By Savvas Savvides
Cyprus is undeniably considered as an internationally trusted location for the establishment of businesses due to its attractive and transparent tax regime, excellent regulatory structure, access to markets due to its geographical position and high quality of life. The fact that Cyprus also maintains close business ties with the European Union (since it is a full member of the European Union) is an additional reason why someone should choose Cyprus as a business destination.
Headquartering and company relocation in Cyprus has become more attractive through the introduction of the framework known as the Fast-Track Business Activation mechanism (FTBA), which was recently implemented by the Cyprus Government in an attempt to further attract foreign business and to stimulate economic activity by promoting foreign investment to the island. The aim of the mechanism is to facilitate the establishment and re-domiciliation of business from third (non-EU) countries to Cyprus, as well as to provide fast and efficient services to new and existing entities (with foreign interests) wishing to speedily and efficiently establish a presence in Cyprus.
The FTBA is operated by the Ministry of Energy, Commerce and Industry (MECI) and includes a service package. This policy is straightforward and includes the below services:
- Registration and name approval of the company.
- Registration with the Social Insurance Registry and the Employer’s Registry.
- Registration with the VAT Registry and the Income Tax Department.
What makes this mechanism different in comparison with anything else today, is the fact that the Fast-Track procedure facilitates the registration of the company with the Civil Registry Migration Department, so as to enable the company to hire non-EU staff and grant them a work-permit. Up to 200 employees (or more under certain conditions – from Managing Directors to specialised skills), may be hired under this policy depending on the company’s turnover. It is also notable to mention that there are not any restrictions pertaining to the maximum duration of stay of non-EU staff and holders of residence and employment permits. They also have direct access to family reunification entitlements with their family members (spouse and minor children).
The work permit can be examined within 4–6 weeks from the day of submission of the relevant application and this is the reason for it being named the Fast-Track Business mechanism.
To be eligible, non-EU shareholders should own the majority of the company shares (over 51%). This requirement can be lifted in the event that the company belongs to one of the categories provided under the relevant conditions imposed.
Another eligibility condition is that there must be a foreign investment of at least €200.000 for the purposes of the company’s operation in Cyprus. This €200.000 can be used for any purpose and does not need to be deposited into a bank account or be directly invested. For instance, It may be used for the payment of rent, buying fixtures and fittings for the company or even used for the payment of staff salaries.
It is expected that this new scheme which offers incentives to entice new business and start-up companies to relocate or establish themselves in Cyprus, will also boost the real estate market. The local real estate market is currently affected by various trends and developments that impact its activity positively and negatively, of which the same applies to most European countries and others. The most unpredictable factor remains the Covid-19 pandemic, which has frustrated a number of investments from foreign investors due to the uncertainty of the situation. Despite, the negative effects of the Covid-19, several landmark projects have been supported by high levels of sales and are currently under construction and are expected to be completed within 2021–2022.
Offices will be in high demand from the moment companies relocate or are established in Cyprus through the Fast-Track Business mechanism, while at the same time private housing will be needed for non-EU staff thereby, initiating higher growth for the real estate sector.
Undoubtedly, any new scheme provides an incentive for new companies and individuals to invest in Cyprus and the Cyprus Government’s proposal through the Fast-Track Business mechanism will definitely attract business activities of which the effects I am certain will be seen within a short time. Nevertheless, the efficiency and integrity of the programme needs to be safeguarded which includes the examination of applications within 4–6 weeks from the Cyprus Government.
The content of this article is valid as at the date of its first publication. It is intended to provide a general guide to the subject matter and does not constitute legal advice. We recommend that you seek professional advice on your specific matter before acting on any information provided.
For further information or advice, please contact Mr Savvas Savvides, Partner and Director of the Paphos Office at Michael Kyprianou & Co LLC, at Tel: +357 26 930 800 or via email at Savvas.Savvides@kyprianou.com
