In an attempt to encourage business people to set up their headquarters in Cyprus the government authorities at present are promoting a policy with certain legal requirements that are applicable to non-EU shareholders, allowing them to establish their businesses in Cyprus, while at the same time obtaining their residency and work permits. Family members are also permitted to join the programme through the family reunification scheme.
Residence and work permits can be granted to non-EU staff in companies with foreign interest. Such companies are Cypriot companies that are incorporated within the Republic of Cyprus in which the majority of the shares are held by non-EU nationals. Companies with foreign interest may be up to 100% owned by non-EU nationals. The operation of a company from Cyprus provides many advantages as it is considered very safe, it is a member of the EU and provides a simple tax system with business-friendly tax rates. The fact that it enjoys political stability and security, including a very well-developed service sector makes Cyprus a very attractive destination. Nevertheless, what do we mean by the term ‘companies with foreign interest’? Let us be more pragmatic by using the below example:
Example: A Cypriot company which is owned only by non-EU shareholders and has a paid-up capital of €200.000 qualifies as a ‘company with foreign interest’. The paid-up capital of €200.000 can either be a payment made into a bank account or an investment in a company asset such as immovable assets and/or rents and/or the payment of any equipment for the needs of the company. Nevertheless, it is remarkable that the €200.000 in investment capital does not have to be invested immediately but can be paid as lump sum amount in the company’s bank account. The shareholders and the directors of the company can decide at a later stage as to how this capital will be invested.
What category of Cypriot residency and work permits can be obtained for non-EU national shareholders on the payment of the €200.000 capital?
Directors who are considered as upper company management staff are entitled to receive residency and work permits however, there is a maximum of 5 non-EU nationals that can be granted these permits. In addition, there is also a maximum of 10 non-EU nationals that can be employed as executive directors, non-executive directors, other managerial staff, clerical and technical personnel and can be granted a residency and work permit under this category. The remaining staff that do not fall under the above categories are expected to be Cypriots or EU nationals however, exceptions may apply if there are not any Cypriot or EU nationals available in the labour market to be employed in a particular position which is also subject to the Labour Office approving the employment of the non-EU national. In these types of cases, residence and work permits will be granted to non-EU nationals for ‘companies with foreign interest’.
There are conditions that apply for the granting of a residence and work permit for non-EU nationals as staff of the Cypriot company with foreign interest, such as the monthly gross salary which applies to upper management staff concerning their minimum monthly salary. There are also certain other conditions imposed by the Migration Department when the company employs individuals from third countries. Additionally, family members of upper and middle management staff are eligible to apply for their family members (spouse and minor children) to relocate to Cyprus, with what we call the family reunification procedure.
In conclusion, companies with foreign interest which meet the required criteria and especially that of capital investment can enjoy the benefits of obtaining a residence and work permit for their employees within the Republic of Cyprus while at the same time enjoying the benefits of the friendly and simple tax system of Cyprus.
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 a specific matter before acting on any information provided. For further information, please contact Mr Savvas Savvides at firstname.lastname@example.org or contact number 26930800.
Lawyer, Partner and Director of the Paphos Office of the Law Firm, Michael Kyprianou & Co LLC