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:
The maximum permitted number of foreign employees hired by the company is set at 70% for a period of 5 years from the date of joining the programme (applying to the Business Facilitation Unit). 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 31 December 2026.
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.
The above rule also applies to the spouses of foreign employees who obtained a temporary residence and work permit before the start of the new programme and have a salary of at least EUR 2,000 per month.
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:
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.
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:
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).
For a 2-year permit, the government fee for the permit and registration is EUR 330. If the applicant is also issued with an entry permit to the Republic of Cyprus, then the total government fees are EUR 400.
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.
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:
Services
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Fees (EUR, without VAT)
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Handling the application for a temporary residence and work permit for one foreign employee.
The fee includes the full support of the application: advising on all matters related to the application for permit, preparing application forms and a package of supporting documents, draft employment agreement, obtaining of insurance, accompanying of the applicant for medical tests, stamping of agreements, translations of diplomas and other documents, a power of attorney for filing the application and obtaining the permit. The applicant pays additional out of pocket expenses: - government fee for issuing a permit (from EUR 330 to 400); - stamp duty on the employment agreement and lease agreement (the duty depends on the agreement’s value and term); - insurance premium for health insurance policy (up to EUR 200) and employer’s liability insurance (EUR 120); - expenses associated with a medical examination and medical certificate |
2800
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Handling the application for a temporary residence and work permit for a second and further foreign employees.
The fee includes the full support of the application: advising on all matters related to the application for permit, preparing application forms and a package of supporting documents, draft employment agreement, obtaining of insurance, accompanying of the applicant for medical tests, stamping of agreements, translations of diplomas and other documents, a power of attorney for filing the application and obtaining the permit. The applicant pays additional out of pocket expenses: - government fee for issuing a permit (from EUR 330 to 400); - stamp duty on the employment agreement and lease agreement (the duty depends on the agreement’s value and term); - insurance premium for health insurance policy (up to EUR 200) and employer’s liability insurance (EUR 120); - expenses associated with a medical examination and medical certificate |
2200
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Finding residential property
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1 monthly rent
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Finding office space
The fee includes the search for premises meeting the client’s criteria – up to 5 properties that correspond to all criteria, with a description and provision of photos and additional information, trip for examination, signing an office lease agreement, picking up the keys. Payable additionally (if necessary): 1. Power of attorney for signing the agreement and making other documents; 2. Due diligence check of the owner; 3. Equipping the office and other works to prepare it for opening (installing a telephone, connecting the internet, doing electrics, buying furniture, etc.). The above works are to be agreed individually |
900
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Opening the employee’s personal account at a Cyprus bank
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1335
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Payroll services provided by accountants/auditors:
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Mandatory ones:
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Calculation of salary, taxes and social insurance contributions for the current year
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200
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Registration with the Department of Social Insurance, including for e-filing of forms (company + employee)
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650
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Monthly filing of electronic forms and payment of tax and social contributions
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100
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Registration of an employee with Tax Department
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200
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Completion and signing of Form T.D.63A for the employee’s employment income (annually)
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200
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Filing of tax form IR7 (annually)
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300 (in the case of one employee)
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Filing of tax form IR1 (annual personal tax return)
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350 (the fee depends on the number of sources of income, it is charged at the rate of EUR 250 per hour)
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Optional ones:
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Obtaining a tax residence certificate
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350
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Obtaining a non-domiciled status
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250
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*The fees are valid as at the date of sending of this offer. The invoices will include 19% VAT on the services rendered.