Relocation to Cyprus
‘’Cyprus should be one of the best places in the world to live, work and be active" is the vision on the basis of which the Cyprus Economy and Competitiveness Council presented the new Long-Term Strategy for the sustainable development of the Cypriot economy.
Cyprus is the third largest island in the Mediterranean Sea and is at the crossroad of three continents – Europe, Africa and Asia and has become over the years an attractive destination.
Cyprus was ranked as the 5th best place for lifestyle among major European cities and other competitive destinations. Cyprus has a fully developed digital network, with reliable high-speed internet on international connectivity and excellent telecommunications infrastructure. Cyprus combines an international competitive business environment with a pleasurable and balanced way of life.
Individuals who relocate to Cyprus can enjoy a high quality of life with their families.
Historically, Cyprus has attracted international companies looking for an alternative base in the region. Over the last few years, we have seen an increase in the number of groups choosing Cyprus as their headquarters to host large numbers of staff or to establish substance on the island. This includes the relocation of employees at all levels, including senior management, and, in some cases, the ultimate beneficial owner(s) and their families.
In November 2022, the Council of Ministers approved the Amendment of the Policy for the Registration of Companies in the Register of Foreign Interest Companies. The reforms aim to encourage and facilitate the relocation of technology industry employees, business executives and other specialists to Cyprus, with a view to support the growth of the local IT, fintech, pharma and shipping industries, ultimately enriching the Cyprus innovation ecosystem. Other growing industries such as funds, headquartering and setting up of Family Offices, will also benefit from higher availability of specialist personnel.
The Fast Track Mechanism was replaced by the Business Facilitation Unit (BFU) on January 1, 2022. The goal of BFU is to quicker and effectively process requests from foreign companies for the establishment of a company in Cyprus or the expansion of existing companies' activities.
Businesses that are eligible must meet the following requirements for registration with the BFU:
- The majority of the company’s shares are owned by third-country nationals.
- In the event that the percentage of the company’s shares, is equal or less than 50% of the issued share capital, the company is eligible if that foreign participation has a value of at least Euro 200.000.
Public companies listed in any recognised stock exchange.
- Former off-shore companies that were operating in Cyprus by approval of the Cyprus Central Bank before the change of the off-shore status (2004)
- Cypriot shipping companies.
- Cypriot companies of high technology/innovation.
- Cypriot pharmaceutical companies or companies operating in the fields of biogenetics and biotechnology.
- Companies in which the majority of the total share capital is owned by individuals who have acquired Cypriot citizenship by naturalization based on economic criteria, given that they will prove that the conditions under which they were naturalized are still met.
There is establishment/operation of independent offices in Cyprus in suitable premises, separate from any private housing or other office.
Employment Permits of Third Country Nationals (TCN)
70% of the company’s employees can be third country nationals and 30% must be Cypriots over a period of 5 years from the date of the company’s registration with the BFU. After the lapse of 5 years the BFU will re-assess on a case-by-case basis whereas the requirement of 30% is not met.
Highly skilled personnel
- Minimum gross monthly salary of 2.500
- University diploma or degree or equivalent qualification or confirmation of relevant experience in a corresponding position of at least 2 years
- Employment contract of highly skilled personnel is of at least 2 years
- The work permits are issued up to three years which will be issued within 1 month from filing of the application
Support staff (non-high skilled personnel)
- 30% of the company’s support staff can be of third country nationals
- An approval must be obtained by the Labour department
- The work permits are issued up to three years
Tax residence of an individual
An individual is considered tax resident in Cyprus if he/she spends in Cyprus more than 183 days in any calendar year (same as the tax year).
A second tax residency test, known as the “60 day rule”, was also implemented on 1 January 2017. As a result, beginning with the tax year 2017, an individual is considered a tax resident of Cyprus if he or she meets either the "183 day rule" or the new "60 day rule" for the tax year.
The 60 day rule applies to individual who in the relevant tax year:
- does not stay in any other country for a period exceeding 183 days in aggregate, and
- is not a tax resident in any other country, and
- spends at least 60 days in Cyprus, and
- carries out business in Cyprus and/or is employed in Cyprus and/or holds an office (director) of a company tax resident in Cyprus
- maintains a permanent residential property in Cyprus which is either owned or rented by him/her.
- 12,5% Tax Rate to Corporate Profit
- 0% Tax on Dividends to non-residents
- 0% Tax on Dividends received from other companies
- 0% Tax on Capital Gains deriving from the sale of securities
- 0% Tax on Capital Gains deriving from activities carried out outside of Cyprus
- Special tax rates and funding schemes available for companies in the Shipping, Oil and Gas, Insurance, Financial (Fund Industry) Cinematographic and Educational sectors.
New Income Tax Exemptions
- Tax exemption of 20% for any person employed for the first time in Cyprus after 26th July 2022 who was previously not resident in the Republic and for a period of 3 consecutive years prior to commencing employment in Cyprus was employed by a non-resident employer and was residing outside Cyprus up to a value of €8,550 for a period of 7 years.
- Tax exemption of 50% for any person employed for the first time in Cyprus as of 1st January 2022 who was previously not resident in the Republic for a period of at least 10 consecutive years and receiving an annual salary of at least EUR 55,000 for a period of 17 years.
- Individuals who are tax residents but not domiciled in Cyprus are exempt from tax on dividend and interest income.
- A non-Cypriot tax resident is subject to income tax on income earned or derived solely in Cyprus and is exempt from tax on dividend and interest income.
How we can help
Conducting international business from Cyprus is made attractive through all of the factors mentioned above. Cyprus is a competitive business hub with a newly introduced plan aimed at attracting funds and investors in the technology sector.
We, at Pyrgou Vakis, stand alongside our clients throughout the entirety of the process and provide support from registering a new company through the Registrar all the way through to obtaining any relevant necessary licenses and proceeding with the running of the business. We may assist with employment contracts, finding and renting or buying residential and commercial properties, immigration issues, compliance matters and in general, making your transition to Cyprus smoother.