Cyprus: A Headquartering Hub for Tech Companies
June 10, 2022
Over the past two decades, Cyprus has developed as a headquartering hub, with global organizations choosing the country as the home for their major operations. Companies from the USA, Russia, Ukraine, and Israel have already relocated their headquarters in Cyprus, taking advantage of the island’s cutting-edge regulatory regime, tax benefits, and highly skilled workforce.
Cyprus has been attracting the increasing attention of major Information Technology Communication companies (ICT), with software development, infrastructure, and telecommunications gaining both traction and popularity on the island.
Why choose Cyprus as a headquartering base?
An increasing number of foreign investors are choosing to set up their businesses in Cyprus, and it’s not without reason. From tax benefits to the lifestyle and language, Cyprus is considered a key jurisdiction in establishing EU headquarters.
Strategically located at the crossroads of Europe, the Middle East, and Africa, Cyprus has historically served as a stepping stone to other markets. As an EU member state since 2004, the island offers access to European markets and EU trade agreements.
Highly skilled workforce
The post-pandemic economy highlights the need to deliver a more resilient workforce. Amid hiring volatility, talent shortages, and the need to reduce recruitment costs, successful talent acquisition planning is more important than ever. In response, Cyprus offers high availability of educated and multilingual professionals suited to various business sectors, from finance to technology.
Advantageous tax regime
Cyprus offers a modern and efficient tax system with a solid double tax treaty network with more than 65 countries, including Ukraine and Georgia. Dividends, profits from trading, and royalty payments abroad are exempt from withholding tax, while the corporate tax rate in Cyprus is as low as 12.5%.
English is widely spoken in Cyprus, which means most of the population is fluent in English. At the same time, all legislation and governmental information are available in both languages Greek and English.
With over 300 days of sunshine and more than 60 blue flag beaches, Cyprus is the sunniest country in Europe. The Mediterranean lifestyle, the warm climate, and the welcoming people living on the island become an exceptional experience.
Read more about the top reasons for investing in Cyprus and what you need to consider before setting up your business in Cyprus.
What is the regulatory framework for Cyprus headquartering?
In the previous article, our team highlighted the updates of the Cyprus scheme for the ‘Fast-track Business Activation Mechanism’ to facilitate the establishment and re-domiciliation of businesses from third (non-EU) countries to Cyprus. In summary, below we examine the new measures to rump up.
Cyprus offers an international hub for companies to grow and expand around a robust and transparent regulatory framework. To attract foreign businesses to establish their activities in Cyprus, the government is continually introducing a number of initiatives, especially in the tech sector.
In October 2021, the Ministry of Finance in Cyprus announced the below new measures to ramp up interest for headquartering on the island:
The Business Facilitation Unit
As of 1/1/2022, the current “Fast Track Business Activation Mechanism” transforms into the “Business Facilitation Unit (BFU)”. The BFU serves as a single point of contact for foreign entities looking to expand their operations in Cyprus. The new unit allows for fast and effective registration processes, including company name approval and entry in the Tax Register for VAT and Direct Taxation.
Who is eligible?
- Public companies registered on the stock exchange.
- Companies of international activities (formerly off-shore) operated before the regime change, whose data are held by the Central Bank.
- Cypriot shipping companies.
- Cypriot high-tech/innovation companies.
- Cypriot pharmaceutical companies or companies active in the fields of biogenetics and biotechnology.
- Companies of whom most of the total share capital is owned by persons who acquired Cypriot citizenship by naturalization. To be eligible, persons need to prove that the conditions under which they were naturalized continue to be met.
Launch of a new policy for employing third-country nationals
The revised policy for the issuance of temporary residence and work permits to third-country nationals allows eligible companies to employ third-country highly-skilled workforce if the following criteria are met:
- They are paid a minimum gross monthly salary of at least € 2.500
- They hold a university degree or equivalent qualification or have a minimum of 2 years of relevant experience.
- They have an employment contract of a minimum of 2 years duration.
- Only 70% of the total number of employees may be employed under this policy in five years from the date of joining the Business Facilitation Unit.
The permits are issued immediately within 1 month and last up to 3 years. Additionally, spouses of eligible individuals will have direct and free access to employment as paid employees.
Companies can also employ third-country nationals as support staff, with a gross monthly salary of less than €2500. Third-country nationals shouldn’t exceed 30% of the total support staff and an employment contract approved by the relevant authority must be in place.
Family reunification rights
The spouses of highly skilled personnel have immediate and free access to the labour market through the Business Facilitation Unit in Cyprus. However, this option is not available for support staff with a gross monthly salary of less than €2500.
Cyprus digital nomad visa
The Cyprus Digital Nomad Visa allows nationals from non-EU and non-EEA countries who can perform their work remotely using telecommunications technology to reside temporarily in Cyprus.
Who can benefit from the scheme?
The scheme applies to third-country nationals who:
- Can perform work remotely through telecommunications technology.
- Are employed in a company registered abroad, for which they can work remotely, or are self-employed, offering services to clients abroad.
- Show evidence that they have a stable and sufficient monthly net income of at least €3500 (after the deduction of contributions and taxes). The amount is increased by 20% if they have a spouse and another 10% per child.
Residency status covers the right to stay in Cyprus for a period of up to one year, with the prospect of renewing for another two years.
If the beneficiaries reside in Cyprus for more than 183 days within the same tax year, they are considered tax residents of Cyprus, provided they are not tax residents in any other country.
Contact us for further clarifications on Cyprus Visa.
As part of the new action plan, the government is also proposing the amendment of the Civil Registry Legislation regarding the time criteria for naturalization of high-skilled third-country nationals.
The amendment will include the right to apply for naturalization after 5 years of residence and work in Cyprus instead of the current 7-year requirement. In the case of fluency in Greek, the timeframe will be reduced to 4 years.
Why headquartering in Cyprus is now more important than ever?
In our previously published article, CX Financia corporate team explained why Cyprus headquartering and the way forward.
In a post-pandemic era with high turbulence across countries, businesses around the world are faced with uncertainty. But as attractive initiatives from the government are coming into full force, more and more companies across industries are choosing Cyprus as a headquarter base.
Cyprus serves as the next destination for many Ukrainians and Russians as a result of the crisis – offering a safe, protected, and transparent business landscape for international companies. That said, attention is received from tech companies looking to take advantage of Cyprus’ highly skilled workforce, double taxation agreements, and business infrastructure.
Choosing CX Financia as your trusted partner
At CX Financia, we help clients adopt strategies that position them for success.
By applying our extensive experience in the industry, we work shoulder to shoulder with our clients to register a Cyprus company, acquire work permit visas for third-country nationals, provide corporate support services, and advise them on accounting and legal matters.
We’re glad to see governmental initiatives paving the way for an international hub where tech companies can grow and transform along with a faster and more effective framework.
Get in touch with us today if you are considering Cyprus for your EU corporate headquarters.
Based in Cyprus, our professionals have expert experience across Europe and other major global jurisdictions and the resources to help your business relocate smoothly. Consult with our CX Financia corporate team and start turning your new venture into a lasting legacy.