In October 2021, the Cyprus Government announced an 'action plan' to attract additional companies to operate and/or expand their activities in Cyprus.
The action plan is certainly forward-looking and innovative in terms of the further measures to be introduced, to attract companies and individuals to move to Cyprus.
Timing
The action plan will be implemented from January 1st 2022, except where new legislation is required, as in the case of the three points below. The aim is for the relevant legislation to be submitted to the House of Representatives by the end of December, and to be approved in the first quarter of 2022.
- Extension of the tax exemption that applies to employees in the Republic.
- Increased tax deduction (in addition to the existing one) for research and development expenses.
- Application to gain Cypriot citizenship, after having spent five of the previous ten years in Cyprus.
1. Business Facilitation Unit: Visas for Highly Skilled Third Country Nationals
The Ministry of Finance announced the introduction of the Business Facilitation Unit that will assist highly skilled third country employees, with a minimum gross salary of €2,500 per month, to gain work permits. Such individuals are required to present a university degree, or equivalent qualification, or certificate.
The maximum quota of work permits for third-country nationals per company, is set at 70% of all employees, over a period of five years. Permits will be issued within one month of application and will last up to three years. The spouses of such employees will also have access to the country's labour market.
2. Digital Nomad Visa
Eligibility
Via the Digital Nomad Visa Programme, non-EU nationals active as self-employed, salaried or on a freelance basis can apply for the right to live and work in Cyprus. Applicants must work remotely using information technology and communicate remotely with clients and employers outside Cyprus.
Residence status
A Digital Nomad has the right to stay in Cyprus for a period of up to one year, with the right to renew for another two years. If they reside in the Republic for a period that in total exceeds 183 days within the same tax year, they are then considered tax resident in Cyprus.
During the stay in Cyprus, the spouse or partner of the Digital Nomad and any minor family members are not allowed to undertake dependent work or to engage in any kind of paid activity in the country.
Digital Nomads must have; salaries of at least €3,500 per month, medical coverage, and a clean criminal record from their country of residence.
3. Extension of the tax exemption that applies to employees in the Republic
Tax exemptions that apply to foreign highly skilled employees in the Republic are being extended to a maximum period of 17 years.
The existing 50% tax exemption is also being extended to cover new resident employees, with an annual employment salary of €55,000 or more.
Please note that the relevant legislation is still to be submitted and approved.
4. Increased tax deduction for research and development expenses
Research and development expenses will be subject to an increased discount.
Eligible research and development expenses will be deducted from taxable income equivalent to 120% of the actual expenditure.
Please note that the relevant legislation is still to be submitted and approved.
5. Application for acquisition of Cypriot citizenship
The option will be available to apply for Cypriot citizenship after a period of five years of residence and work in the Republic of Cyprus, instead of the seven years that was applicable before.
Please note that the relevant legislation is still to be submitted and approved.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.