On 15 October 2021, the Minister of Finance presented a new integrated strategy for attracting new businesses to Cyprus and encouraging their operations in Cyprus (the “Strategy”) aimed at making Cyprus a Sustainable Business and Commercial Center in the region and across Europe.
One of those actions included the creation of the Business Facilitation Unit (the “BFU“) which was set up to further enhance the ease of setting up and operating a business in Cyprus and which was rolled out on 1 January 2022. The Business Facilitation unit is an evolution of the existing “Fast-Track Business Activation Mechanism” but with additional responsibilities and a more important role.
The BFU will act as the central point of contact for all companies of international interest either operating in or wishing to operate in Cyprus, as well as Cypriot companies in specific areas of economic activity.
What are the services of the BFU?
I. Provision of services relating to the establishment of businesses:
Ability to complete all registrations for the establishment of a business at the One-Stop Shop Section of the Business Facilitation Unit:
- Approval of company name and registration (in collaboration with the Department of Registrar of Companies and Intellectual Property)
- Registration in the Employers’ Register (Social Insurance Services)
- Entry in the Tax Register for Indirect Taxation (VAT) and Direct Taxation (Tax Department)
II. Guidance regarding the necessary permits for the activation and establishment of businesses in Cyprus:
Guidance throughout the business’s life cycle, from the development of a business plan, the guidance on necessary licensing, the placement of the business in the market, the registration of the business entity and / or the trade mark of the business, the recruitment of employees and many other related issues.
III. Registration of companies in the Register of companies of foreign interests
Evaluation by the Unit whether companies wishing to employ nationals from third countries fall under the criteria of companies of foreign interests, as defined below. In case of eligibility, these companies will be registered in the above-mentioned Register, which will be notified to the Civil Registry and Migration Department (CRMD).
Which businesses are eligible?
Eligible businesses must meet one of the following conditions:
- The majority of the company’s shares are owned by third-country nationals. [Note: In the event that the percentage of the foreign participation in the share capital of the Company is equal to or below 50% of the total share capital, the Company is eligible when this percentage of the share capital represents an amount equal to or greater than the amount of €200,000]
- Public companies registered on any recognised stock exchange.
- Companies of international activities (formerly off-shore), which operated before the change of regime, whose data are held by the Central Bank.
- Cypriot shipping companies.
- Cypriot high-tech/innovation companies*
- Cypriot pharmaceutical companies or Cypriot companies active in the fields of biogenetics and biotechnology.
- Companies of whom the majority of the total share capital is owned by persons who have acquired Cypriot citizenship by naturalization based on economic criteria, provided that they prove that the conditions under which they were naturalized continue to be met.
High Technology Company
* An enterprise qualifies as ‘High Technology Company’ if:
- it is already established and has a presence in the market, and
- it has a high level or experimental R&D intensity, and
- it developed product/s that fall into one of the following categories: products related to aviation and space industry, computers, electronic and telecommunication products, pharmaceuticals, biomedical, research and development equipment, electrical machinery, chemicals, non-electrical machinery.
The procedure to be followed under the BFU is described as follows:
a) Businesses wishing to transfer their operations or expand their activities in Cyprus, must:
- Express their interest through email.
- Submit a letter of expression of interest for the establishment or expansion of their activities in Cyprus.
- A brief description of the company, activities (nature of business as stated in the Articles of Association), number of staff, expansion plans, etc.
b) The BFU will inform the investor in writing of the next steps and the documents that would have to be submitted in accordance with the services he/she wishes to utilize.
c) All the necessary registrations for the establishment of the company will be completed within seven (7) working days from the date of submission of all the necessary documents to the Ministry of Energy, Commerce and Industry.
Work Permits of third country nationals
Following the successful registration with the BFU, companies will be able to employ high skilled third country nationals through a fast track progress with the Civil Registry and Migration Department (the “CRMD“) avoiding the existing time consuming process through the Department of Labour.
Employment third country nationals with high skills
The main requirements for the employment of third-country nationals with high skills are:
- a minimum gross monthly salary of € 2500
- hold of a university degree or diploma or equivalent qualification or certificates of relevant experience in a corresponding employment position of 2 years duration.
- present employment contract of not less than two years
The maximum permissible number of third-country nationals that can be employed is set at 70% of all employees over a period of 5 years, from the date of accession to the Fast-Track Business Activation Mechanism. In case 5 years have passed and it is not possible to employ 30% of Cypriot workers, it will be re-examined on a case-by-case basis.
Employment third country nationals as support staff
Additionally, foreign companies can also employ support staff. The main requirements for the employment of support staff are:
- Gross monthly salary of less than € 2,500
- The number of support staff does not exceed 30 % of the total support staff
- The third country national and the employer have duly entered an employment contract ratified by the competent authority in accordance with current legislation
- The amount of their salary is determined by the current legislation.
Right of employment for family members of third country nationals
Direct and free access to the employment market to spouses who have obtained a residence and work permit in the Republic, and who receive a minimum gross monthly salary of €2,500 (not applicable to support staff).
How we can help
Our dedicated team at Sagehill Partners can provide assistance for registering potentially eligible companies with the BFU, in order to employ highly skilled third country nationals from start to finish.
For any assistance or further clarifications, please do not hesitate to contact us.