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By Charles Savva
In today’s fast-moving world of rapid developments and economic challenges, business executives and high net worth individuals must depend on a reliable and reputable passport, providing themselves and their families ease of mind when travelling and doing business.
Having a second passport can be highly beneficial as it provides secure options for travel and conducting business away from your home country. In short, a second citizenship has become an increasingly popular way to facilitate both travel and business, and helps you put in place a robust ‘Plan B’ to safeguard your family’s private wealth.
The most popular citizenship programs in the world today are found in the Caribbean, which offer an important insurance policy, providing security for your assets and your future.
Having been one of the leading service providers of the highly successful citizenship by investment program in Cyprus, that operated from 2013 to 2020, Savva & Associates has been a prominent facilitator in the global second citizenship by investment space, helping clients from all over the world secure EU citizenship, as well as Permanent Residency.
EU PRP vs Caribbean passport
Our experience in this sector has allowed us to forge close business ties with the world’s leading second-citizenship providers, many of which focus one second citizenship solutions in the Caribbean, as their primary products.
The EU Permanent Residence Permit (PRP) programs, namely in Cyprus, Greece and Malta, have been somewhat overlooked by the Caribbean second citizenship sector, despite offering similar advantages, and in some cases clearer advantages over a Caribbean passport- this is the focus of the current article, which is explored in further detail below.
The reasons to pursue second citizenship in the Caribbean, can be summarized as follows:
Let’s compare the benefits offered by the Caribbean citizenship programs and the EU PRP via investment programs, head to head.
While a Caribbean passport will allow for visa-free access to select countries, the same can be said of an EU PRP, especially when issued from a Schengen-area country such as Greece and Malta, allowing unhindered travel within any of these countries.
Being the holder of a Caribbean passport will, of course, allow you to live in that particular Caribbean country. However, in all of my years of experience in the second citizenship space, I have yet to come across a client who actually relocated to the Caribbean. In contrast, a good number of EU PRP holders actually do relocate to the specific country they hold the PRP (in most cases Cyprus, Greece or Malta).
The EU is the world’s largest economy, and home to about 450 mln people. It’s clear to assume that the benefits offered by an EU PRP in this specific area far exceed that of Caribbean citizenship.
Holding a EU PRP continuously for 5 to 7 years, depending on the EU country, can lead to EU citizenship, and therefore full access to the world’s largest economy and trading bloc. Again, the advantages offered by a EU PRP in regards to the facilitation of business should be considered another advantage of the EU PRP programs over Caribbean citizenship.
Being an international tax specialist, and having worked with private clients for over 20 years, I can strongly assert that the EU offers unparallel wealth preservation solutions, especially in the field of taxation. This is nowhere more prevalent than in Cyprus and Malta.
In summary, while Caribbean citizenship continues to offer clients important safeguards and levels of protection, the same can be achieved via EU PRP programs, that offer unique advantages which in some cases are not available via Caribbean citizenship.
As an important side note regarding Russian nationals, who are no longer permitted to apply under any of the Caribbean citizenship programs, it should be noted that Cyprus remains the only EU country with a PRP program still open to Russian nationals and their families.
Charles Savva is founder and Managing Director of C. Savva & Associates Ltd. www.savvacyprus.com
For further information regarding EU Permanent Residence Permit and citizenship solutions, please contact c.savva@savvacyprus.com.
On 30 November 2022, the Council of Ministers approved the Amendment of the Policy regarding the Registration of Foreign Interest Companies.
The Decision changes the eligibility criteria of foreign interest companies and particularly includes the criterion of a company’s requirement to prove an initial investment of at least EUR 200,000 in the Republic.
The Decision enters into force on 12 December 2022.
B. Definition and General Information
The definition of a “Foreign Interest Company” is:
“A company, which, subject to meeting certain criteria, may employ non-EU national employees in Cyprus. This type of company allows employees and their families to obtain residence and work permits under beneficial terms.”
This initiative aims at attracting foreign investment and workforce talent to the country.
The initial approval by the Council of Ministers was on 15 October 2021, that passed the “Strategy for Attracting Businesses for Activities or/and Expansion of their Activities in Cyprus”.
The existing investment policy has been thoroughly reviewed, expanded and simplified to include a number of actions and amendments in various areas of intervention, trying to enhance Cyprus’ position as an international high-growth business centre.
As of 1 January 2022, the “Business Facilitation Unit (BFU)” has been created, to act as the single point of contact for foreign interest companies, in an attempt to quickly and efficiently process the requests received from foreign companies for the establishment of a company in Cyprus.
C. Criteria
Eligible companies are required to meet the following criteria:
In both cases above (1&2), the ultimate beneficial owner (UBO) requires to deposit the amount of EUR 200,000 in a company’s bank account in a credit institution licensed by the Central Bank of Cyprus.
Alternatively, the company may provide evidence of an investment equal to EUR 200,000, for the purposes of operating its business in Cyprus (i.e. office space, office equipment, etc.).
D. Advantages of a Cyprus Foreign Interest Company
E. Staff Categories
Companies that meet the aforesaid conditions, are entitled to employ third country nationals in four categories, provided that they first obtain temporary residence and employment permits.
The first category is Directors. The minimum acceptable gross monthly salary for Directors is EUR 4,000 and the maximum number of third country nationals that may be employed under this category is 5.
In this category the following third-country nationals are included:
The second category is the middle management executives and other key personnel (staff). The minimum acceptable gross monthly salary for this category is EUR 2,000 and the maximum number of third country nationals that may be employed under this category is 10.
In this category the following third country nationals are included:
The third category is Specialists. The minimum acceptable gross monthly earnings for Specialists are EUR 2,000 and the maximum number of third-country nationals that may be employed in this category depends on the company’s turnover.
The fourth category is the Support Staff. Companies are expected to fill the positions in this category with Cypriot or European citizens. In the case where there are no qualified Cypriot or European citizens available, a company may employ third country nationals for the posts in this category at a rate of 30% of the total staff. A company may employ third country nationals for the posts in this category, by first securing the positive recommendation of the Department of Labor.
F. Conclusion
In brief, a non-EU national has the ability to obtain a work permit in Cyprus through registering a Company of Foreign Interests. For the employment of a non-EU national in the Republic, a temporary residence and work permit is necessary.
The examination period for all actions (registration of the Company as a Foreign Interest, issuance of an entry visa and issuance of a work permit) takes approximately 7-8 months.
It is worth noting that holders of a work permit cannot be away from Cyprus for a period exceeding 3 months per year. Otherwise, the work permit is automatically cancelled.
Among the most successful ways to combat tax evasion and safeguard the integrity of tax systems has long been thought to be the exchange of information. The multilateral Convention on Mutual Administrative Assistance, Bilateral tax treaties, as well as, more lately, the Global Forum on Transparency and Exchange of Information have all previously made it easier to exchange information.
With the adoption of the European Directive in Administrative Cooperation in the Field of Taxation (DAC) in 2011, the exchange of information became formalised at a European level. With the recasting of the Directive and the introduction of DAC2, which incorporates the guidelines of the OECD's Common Reporting Standard and establishes a system of automated sharing of financial account information, the Directive's scope of application was dramatically broadened in 2014. The EU established reporting requirements on intermediaries in order to reveal reportable cross-border agreements in 2018 under DAC62, which might possibly include components of aggressive tax planning and trigger certain hallmarks.
Various kinds of digital assets and extra revenue streams have emerged in recent years as a result of the growth of the digital economy and new e-commerce-related services. It became apparent that the structure for information exchange needed to be modified to take into account current trends and advances.
Digital platform-driven growth in the sharing and gig economies has given rise to new economic actors who conduct their operations outside of the norm. Digital platform operators with connections in the EU are required to recognize specific sellers and report information about sellers, as well as related actions under the DAC7 Directive. The rental of immovable property, both commercial as well as residential property, the sale of goods and personal services, and the rental of any means of transportation, when performed for payment, are among the activities involved. Platforms are required to provide information about "reportable sellers," for example, individuals, businesses, or other legal arrangements, who engage in a relevant activity and that either live in the EU or rent out real estate in a EU Member State. The first reporting is anticipated by January 31, 2024, while the Directive's provisions should go into effect on January 1, 2023.
The EU has established regulations to create a Central Electronic System of Payments (CESOP), demanding payment service providers (PSPs - as defined under the Payment Services Directive 2) to comply with the guidelines in order to combat another type of tax evasion in this case VAT fraud. CESOP may be viewed as another DAC-like proposal, despite being an amendment to the VAT Directive. PSPs must submit payment data, on a quarterly basis, to their local tax authorities. These authorities will exchange this information with other EU nations in a central database known as CESOP (Central Electronic System of Payment information). On January 1, 2024, CESOP will go into effect
Despite the latest "crypto crash," there have been concerns about taxpayers not comprehending the tax duties related to investing in crypto assets and e-money, given the significant increase in investment in these areas in recent years. Evidently, this increased the likelihood that taxes would go unpaid in intentional or even unintentional ways. The DAC8 Directive, which is likely to implement new laws requiring all financial institutions, including e-money institutions, crypto exchanges, and other platforms, to disclose transactions on a yearly basis, is the EU's response and another connection in the DAC chain. The proposed regulations have an undeniably massive scope, particularly in terms of the kinds of digital assets that are included in the proposed framework. The OECD released their final report for a new Crypto Assets Reporting Framework at the exact time, in October 2022. This report reveals new and modified reporting standards encompassing the reporting of e-money and crypto-assets. Additionally, more extensive changes to the current Common Reporting Standard (CRS) are also suggested. From 2024 forward, OECD is anticipated to press for adoption on a worldwide scale.
Although the details of each of the foregoing frameworks will vary, a similar method of operation is expected. The automatic sharing of information amongst tax authorities will enable them to identify under-declared as well as non-declared income. From a procedural perspective, impacted organizations will be required to modify their current procedures or perhaps even implement new ones for the purpose of collecting, validating documentation, identifying, classifying, and monitoring their client base, as well as reporting particular information to the appropriate tax authorities by means of a data control process.
Cyprus is regarded as a top option for shipping and international trade. Moreover, Cyprus has signed several bilateral agreements that grant Cyprus ships special privileges or national treatment in other nations' ports.
With a registered gross tonnage surpassing 21 million, the registry is now listed as the merchant fleet worldwide and the third largest fleet within the EU. In order to provide a high level of support to its flag users and uphold its status as a "Flag of Progress and Quality," the Cyprus Registry is constantly improving its services. One of the biggest and most well-known maritime hubs in the world, Cyprus is home to both ship management firms and ship owners. By retaining affordable registration fees and a beneficial tax system, its premier maritime structure is getting stronger. The only "Open Registry" regime recognised by the EU and with a favourable Tonnage Tax System that includes the 3 major "maritime transport" activities of ship ownership, ship management, and chartering is found in Cyprus.
Additionally, Cyprus has signed a number of international marine conventions, and to this day has struck double tax agreements with various nations. One of Cyprus's finest and most important economic sectors is its strong shipping infrustructure.
The requirements of ship owners, ship operators, as well as other professionals working in the maritime and related sectors, have always been catered to by our team of professionals at C. Savva and Associates.
At C. Savva and Associates, we possess the expertise in corporate matters, trusts, shipping, property, and international tax planning and we are an award-winning and top-rated global service provider. Through our preferred partners we offer additional services in the areas of law, accounting, and auditing. Our team of expert professionals comprises of accountants, tax advisors and legal consultants with multidisciplinary experience in local and international affairs. We are dedicated to providing useful solutions to our clients, including high-net-worth individuals, business owners and professionals, banking institutions, and large corporations.
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