By Uglobal Staff
Cyprus has launched a new Startup Visa scheme to draw innovative entrepreneurs to the island.
Despite much interest, so far only two entrepreneurs have applied for the program, seven months after its launch, according to Zoe Andreou, audit officer of Directorate of Economic at the Ministry of Finance of Republic of Cyprus.
“There have been many queries about the scheme since its introduction though,” Andreou said.
The Cyprus Startup Visa scheme, introduced in February, is intended to attract entrepreneurs from non-European Union (EU) and non- European Economic Area (EEA) countries to establish and grow startup businesses in Cyprus. Currently on a pilot basis, the scheme will last for two years during which period 150 visas will be granted.
The program is available for both individual and team applicants. An individual applicant must be the only founder of the startup with access to €50,000. An undergraduate degree or a similar professional qualification, as well as Greek or English language proficiency, is also required.
For a team application, a maximum of five individuals could be included. The team could consist of solely founders or at least one founder with the rest of the team serving as senior executives. In the former case, the founder must have access to €25,000 as initial investment; for the latter, a minimum capital of €50,000 is required. The team in total should possess more than half of the startup’s shares. Moreover, at least one member of the team should meet the same threshold of educational background and language skills as for individual applicants.
Both the individual and team components require the enterprise to be innovative, which must be embodied in the operating costs and certified by an external auditor, or in case of an enterprise in its planning stage, elaborated in the business plan.
The application procedure of the startup scheme includes two stages. After an application is submitted, the Competent Authority, which consists of professionals from the Ministry of Finance and other designated parties, will evaluate the documentation and provide a decision. If approved, the applicants will receive a Notification of Initial Approval, which allows them to realize their business plan or keep running their existing startups for one year and possibly renew residence and work permits for at least another year.
In the second stage, which is two months before the expiration date for the renewed permits, the applicants must submit a new application to the Competent Authority. Entrepreneurs who can show that the business is growing will receive a Notification of Final Approval which ensures their rights to residence and employment in the country as well as those of personnel working for them.
Although Cyprus Startup Visa holders cannot enjoy free movement across all EU countries, with a Notification of Final Approval, they would be able to keep running their business in Cyprus with no time limit, as long as it is successful. After seven years in the country under legal status, they will be eligible to apply for the Cypriot citizenship. Startup Visa holders are also allowed to hire a certain number of non-EU nationals without prior permit of the Cypriot Department of Labour.
AFFORDABLE SCHEME WITH CHALLENGES
Although the Cyprus Startup Visa scheme may not be able to compete with other investment immigration programs offered by the country in terms of the speed of gaining residency and citizenship, it is still a highly affordable path toward Cypriot citizenship. The Citizenship by Investment Cyprus program, for example, requires an investment of €2 million, and applicants can receive approval within months). This is especially true for ambitious business innovators.
“Starting and running a business in Cyprus reduces the costs of launching, giving applicants a longer runaway and more flexibility,” commented Andreou.
Bettina Borongics, senior corporate administrator for New Company Formations at Shanda Consult, a Cyprus-based international investment consulting firm, agreed. But she urges applicants to pay careful attention to the definition of “innovative enterprise” in the scheme.
“The Cyprus Startup Visa scheme is an excellent opportunity for talented entrepreneurs and for their executives,” she said. “…The only ‘challenge’ could be the business idea… the enterprise must be an innovative one proving that R&D (research and development) cost represents at least 10 percent of its operating costs… or in case of a new business, the applicants must come up with an innovative idea.”
CYPRUS IS READY FOR GLOBAL BUSINESS TALENTS
Cyprus is striving to forge a pivot for information and communication technologies (ICT) as well as R&D business entities, according to Borongics.
“The Government of Cyprus has announced ICT as one of the island’s priority growth sectors; a Digital Strategy and Action Plan has been developed for immediate implementation,” she said. “The capital Nicosia has been identified as the future center of Cyprus for ICT and R&D.”
With the belief that startups with innovation competency and growth potential could fuel the country’s economy and boost the job market, the Cyprus government hopes that a larger scale promotion could increase the popularity of the newly introduced scheme and attract more investors from third countries to establish their business in Cyprus, helping to promote an innovative atmosphere and strengthen the entrepreneurial ecosystem of the country.
“Information campaigns (for the scheme) are planned in the autumn with the cooperation of the Cyprus Investment Promotion Agency (CIPA),” Andreou said. “CIPA will participate in many investment events in abroad that are related to innovation. The Cyprus Startup Visa scheme has not yet been adequately promoted, and with the promotional material that has been prepared, we hope that potential investors will be informed.”