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In October 2021, the Cypriot Minister of Finance, Mr. Konstantinos Petrides, introduced an action plan for attracting foreign companies to operate or enlarge their business in Cyprus (the “Action Plan”), with the aim of making Cyprus a sustainable business hub. The core provisions of the Action Plan are summarily mentioned below:

1. Business Facilitation Unit
The current fast track business activation mechanism will be transformed into a business
facilitation unit. This unit will be operating as the main contact for all corporate entities
of international interest, being the corporate entities which are functioning within Cyprus
or desiring to operate in the island, as well as the Cyprus corporate entities which
operate in particular areas of economic activity such as shipping companies, high[1]tech/innovation companies, pharmaceutical companies and companies operating in the
fields of biogenetics and biotechnology (the “Companies of International Interest”).
This unit will be responsible for the provision of the below mentioned services:
a) facilitating the formation of corporate entities, namely providing the services for the
name approval and company registration, registration with the Social Insurance
Registry, the Employers’ Registry, VAT and Income Tax;
b) guiding the formation and operation of corporate entities in Cyprus; and
c) assisting with the issuance of residence and employment permits in Cyprus.

2. Revised employment policy for the third country nationals
The revised policy for the issuance of temporary residence and work permits to third
country nationals allows the Companies of International Interest to employee third
country nationals provided that the below mentioned requirements are followed:
a) the foreign companies operating in Cyprus or desiring to establish presence in Cyprus
shall have a physical presence in Cyprus in suitable premises, being separated by any
private house;
b) a minimum gross monthly salary of €2.500 will be offered to employees who have
adequate academic skills or at least two years of relevant experience;
c) third country nationals can be employed by the Companies of International Interest as
support staff, with gross monthly salary below €2.500, only if the employment of third[1]country nationals does not exceed 30% of all support staff;
d) the period of the residence and work permit can be up to three years and will be issued
in one month from the date of application; and
e) the maximum number of third country nationals shall be 70% of the total number of
employees in a 5-year period (starting from the date the company was included in the
business facilitation unit).

3. Right to employment for spouses of third country nationals
Immediate and free access to employment will be provided to the spouses of third
country nationals who have been given a residence and work permit in Cyprus and who
receive a minimum gross monthly salary of €2,500, thus, this provision is not applicable
for the spouses of support staff.

4. Simplifying the process of granting work permits
The regulations of the Aliens and Migration Law of Cyprus, those that are relevant to the
granting of work permits will be amended by the Ministry of Interior of Cyprus in order to
simplify the process and determine the criteria based on which work permits will be
granted.

5. Digital Nomad Visa (with a maximum initial limit of 100 applications)
The digital nomad visa is a new type of residence permit that will be introduced for
people who wish to live in Cyprus but work in corporate entities operating abroad.
Beneficiaries:
Third country nationals who are self-employed or freelancers or employees who work
remotely using information and communication technologies and platforms and having
employers/clients outside Cyprus.
The residence status of the above-mentioned beneficiaries will be as follows:
a) they will have the right to stay in Cyprus for up to one year, with the right to renew
their permit for another two years period;
b) they will be considered as Cyprus tax residents if they live in Cyprus for any periods that
in total exceed 183 days within the same tax year;
c) they can be accompanied by their family members, to whom, upon request, a
residence permit is granted (expiring at the same time as the beneficiary’s); and
d) the spouse/partner (being a person with which the beneficiary has entered into a civil
union) and/or the minor members of the beneficiary’s family in Cyprus are not allowed
to provide dependent work or to engage in any kind of economic activity during their
staying in Cyprus.

The digital nomad visa will be granted if the third country national provides the
relevant authorities with the following (among others) required
documents/evidences:
a) A minimum threshold of funds (supported by salary, bank statements, etc.) up to
€3,500 per month, increased by 20% if the beneficiary has a spouse and by 15% if
the beneficiary has a minor;
b) Employment contract;
c) Medical insurance; and
d) Clean criminal record certificate from the country of residence.

6. Tax Incentives
a) An extension to the applicable period of the existing personal income tax exemption
of 50% will be implemented to cover new Cyprus tax residents-employees with
annual salaried income starting from €55,000. The existing beneficiaries of the
scheme will be able to extend their tax exemption from 10 to 17 years whereas the
potential beneficiaries, being individuals with annual income between €55,000 -
€100,000, will be able to benefited from the exemption for a period of 17 years.
b) It is under consideration the possibility to expand the tax exemption of 50% for
investment in certified innovative companies to corporate investors.
c) An increased tax deduction (i.e. by 20%) will be applied on the expenses related to
Research & Development (“R&D”). Particular expenses of R&D will be deducted
from taxable income in an amount equal to 120% of the actual income.

7. Application for Cypriot Citizenship
Third country nationals are given the right to submit an application for citizenship
after 5 years of residence and work in Cyprus (instead of 7 years that were required
before existence of the Action Plan), or after 4 years if they obtain a recognized
certificate of very good knowledge of the Greek language.

8. Social Insurance
The transfer of social security contributions will be ensured through Bilateral
Agreements (currently under determination by the Ministry of Foreign Affairs) with
third countries so that when a third country national has paid social security
contributions in Cyprus and he/she returns for permanent residence in his/her
country, to be entitled to transfer the contributions paid, provided that he/she did not
acquire any right to a pension of old age, incapacity, etc with such contributions.

9. Promotional Actions
The competent officials of the Action Plan aim to proceed with the following
promotional actions:
a) Promotion of the Action Plan abroad;
b) Campaign for attracting qualified Cypriots working abroad; and
c) Targeted campaign to qualified workforce employed in countries with political
instability.
Implementation

The above-mentioned provisions of the Action Plan will be entered into force as from the
1st of January 2022 with the exception of actions 6 (Tax Incentives) and 7 (Application for
Cypriot Citizenship) which require legislative enactment. The target is to submit to the
Cyprus Parliament the relevant legislation for the actions 6 and 7 by the end of December
so as to get approved by the first quarter of 2022.

Areti Charidemou & Associates LLC

IOANNA MESIMERI

Associate Lawyer