Cyprus: A new plan to attract skilled workforce, innovation, investors and companies
By: P. Constantinou & Co Ltd
The Cyprus government presented recently, this October, a new strategy to attract employees and companies in the country, giving an emphasis on high-tech, research, innovation, shipping, and pharmaceutical companies. The implementation of the strategy is anticipated to start in January 2022, giving enough time for the interested individuals and companies to prepare.
The new proposals take into consideration best practices from other European countries and aim to establish Cyprus as a Sustainable Business and Trade center of the broader Middle Eastern region and Europe.
In general, the proposals suggest, amongst others, the following:
Business Facilitation Unit
The evolution of the Business Facilitation Unit with more Responsibilities such as company and company name registrations, registration in the Social Insurance register, the VAT, and income tax registers. The unit will also provide guidance for licensing facilities/offices and operating in Cyprus and facilitate the issuance and renewal of residence and employment permits.
Employment of staff from third countries
A new policy for the employment of staff from third countries employed by companies of foreign interests, as well as for Cypriot companies that provide added value to the economy. These companies must have a physical presence in Cyprus (offices) and the eligible companies can come from a variety of industry but these policies mainly target Cypriot shipping companies, High-tech, innovation, pharmaceutical, and biotech.
Employment of third-country nationals with a minimum gross monthly salary of € 2500. These employees must have a university degree or at least 2 years of experience, a minimum 2-year contract and they will also be allowed to move their family to Cyprus.
Another proposal is aiming to attract Digital Nomads by initially issuing 1-year visas to a maximum of 100 people that will offer their services to clients that are not Cypriot companies. This group will also be allowed to move their families in Cyprus but without the ability for them to work here. In order to be eligible for a Digital Nomad Visa, certain conditions must be met such as employment or project contracts, proof of a minimum income of at least 3500 euros per month, medical coverage, and criminal record from their current country of residence.
Extending the tax exemption that applies to employees in the Republic with a Tax exemption of 50% to new residents/employees with remuneration from employment of €55,000 and the possibility to extend the benefit from 10 to 17 years.
Extension of tax exemptions for investments in innovative companies. The new proposals suggest extending the 50% tax exemption for investment in certified innovative companies to also include corporate investors. Please note that the current status that was in force until the end of June 2021 allowed the tax exemption only to natural persons.
Research and development
The new proposals also aim to grant an increased discount on research and development costs (for example by 20%). Eligible research and development costs will be deducted from taxable income at a rate of 120% of the actual business income.
Finally, regarding citizenships, employees will have the right to submit an application for naturalization after 5 years of residence and work in the Republic of Cyprus or after 4 years if they meet the criteria of holding a recognized certificate of very good knowledge of the Greek language.
All the above proposals will be implemented in 2022 pending the necessary approval of various amendments in the legislation.