Cyprus Temporary Residence and Work Permit for Foreign Employees of Foreign-Owned Cyprus Companies. Service offer

On 2 January 2022, Cyprus introduced the Strategy for attracting foreign businesses. The rules for issuing temporary residence and work permits to foreign employees of Cyprus companies have been revised to even further simplify the procedures for relocating foreign businesses to Cyprus.

To implement the Strategy, the country created the Business Facilitation Unit (BFU), which evolved from the Fast Track Business Activation Mechanism and since January 2022 has become a one-stop shop for both existing and newly established Cyprus companies that look to hire foreign personnel.

Which companies are eligible to hire highly skilled foreign employees under a simplified procedure:

• companies with majority of their shares held by third-country nationals; or
• if the shareholding of third-country nationals in the company’s capital is less than 50%, the nominal value of this shareholding must be at least EUR 200,000

From 12 December 2022, there is a requirement to invest EUR 200,000 in the company:

• the ultimate beneficial owner must transfer EUR 200,000 to the company’s account at a Cyprus bank (a bank, not a payment system);

or

• EUR 200,000 can be invested in the company’s business in Cyprus, for example, by buying office space in Cyprus, office equipment, etc.

• Minimum gross salary of at least EUR 2,500 per month;
• Diploma of higher education or equivalent qualification or confirmation of the relevant professional experience in relevant positions for at least 2 years;
• Employment agreement for a period of at least 2 years.

There is currently no limit on the number of foreign employees hired by the company, but within 5 years from the date of joining the programme (applying to the Business Facilitation Unit) the company is obliged to hire at least 30% of Cypriot or EU employees. After the 5 years, in the case of non-compliance with the required ratio of foreign employees and employees from EU countries in the company’s staff, the matter will be examined on a case-by-case basis.

For existing companies with foreign investment that employ foreign personnel, the five-year period for fulfilling the above requirement will expire on 2 January 2027.

Companies are permitted to employ foreign nationals as support staff with a gross salary of less than EUR 2,500 per month, given that the share of foreigners among the support staff does not exceed 30% and the employment agreements with such foreign employees are duly certified by the competent authority in accordance with applicable law (i.e. under the normal employment procedure). The salary rate is determined by the current legislation.

A highly skilled foreign employee with a salary of at least EUR 2,500 per month is eligible to obtain temporary residence permits for his/her family members – the spouse and minor children.

The spouse gets the right of free access to the Cyprus labour market, i.e. may be employed without additional permits from the Department of Labour.

A visa application for the spouse and children can only be submitted after the main applicant (employee of a Cyprus company) has been granted approval.

1. Making documents before the entry

Obtaining a clean criminal record certificate in Russia (no apostille required) – 1 month.

Entering Cyprus is possible on a Schengen visa (including “unopened” visa), a tourist multi-visa issued by Romania, Croatia or Bulgaria, and on an Entry Permit for the purpose of issuing a work visa.

Coordinating the opening of a Cyprus bank account usually takes about 5 business days. Drafting an employment agreement, searching remotely for premises to rent – 1-2 weeks, depending on the wishes of the client.

2. Incorporating a company for hiring foreign employees – 5 business days after filing. It is done in parallel with stage 1.

3. Entering Cyprus and submitting the documents

After entering Cyprus, the remaining documents are processed within a week (subject to proper preparation before entry). From the moment of documents submission, the employee can legally stay in the Republic of Cyprus and go abroad once with a return to Cyprus.

4. Application approval

Approval of the application and issuance of a plastic card of a foreign employee – 1 month from the date of submission of documents.

Overall, the process usually takes 1.5 months.

1. The incorporation of new companies with foreign investment that intend to hire foreign employees can be arranged through the BFU under an accelerated procedure in 7 days.

The BFU must be provided with a letter of intent to establish and/or expand a business in Cyprus. The letter should contain a brief description of the company, activities, number of employees, plans to expand the business, etc.

The company must also provide the following documents:

• Certificate of incorporation;
• Certificate of registered office;
• Certificate of directors and secretaries;
• Certificate of shareholders confirming that the foreign ownership exceeds 50%.

In the case of a complex structure, where the shareholders of a Cyprus company are Cyprus or foreign legal entities, trusts, etc., it is necessary to provide documents disclosing the entire ownership structure down to the ultimate beneficial owners – individuals.

• Affidavit of the ownership structure made by the director of the company;
• Copies of passports of ultimate beneficial owners;
• Memorandum and Articles of Association;
• Office lease agreement or deed of title for the office space;
• Audited financial statements (not applicable to new companies);
• Tax clearance certificate (not applicable to new companies);
• Proof of EUR 200,000 investment.

Based on the above documents, the company’s compliance with the requirements of the programme will be assessed.

2. An application for temporary residence and work permit for a foreign employee is submitted to the Migration Department together with a package of supporting documents. The procedure (the order in which the documents are submitted) may differ depending on where the applicant is located – in Cyprus or abroad, i.e. whether the applicant needs to additionally obtain permission to enter the Republic of Cyprus.

List of documents:

• application form;
• passport valid for at least 2 years from the date of application;
• applicant’s CV;
• diplomas and other documents confirming education and/or at least 2 years of experience in the relevant specialty;
• employment agreement for a period of at least 2 years;
• employer’s undertaking to cover the costs of the repatriation of a foreign employee;
• medical certificate from a Cypriot doctor with the applicant’s negative blood test for HIV, syphilis, hepatitis B and C, as well as a certificate of the applicant’s passing a chest X-ray and having no tuberculosis;
• clean criminal record certificate from the applicant’s country of origin; if the applicant permanently resides in another country, then the certificate from the country of residence is provided;
• proof of residential address in Cyprus: lease agreement or deed of title for a residential property;
• health insurance policy;
• confirmation of employer’s liability insurance;
• confirmation of payment of levy to the Registrar of Companies;
• confirmation of IBAN at a Cyprus bank and completion of FIMAS Form.

Upon submission of all documents, the applicant receives an Alien Registration Certificate (ARC), that constitutes the legal ground for the future employee to stay in Cyprus until the work permit is granted.

When submitting documents to the Migration Department, one must pay the government fee for the issuance of a temporary residence and work permit, as well as for registration (ARC).

The government fee for the permit and the issuance of a residence permit with a right to work will be EUR 140 or 150, depending on the making of an Entry Permit.

Individuals who are tax resident in Cyprus are subject to tax on their income accrued or derived from sources both within and outside Cyprus.

An individual is required to register with the Tax Department and submit an annual income tax return electronically by 31 July of the following year.

According to Cyprus tax law, there are certain requirements for employers.

• If the employee’s annual taxable income exceeds EUR 19,500, the employer withholds tax from employment income under the PAYE system (tax is deducted from pay checks); the tax is payable to the tax authorities by the end of the next month.
• Must annually provide signed Forms T.D.63A regarding the employee’s employment income for submitting the personal tax return.
• By 31 July of the following year, employers electronically submit Form IR7, which summarizes the employees and payroll for the year.

A company that has an office and employees in Cyprus must pay social insurance contributions for its employees working in Cyprus. The employee’s country of nationality is irrelevant – EU citizens and third-country nationals are equal in this respect.

Both the company and the employee must be registered with Social Insurance Fund in the first month after hiring the employee, with contribution to be paid by the end of the next month. In the case of late payment, there is an automatic penalty on the outstanding debt which represents a percentage of such outstanding amount and increases depending on how long the delay continues. In the first month of the delay, the penalty is 3% which increases by 3% every month until reaches the maximum of 15%.

Our company can also provide further support in the matters relating to the employee’s stay in Cyprus, such as:

• registration with Social Insurance;
• registration of an individual taxpayer;
• calculation and completion of Social Insurance forms;
• calculation and completion of an individual tax return;
• renewal of temporary residence and work permit in Cyprus.

*The fees are valid as at the date of sending of this offer. The invoices will include 19% VAT on the services rendered.