By Chrysovalantis Papantoniou, Associate Lawyer at Dionysiou & Partners LLC
Having the intention and the ultimate goal of attracting international investment and talent in Cyprus, the Council of Ministers approved the “Strategy for Attracting Businesses for Activities or/and Expansion of their Activities in Cyprus”, on the 15th of October 2021. As part of this program, the Business Facilitation Unit (BFU) came into force on the 1st of January 2022. In essence, this unit is a reviewed and simplified version of the Fast Track Business Activation Mechanism. The main aim of the BFU is to provide a faster and more effective process of applying for foreign interest company establishment in Cyprus or the development of existing companies.
SERVICES PROVIDED BY THE BFU
1.The unit will act as the single point of contact and will give the ability to new entities to complete all registrations for their establishment. The setting up of a business includes the below:
- Approval of company name and registration (in collaboration with the Department of Registrar of Companies and Intellectual Property)
- Registration in the Employers’ Register (Social Insurance Services)
- Entry in the Tax Register for Indirect Taxation (VAT) and Direct Taxation (Tax Department)
2.Part of the services included in the BFU is also the provision of guidance regarding the necessary licensing or permits for the activation and establishment of any type of businesses in the Republic. The unit will also provide instructions such as the development of a business plan, the registration of the trademark of the business, and many other related issues.
3.Furthermore, the unit will provide support regarding the review and application for new or existing foreign interest companies wishing to employ third country nationals. Submissions and issuance of residence and employment permits will take place at a new separate area of the Civil Registry and Migration Department (CRMD), aiming at the establishment of a faster and direct procedure. Once the company is registered with the BFU, a written confirmation will be given. Using the written confirmation, companies can contact the CRMD for the residence and employment of their third-country personnel.
1.All foreign interest companies in which third-country nationals own the majority of the company’s shares. The term “third country nationals” also include third country nationals who have acquired Cypriot citizenship by naturalization based on economic criteria. One of the most important alterations of the new criteria is that the requirement for the company to present € 200.000 as nominal capital has been abolished.
Only in cases where the percentage of foreign participation in the company’s share capital is equal to or less than 50% of the total share capitalthe foreign participation should represent an amount equal to or greater than the amount of € 200.000 as nominal capital.
2.Cypriot high-tech companies / innovative companies. To qualify for this category a company must prove the following:
- it is already established and has a presence in the market, and
- it has a high level or experimental Research and development intensity, and
- it developed product/s that fall into one of the following categories: products related to aviation and space industry, computers, electronic and telecommunication products, pharmaceuticals, biomedical, research and development equipment, electrical machinery, chemicals, non-electrical machinery.
3.Cypriot shipping companies
4.Cypriot pharmaceutical companies or companies active in the sectors of biogenetics and biotechnology
5.Public companies registered on any recognised stock exchange.
6.Companies of international activities (formerly offshore), which operated before the change of regime, whose data are held by the Central Bank.
It should be noted that for all categories mentioned above the company must prove the exercise of their business in independent offices in Cyprus, housed in appropriate premises, separate from any private residence or other offices.
WORK PERMITS FOR THIRD-COUNTRY NATIONALS
The new program also introduced new criteria regarding the employees of foreign interest companies. As of January 2022, there will be no categorization of the personnel of the company. Employees of foreign interest companiesare now titled “high skilled employees” and they can apply for residence permit for up to 3 years given that:
- They will be paid a minimum gross monthly salary of at least € 2.500
- They hold a university diploma or degree or equivalent qualification or confirmation of relevant experience in a corresponding job of at least 2 years duration
- They have an employment contract of not less than two years duration
During the period of 5 years, from the date of joining the BFU, the maximum number of third country nationals that can be employed in a foreign interest company is set at 70% of all employees. When the said period comes to an end, in cases where it is impractical to employ 30% of Cypriot workers the matter will be examined on a case-by-case basis.
In addition to the above, the current legislation for family reunification is still in force and will apply to any third country national who has obtained a residence permit in accordance with the above criteria. This will provide immediate and free access to the labour market, with remunerated employment for the spouse of a high skilled third country national.
Moreover, the company can also employ third country nationals as support staff (with a gross monthly salary of less than €2500), given that the percentage of this staff will not exceed 30% of the total support staff. An employment contract between the third country national and the employer duly validated by the competent authority, will also have to be in place.
As part of the new strategies introduced to attract business in Cyprus, the Ministry of Interior will proceed with the amendment of the Civil Registry Legislation regarding the time criteria for naturalization of high skilled third country nationals.
The proposed amendments that will be introduced in 2022 will include the right to apply for naturalization after 5 years of residence and work in the Republic, instead of the current 7-year requirement. Also, in cases where the applicant holds a recognized certificate of very good knowledge of the Greek language, the right to apply for naturalization will be reduced in 4 years.
The flexibility and extensive nature of the new criteria, as explained above, will certainly work in favor of Cyprus and their pursuit of becoming an international high-growth business center.
For further information or clarifications, please contact S. Dionysiou & Partners LLC at email@example.com / +357 22 272360.