Benefits of relocating your family and business to Cyprus

Cyprus is and has been a place where people from both Europe and Asia have emigrated to for centuries.  

Cypriots themselves are not strangers to the concept of immigration either. In the beginning of the 19th century, the harsh economic conditions at the time and the onset of World War I saw many Cypriots migrating permanently and in large numbers all over the world but primarily to the United Kingdom, Australia, Africa and the United States. As a result, there are currently sizeable Cypriot expat communities around the world with strong links to their families who live in Cyprus. Their overseas prosperity has made Cypriots in general appreciative of welcoming and assisting people from abroad in making the best out of their choice to relocate.  

A stable and civil society, progressive infrastructure, great weather all year round and genuine hospitality in leisure and in doing business make Cyprus an island at the easternmost point of the European Union, a destination of choice for many foreigners relocating their businesses and families. 

A member of the EU since 2004, situated at the meeting point of Europe, Africa and Asia, and close to the trade routes linking these continents, Cyprus is located at a strategic position, which has contributed decisively to its development into a business center and the availability of a multitude of services offered. 

Being a member of the Eurozone since 2008, through the endorsement of the Euro currency under the supervision of the European Central Bank, Cyprus affords both transparency in pricing and a reduced exchange risk, unlike other countries with more volatile currencies. 

The advantages of relocating to Cyprus for doing business and for living are many 

There is, for example, a very high standard of both public and private education, resulting in Cyprus having a talented and highly educated and professionally qualified workforce, accustomed to operating on an international level. 

In addition, the excellent climate with more than 300 days of sunshine a year, an abundance of some of the best and cleanest beaches in Europe and low crime rates, have made the island one of the top choices for the acquisition of property for residential and/or investment purposes. 

DOING BUSINESS IN CYPRUS 

Cyprus has always been looking outwards in terms of inviting and facilitating foreigners, be it for business or pleasure. It is easy to access given its geographic location and it is easy to communicate as English is widely spoken, all being factors that contribute to a truly business and family-friendly environment. 

The country offers highly affordable business support services of a very high quality with over 700 registered accounting firms and almost 200 registered legal firms. There is a high availability of office space in the cities, and government programs that aim at facilitating foreign interest companies to operate in Cyprus and enable corporations to start operations easily. 

The human talent that is locally available is of high standard as Cypriots are typically highly educated, highly skilled and typically multilingual. Moreover, as a member state of the EU, Cyprus gives access to a 240 million people workforce. 

Ownership and possession, as well as related rights (freedom of contract, practicing any profession and carrying on any trade or business etc.) are safeguarded by the Constitution of the country and international treaties ratified by Cyprus and forming part of its laws. 

A number of tax incentives and benefits are given via both local tax laws and the Double Tax Treaties, with new incentives frequently being introduced.  

Foreign interest companies can benefit from the Cyprus Investment Program (CIPas the program provides for the naturalization of their high-ranking senior managersUnder the CIP, a high-ranking senior manager may be naturalized provided the company has concluded an investment under the criteria of the program and the individual has paid at least 100,000 euros in taxes. 

CYPRUS LEGAL SYSTEM 

Cyprus was a British colony until its independence in 1960. The legal system was based on the English legal system with the laws enacted at the time applying the principles of common law and equity in Cyprus. Many of those laws are still in force today and the English legal system has been largely preserved in the Cypriot system 

Following the accession of The Republic of Cyprus to the European Union in 2004, the Constitution was amended, and after that European law has supremacy over the Constitution and national legislation. 

The entire legal infrastructure and the regulatory framework is compliant with EU legislation, the FATF, OECD and FATCA requirements and is therefore familiar and transparent for international businesses to operate in. It is more than fair to say that Cyprus has robust and attractive legislation that strongly protects investments and intellectual property. 

REGISTRATION OF CYPRIOT COMPANY  

In Cyprus, the activities of any company are regulated by the Companies Law(Cap.113). According to this law, companies may be registeredas limited liability companies, public limited companies or companies limited by guarantee. Partnerships are also allowed in Cyprus, in two forms: general or limited. 

Foreign citizens no longer need the permission of the Central Bank of Cyprus to hold shares in Cypriot companies. Any national can start his or her business in CyprusAll are treated equally, and the registration process is simple and quick, and does not require the presence of the shareholder on the island. 

In accordance with the Companies Law, companies are obliged to prepare Financial Statements in accordance with the International Financial Reporting Standards (IFRS). 

TAXATION 

Cyprus has an inviting culture when it comes to incoming investments. The tax system is attractive and transparent offering numerous exemptions and incentives for both corporates and individuals, at the same time being fully compliant with EU, OECD and international laws.  

Corporation tax is at 12.5% on profits, one of the lowest in the EU, while companies with certain operations, such as Shipping and Intellectual Property, are taxed at much lower rates.  

The wide network of double tax treaties allows corporations to fully take advantage of the available tax exemptions such as those for dividend participation, gains from the disposal of securities, withholding taxes and profits from foreign establishments.  

Exemptions are also extended to individuals including employment income exemptions for new and non-residents as well in respect to those having a non-domiciliation status. 

HEADQUARTERING 

Having full access to the European Union market and with a Common Law Legal System aligned with EU laws, Cyprus is an ideal base for the establishment of Regional Headquarters. It combines all the critical ingredients including geographical location, human talent, infrastructure, business friendly approach, safe and interesting living environment. In the past few years, this competitive advantage has been recognized even more. As a result, existing companies have significantly increased their presence and operations in Cyprus and the presence of new investors on the island across all sectors is increasing steadily. 

KEY SECTORS 

Traditionally the main pillars of the Cypriot economy have been in the hospitalityshipping and the professional services industries. The legal and regulatory frameworks, services and facilities of these industries continue to improve and modernize. 

More recently, the government sought to develop an environment to support and promote innovation, research and development and start-upsCyprus is also a new and well-regulated funds jurisdiction and is looking to become an Eastern Mediterranean oil and gas hub.  

The response to the updates of the traditional sectors as well as the establishment of the frameworks and facilities of the emerging ones has been vast, with foreign direct investment on the rise, and new investment opportunities continually emerging. 

THE CYPRUS INVESTMENT PROGRAM  

The Cyprus Investment Program (CIP) was initially introduced in 2011 and has since then been amended to be more appealing to foreign investors.  

An investor who, in the three years preceding the date of application has made an investment in Cyprus of at least 2 million euros in any of the accepted investment categories and owns a residence in Cyprus of at least 500,000 eurosand has donated 7,000 euros to both the Research Promotion Foundation and the Cyprus Land Development Corporation, is eligible to apply for naturalization under the CIP for themselves, their spouse, dependent children and dependent parents. The dependents must also own a residence of 500,000 euros in Cyprus. Applications are examined by the government in about six months. 

The Investments are, at all times, owned by the investor and it is a condition of the CIP that they be maintained for a period of five years post approval. It is, however, permitted to switch investments during this five-year period provided that an approval is obtained from the government. At the end of the five years, the obligation has been fulfilled and the investments can be sold. 

The CIP clearly stipulates that the all persons over 18 applying under the program must: 

  1. have a clean criminal record 

  1. not be included in the list of persons whose assets have been frozen within the European Union as the result of sanctions 

  1. not have applied for citizenship and been rejected in any other member-state of the European Union  

  1. hold a valid Schengen visa  

  1. hold a permanent residency permit from Cyprus for a minimum of six months before a passport can be issued to them 

Globalization, internationalization and security are the main reasons why people seek second citizenships. A second passport, especially one that is considered to be a “strong one” opens the door to a world of options and even freedoms, be it in business, education, travel or family life.   

THE PERMANENT RESIDENCY PERMIT (PRP) 

The fast track program to acquire an Immigration Permit under the Aliens Immigration Regulations of 1972 was initially introduced in 2009 and has since been amended many times in order to correspond to the emerging needs and challenges that relate to immigration 

Following the latest revision in February of 2016, a foreign investor who purchases a new residence in Cyprus of at least 300,000 euros and who sets up a fixed deposit of 30,000 euros for three years in a Cypriot banking institution is eligible to apply for a permanent residency permit (PRP) for themselves, their spouse, dependent children and dependent parents and in-laws. 

The Immigration Permit is under category F, which will allow the holder to reside freely in Cyprus without any restrictions but without the right to be employed in Cyprus although business can be conducted via a Cypriot company. 

PRP applicants are typically persons who will either relocate to Cyprus as retirees or for the purposes of their children’s education taking advantage of the private institutions in Cyprus. PRP holders often register Cypriot companies, which they later expand through Cyprus and into the EU. 

CYPRIOT LIFESTYLE 

Cyprus is an ideal place for families with an enviable lifestyle. It is the 5th safest country in the world, has a mild climate and a road and communications infrastructure that allows its residents to have easy and fast access between all regions of the island 

There is a large number of excellent private elementary and secondary schools, mostly English-speaking, but also French, Russian and Greek, and the fees are significantly lower to those in the UK. Public schools are free and is taught in Greek. Tertiary education is provided by the six universities in Cyprus as well as other colleges, offering a wide variety of internationally recognized undergraduate and post graduate degrees, with an international student body from across the globe. 

The World Health Organization has ranked Cyprus as one of the healthiest countries in the Mediterranean. The level of the medical professionals and services in Cyprus is very high and the government has recently successfully introduced a national healthcare system aiming to reduce the cost of healthcare and ensure access to all. 

As the famous French poet Arthur Rimbaud said in 1878 when he relocated to Cyprus to work as a foreman in the quarries, “It has been found again! What? Eternity. It is the sea mingled with the sun. Cypriots use that saying and that is what awaits those who make the choice to make Cyprus their home. 

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About the Author

Maria  Clappa
Maria Clappa

Maria Clappa is a partner of Tassos Papadopoulos & Associates LLC based in Cyprus. She joined the firm in 2013 and became a partner in 2016. She focuses on private investment, property acquisition and development, immigration law and corporate affairs. She also has expertise in alternative investment funds and other entities with activities in the sphere of financial services. She is certified by the Cyprus Securities and Exchange Commission.

Clappa has a bachelor’s in law from the University of North London, was admitted to the Cyprus Bar in 1999, and has earned a master’s in venture capital from the University of Westminster. She speaks Greek, English and has reading knowledge of French.

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