A. Introduction
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:
- Third country shareholders are required to own the majority of the company’s shares.
- In case third-country nationals do not own the majority of the company’s shares (i.e. equal to or less than 50%) then the company may be registered as a foreign interest company, if the foreign participation represents an amount of at least EUR 200.000.
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.).
- The Company should operate in independent offices in Cyprus.
D. Advantages of a Cyprus Foreign Interest Company
- Foreign interest companies may employ third country national employees.
- Third country national employees may obtain a residence and a work permit.
- Employees may exercise their right for their family to join them and to also reside in Cyprus.
- Companies tax registered in Cyprus may benefit from one of the lowest corporation tax rates in Europe at 12.5% and also take advantage from the double taxation treaties that are in force. In addition, there are a number of exceptions associated with the Cyprus Tax regime, such as the exemption of dividend income from corporation tax as well as dividend distributions to shareholders are not subject to withholding tax. Further details may be provided upon request.
- Favourable tax regime for individuals, being employees of a Foreign Interest Company. Further details may be provided upon request.
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:
- Directors or Partners registered in the Registrar of Companies and Official Receiver;
- General Managers of branches and of mother companies of alien companies;
- Departmental Managers;
- Project Managers.
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:
- Upper / middle management personnel;
- Other administrative, secretarial or technical staff.
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.
