By Eleni Drakou
Cyprus has long been a renowned business centre. More and more companies nowadays choose Cyprus as a destination for corporate relocation and expansion. A number of advantages being offered by the country, including the tax regime, the infrastructure and the highly educated workforce, led to the forming of a platform for international business activities and the setting-up of corporate presence in the island.
Business owners and entrepreneurs who wish to establish their presence in the country, can join the Cyprus Residence Permit program, which grants the permanent immigration permit to reside in the country. According to the provisions of Regulation 6(2) of the Aliens and Immigration Regulations, this permit is granted on an expedited (fast-track) procedure to non-EU nationals who invest in Cyprus and meet the program’s set criteria, as analysed below.
This program has been very popular among non-EU citizens, especially due to its examination time-frame which is from two to five months, as well as due to its permanent character whereby no renewal is required, provided that certain criteria are met (such as maintaining the investment and regular visits to the country).
Recently, this program was revised to enable the investment in Cyprus companies. The investors can be appointed as directors of their Cyprus companies, thus being employed by their companies and receiving a salary. In particular, the program was amended on March 24 2021, having been amended for the third time, in order to broaden the investment options for interested applicants. As a result, applicants are able to apply for the permanent residence permit by investing in a business in Cyprus, by which they are also hired, as well as investing in immovable properties.
Business potentials: The business sector offers important opportunities and potentials for return and growth. The Cyprus economy traditionally excels in industries such as tourism, real estate, professional services and shipping, hence providing significant possibilities for companies whose activities involve these sectors. Cyprus aims at further diversifying its economy by developing other areas with high potential, such as energy, start-ups, filming, investment firms, education, technology, innovation and investment funds. A number of tax and other incentives is provided as per the government’s policy to further promote these sectors.
Taxation: The Cyprus corporate tax is currently 12.5%, while dividends are exempted from income tax. The applicant can be employed as the company’s director and receive remuneration from the company. At the same time, the applicant can receive dividends from the company’s profits. Important exemptions are provided on income tax, which can reach up to 50% of the remuneration from any employment undertaken in Cyprus by an individual who was not a resident of Cyprus before the commencement of the employment. Investors who choose to become tax-residents of Cyprus by spending 183 days or 60 days (provided that they are not tax-residents in any other country) in Cyprus within one calendar year, can enjoy a beneficial Non-Dom status with significant tax deductions on their income and tax exemptions on dividends and interest, for 17 years.
Family members: Besides the investors, the permit can be granted to the investor’s family members, including (a) the investor’s spouse, (b) children below 18, (c) children over 18 and up to 25 years old who are unmarried students of tertiary education and are financially dependent on the applicant, as well as (d) the main applicant’s parents and parents-in-law.
The holders of this permit can access the Cyprus General Health System (GESY) as per the provisions of the General Healthcare System Law of 2001 (N. 89(I)/2001). The children can receive free education at public schools, while a variety of private schools is also available at a tuition fee.
Incorporation: Setting up a Cyprus company is quite popular within the European Union (EU), as well as outside the EU, due to the relatively low-cost regarding set-up and maintenance, the office rental rates and the labor cost. The provision of professional legal and accounting services is highly affordable. In addition to these advantages, the regulatory regime is in full compliance with the requirements of the EU and OECD, and the AML Directives. Administrative procedures for registering a company are relatively simple, while Cyprus companies can be entirely owned by foreigners. Share capital can be in any currency and there is no minimum paid-up share capital.
Interested investors should meet the following criteria in order to apply for the Cyprus Residence Permit (fast-track) through the option of investing in a Cyprus company:
Investment: A minimum investment of EUR 300,000 should be contributed in the share capital, existing or new capital, of a Cyprus company through the purchase of shares. The investment funds must be transferred to Cyprus from abroad.
The company should be registered in the Republic of Cyprus, having its physical presence and operations in the country. Moreover, the company should employ at least five people. A business profile of the company, stating the business activities and objectives, as well as the Share Purchase Agreement, the Shareholders Certificate and the company’s Certificate of Incorporation should be submitted to the Migration Department upon submission of the residence permit application.
Secured income: The main applicants should prove that they have at their disposal a secure annual income of at least EUR 30,000, increased by EUR 5,000 for each dependent person (spouse and children) and by EUR 8,000 for each dependent parent and parent-in-law. For the calculation of the total amount of the annual income, the spouse’s income may also be considered, as well as sources coming from activities within the Republic of Cyprus.
No criminal record: The applicant and each adult family member applying for the permit should have a clear criminal record from the country of origin or the country of residence if it is different. Applicants should not be considered a threat in any way to the public order or public security of Cyprus.
Residence: Lastly, the applicants should provide evidence regarding their accommodation in the Republic of Cyprus by way of a purchase or rental agreement.
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