Relocation and Corporate Establishment Options in Cyprus
INTRODUCTION
Cyprus offers non-European citizens individual and corporate tax savings in addition to a safe and sunny environment. Owning a company of foreign interest in Cyprus will allow for owners and their families to live and work in Cyprus.
Why Cyprus?
Cyprus, offering the perfect balance between work and relaxation, with long sunny days in a stress-free atmosphere and beautiful beaches, history, and nature is the third largest island in the Mediterranean and it has a great mixture of work, holidays, education, safety etc.
The country’s unique geographical position creates a business link between Europe, Asia and Africa, and it gives the opportunity to any interested individuals or companies to use it as the base of their business transactions. In Cyprus, there are many ways in which individuals can obtain the right to work and live on the island. One of the appealing options for those wanting to own and operate businesses in the country is through registering companies as companies of foreign interest company.
Personal Relocation
Cyprus offers many key benefits to High-Net-Worth Individuals (“HNWIs”), Senior Executives, and their dependents who are looking to relocate to a country that offers financial stability, a gateway to Europe, and a quality standard of living for their families. The country offers an enviable combination of climate, business, and culture and many incentives for relocation. Cyprus has an advanced economy providing a high standard of living and quality of life.
In addition to the above, Cyprus offers several personal tax incentives that aim to attract multinational companies to relocate key personnel to perform their duties in Cyprus. Income arising from employment is subject to income tax subject to certain exemptions and deductions, while passive income such as dividends and interest are generally exempt from tax for expatriates relocating to Cyprus.
Tax Benefits, while working in Cyprus Republic
50 % Income Tax Exemption for First (1st) Employment in Cyprus (The amendments made to Article 8(23A) of the Income Tax Law) are the following:
The 50% exemption on income tax is granted to individuals who were not residents of Cyprus for 15 consecutive years (instead of 10 years as was previously the case) prior to any employment in Cyprus. Under these circumstances, an individual is considered to have commenced first employment in Cyprus when for the first time (after a period of 15 consecutive years during which he was outside of the Republic and was not performing any salaried services in Cyprus) commences his employment in Cyprus to an employer resident in Cyprus or to a non-Cyprus resident employer.
The 50% exemption on income tax is granted to individuals, who meet the conditions for the exemption, even if they change employer – the exemption was previously only granted for the first employment in Cyprus whereas change of employer resulted to termination of the exemption.
The 50% exemption on income tax is granted for 17 consecutive years starting from the tax year of employment in the Republic.
Company Relocation
Cyprus is a favorite destination to relocate a business. It has one of the lowest corporate tax rates in Europe and is ideally suited for international business due to the numerous benefits it offers including its strategic geographic location, talented workforce, EU membership, robust legal framework, friendly business environment, and one of the most attractive tax regimes in Europe, fully compliant with EU and OECD regulations.
What is a “foreign interest company”?
A company, the UBOs of which are from non-EU countries are eligible to employ non-EU nationals in Cyprus. The company owners can also apply for a work permit and residency through the company. This will give them the right to live and work in Cyprus and the opportunity to bring their current employees with them. Their family members will also be allowed to apply to live in Cyprus. After 7 years of residency, the individuals will have an opportunity to become Cypriot citizens and enjoy the full benefits of having a Cypriot passport. They can also benefit from both the individual and corporate tax savings available, including the non-Domicile status.
Criteria and eligibility:
Most of the company shares must be owned by non-EU nationals. If the majority of the shares is not owned by third-country nationals (equal or less than 50%), then the company can apply if the foreign participation amounts to at least 200,000 euros. In both cases, the UBO must deposit the amount in a Cyprus Central Bank licensed institution or must provide investment evidence in Cyprus such as the purchase of an office or office equipment.
The following companies are also eligible:
- Public companies
- International activities companies
- Cyprus shipping companies
- High-tech companies such as ICT, computers, aviation, and others
- Cypriot pharmaceutical, biogenetics, or biotechnology companies
- Companies with the majority of share capital owned by persons with Cypriot citizenship.
Required Documents for the Company to be approved:
The following documents and certifications must be presented by the interested companies:
- Certificates of incorporation, registered office, directors, and shareholders. If the shareholders are other legal entities, a shareholder structure diagram must be presented that will clearly identify all natural persons as the ultimate beneficial owners,
- Memorandum and articles of association,
- Company ownership directors’ affidavit (or representative),
- Rental agreement or title deed or a sale document for the offices of the new business,
- Audited financial statements (for non-newly incorporated companies),
- Company Tax Clearance Certificate (for non-newly incorporated companies),
- Bank statement and swift proving the deposit of at least 200,000 euros in a Cyprus-licensed bank.
- Annual company levy tax payment receipt,
- Employer's Liability insurance,
- Company activities short profile/description.
The following criteria must be met to hire third-country nationals.
- Original passport with a validity of at least 2 years (when submitting the application, the presentation of the original passport is mandatory, for verification)
- Copy of the passport or other travel document's page showing the latest arrival in the Republic and visa (if applicable).
- Brief Curriculum Vitae - CV (including copies of academic qualifications and or relevant professional experience of at least two years).
- Original contract of employment, of at least two years of duration and a salary of at least 2,500 euros gross per month, duly signed and stamped.
- Original Criminal Record, official translation, and APOSTILLED
- Original results of medical tests, performed in Cyprus, showing that the third country national does not bear/suffer certain diseases,
- Title deed or rental agreement of a house/apartment dully stamped if valued over €5000.
- Certificate of Health Insurance for medical care that covers inpatient and outpatient care and transportation of corpses (Plan A).
The Digital Nomad Visa scheme in Cyprus
Digital nomads, as the term implies, are people who work remotely from anywhere in the world, using digital technology to perform their job.
The Government Cyprus established a specific visa program, with incentives for people who would like to take advantage of the benefits of living on the island, while working for companies who operate outside the country. The program aims to contribute to the transformation of the business ecosystem and the economic development of the country, by attracting talented individuals and entrepreneurs.
What is a digital nomad visa?
It is a type of residence permit, for people who wish to live in Cyprus but work for companies operating abroad, given the rapid rise of “remote working” policies adopted by several companies worldwide.
Who can apply for the digital nomad visa?
The beneficiaries for the digital nomad visa are third-country (non-EU or non-EEA) nationals who:
- work remotely using information and communications technology
- are employed and work remotely by their own company or another company, located outside of Cyprus or are self-employed and their customers are located outside of the country,
- can prove that they have sufficient and adequate monthly income to support their living in Cyprus, of at least €3,500, after the deduction of contributions and taxes.
What are the benefits of the digital nomad visa?
Individuals granted with a Digital Nomad residence permit will benefit from:
- The right to stay in the country for up to a year, with the possibility of 2-year extension,
- Their dependents can also stay in Cyprus for the same period and be granted a residence permit that expires at the same time as the permit of the individual. However, the dependents are not allowed to work or engage in any kind of economic activity in the country.
- If they spend more than 183 days in Cyprus during the same calendar year, then they will be considered Cyprus tax residents and be eligible for a number of tax benefits.
Family Reunification- Family Members:
In order to preserve family unity, third-country nationals with residence and employment permits are able to exercise their right to Family Reunification for their family members (spouse and minor children/parents), provided that the relevant conditions of the Aliens and Immigration Law are met.
HOW CAN WE HELP?
Our team, together with our collaborating attorney in Cyprus Galatia Pericleous, has extensive experience in helping clients establish businesses and relocating to Cyprus. So please, do get in touch when you want to get sophisticated and tailored advice.
NOTE: This material is for general information only and is not intended to provide legal advice