Cyprus Foreign Interest Company

In the dynamic landscape of global business, Cyprus has emerged as a strategic hub for companies seeking to optimize their operations and expand their reach into European and international markets. A pivotal aspect of this allure is the designation of “Companies of Foreign Interests” by the Cypriot authorities. This classification offers a myriad of benefits, primarily aimed at facilitating the seamless integration and operation of foreign entities within the local economy.

The cornerstone of these benefits is the ability to employ highly skilled professionals from non-EU countries through a streamlined process. By registering with the Business Facilitation Unit (BFU), companies of foreign interests are granted a significant advantage: direct access to the Civil Registry and Migration Department (CRMD) for the issuance of work permits, typically within one month. This fast-track procedure circumvents the traditionally lengthy and complex processes overseen by the Department of Labor, which are typically required for the approval of employment for third-country nationals.

A. Definition and General Information

The official definition of a ‘foreign interest company’ is as follows:

‘A company, subject to meeting certain criteria, may employ non-EU national employees in Cyprus. This company allows employees and their families to obtain residence and work permits under beneficial terms.’

This initiative aims at attracting foreign investment and workforce to the country.

The Council of Ministers approved the operations of such companies on 15 October 2021, intending to enhance Cyprus’ position as an international high-growth business centre.

On 1 January 2022, the BFU was created to act as the single point of contact for foreign interest companies to quickly and efficiently process the requests received from foreign companies to establish companies in Cyprus.

On 30 November 2022, the Council of Ministers approved the Amendment of the Policy for the Registration of Companies in the Register of Foreign Interest Companies.

This Decision modified the eligibility criteria of foreign interest companies, specifically including the criterion of a company’s obligation to prove an initial investment of at least EUR 200,000 in the Republic by presenting appropriate certificates.

The Decision entered into force on 12 December 2022.

B. Criteria for Companies

Eligible companies must meet the following criteria:

1. Third-country shareholders (i.e. non-EU nationals) must own most of the company’s shares.
2. If third-country nationals do not own the majority of the company’s shares (i.e. equal to or less than 50 per cent), 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 mentioned above (1 and 2), the ultimate beneficial owner (UBO) must deposit EUR 200,000 in the company’s bank account, which must be the Central Bank of Cyprus.

Alternatively, the company may provide evidence of an investment of EUR 200,000 to operate its business in Cyprus (i.e. in terms of office space, equipment, etc.).

If third-country nationals do not own the majority of the company’s shares, then the following criteria must be met with respect to the status of the proposed company:

• Public companies registered on any recognised stock exchange.
• Companies with international activities (formerly off-shore), which were operational before the change of regime, whose data are held by the Central Bank.
• Cypriot shipping companies.
• Cypriot high-tech or innovation companies. As per this criterion, a company qualifies if:
  (a) It is already established and has a presence in the market.
  (b) It has a high level of experimental research and development (R&D) intensity.
  (c) It has developed product/s that fall into one of the following categories: products related to the aviation and space industry, computers, information and telecommunication technology (ICT), pharmaceuticals, biomedical products, R&D equipment, electrical machinery, chemicals and non-electrical machinery.

• Cypriot pharmaceutical companies or Cypriot companies active in biogenetics and biotechnology fields.

• Companies where the majority of the total share capital is owned by persons who have acquired Cypriot citizenship by naturalisation based on economic criteria, provided that they prove that the conditions under which they were naturalised are being met.

The following documents should be submitted for the company when applying for the foreign interest status:

C.  Criteria for Eligible Employees

The following criteria must be met to hire third-country nationals:

• Must receive a minimum gross monthly salary of EUR 2,500. Third-country nationals who already hold a residence and employment permits at the BCS Key Personnel level of foreign interest companies, with a monthly gross salary of EUR 2,000 or more, will continue to renew their residence permit for the next five years, that is, until 31 December 2026, with the same employer without increasing their payroll.
• Possession of relevant academic qualifications or at least two years of relevant experience to fill the positions.
• Possession of an employment contract of at least two years. The contract must indicate a duration and corresponding two-year stamp duties, even if the application is submitted for a one-year permit.
  
  

D. Advantages of a Cyprus Foreign Interest Company

The following are the 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 families to join them and reside in Cyprus.
• Companies with tax registration in Cyprus may benefit from one of Europe’s lowest corporation tax rates at 12.5 per cent and take advantage of the double taxation treaties in force. In addition, several exceptions are associated with the Cyprus tax regime, such as the exemption of dividend income from corporation tax and dividend distributions to shareholders are not subject to tax withholding. Withholding taxes may apply if the payments are made to companies in jurisdictions included on the EU list of non-cooperative jurisdictions on tax matters. Further details may be provided upon request.
• The favourable tax regime for individuals who are employees of a foreign interest company. Further details may be provided upon request.

In brief, a non-EU national can obtain a work permit in Cyprus by registering a foreign interest company. A temporary residence and work permit are necessary to employ a non-EU national in the Republic.

The examination period for all actions (company registration as a foreign interest, issuance of an entry visa and a work permit, etc.) takes approximately two to four months.

It is worth noting that work permit holders cannot be away from Cyprus for a period exceeding three consecutive months; otherwise, the work permit is automatically cancelled.

HOW WE CAN ASSIST

In navigating the intricacies of establishing and operating a Company of Foreign Interests in Cyprus, the value of expert guidance cannot be overstated. Our team, comprising seasoned immigration attorneys, stands ready to facilitate every step of your journey. From the meticulous preparation of your application to the strategic optimization of your tax obligations, we are committed to providing bespoke solutions that align with your unique business landscape.

For comprehensive support and to explore how we can contribute to the flourishing of your business in Cyprus, we invite you to reach out to Savva & Associates. Connect with us at +357 22 516 671 or via email at [email protected] or [email protected]. Discover how our expertise can be the cornerstone of your success in the vibrant economic landscape of Cyprus.