On 15 October 2021 the Cyprus government presented its Action Plan for attracting companies to establish or expand presence in Cyprus. The Plan is in line with the guidelines of the EU Recovery and Resilience Facility, which has been established to help the EU emerge stronger and more resilient from the crisis caused by COVID 19. The implementation of the Action Plan is expected to create added value to the economy of Cyprus, as well as to redefine the economic model of the country.
Although more details will become known in the following weeks, the main points, which are briefly presented below, seem very promising. The key points of the Action Plan are briefly summarised below:
Revised policy for the issuance of temporary residence and work permits to third country nationals
Eligible businesses include companies of international interest, either already active in Cyprus or wishing to set up in the country and which are/will be operating from their own premises (separate from any other office or private residence), as well as for local interest companies in specific areas of economic activity, such as the following:
Work permits for third-country nationals can go as high as 70% of all employees of a company over five years. Any cases for which after the lapse of the five-year period it is not possible to employ at least 30% of local staff, will be examined on their own merits.
A minimum gross monthly salary of €2,500 is introduced for employees who have the required academic skills (university degree or equivalent title) or at least two years of relevant experience. The employment contract must have a minimum duration of two years.
Companies will also be able to employ third country nationals as support staff provided that the employment of staff does not exceed 30% of all support staff of a company. The gross monthly salary of such persons should be lower than €2,500.
The permits will be issued within one month from the application date and will last up to three years.
Right to employment of family members
Spouses of third country nationals who have obtained a residence and work permit in Cyprus based on the above mentioned policy for employment of third country nationals earning a gross monthly salary of at least €2,500 per month (i.e. non-support staff), will have immediate and free access to employment.
Simplification of the process for granting work permits
The Regulations of the Aliens and Migration Law will be amended in order determine the criteria and simplify the process for granting work permits.
Digital Nomad visa
Eligible for such a visa will be third country nationals who are self-employed or employees who work remotely for clients and employers respectively who are situated outside Cyprus.
There will be an initial limit of 100 applications.
The particular visa will provide the right to stay in Cyprus for up to one year, with a right to renewal for another two years.
Upon request, a residence permit, expiring at the same time as the one of a holder of a Digital Nomad visa, can be grated to his/her family members. During their stay in Cyprus, the spouse or partner (concerns persons who have entered into a civil union) and the minor members of the applicant’s family are not allowed to provide dependent work or to engage in any kind of economic activity in the country.
Applicants for such a visa will have to show receipt from abroad of at least €3,500 per month (supported by salary slips, bank statements, etc.), increased by 20% for the spouse and by 15% for any minor. Furthermore, they need to provide a declaration that they undertake not to provide any kind of employment or service to an employer or client based in Cyprus. They also need to provide evidence about their employment or occupation (i.e. employment contract or engagement agreement in case they are freelancers or details about the enterprise in case they are self-employed). They also have to hold a medical insurance and to present a Clean Criminal Record Certificate from their country of residence.
Extension of 50% Income Tax Exemption
The existing Income Tax exemption of 50% for people moving to Cyprus for employment earning at least €100,000 per annum will be expanded, by reducing the threshold to €55,000 per annum.
Existing beneficiaries will be eligible for extension of the exemption from 10 to 17 years.
Increased tax deductions for Research & Development (R&D) expenses
R&D expenses will be granted an extra tax allowance of 20%, thus giving a 120% total deduction from taxable income.
Application for Cyprus Citizenship
Individuals looking to apply for Naturalization will now be eligible to do so within five years, instead of seven years of residence and work in Cyprus. A further reduction to four years will be granted to holders of certification for very good knowledge of the Greek language.
The Action Plan will be implemented as from 1 January 2022 with the exception of actions related to the 50% Income Tax Exemption and to Citizenship for which legislative regulations are required, which are expected to be approved in the first quarter of 2022.
As always, we are at your disposal for any further information or clarification and for discussing any specific enquiries, concerns and thoughts you may have.