On the 15th of October, 2021, the Council of Ministers approved the introduction of the Digital Nomad Visa Scheme in Cyprus, with a cap of 100 visas to be issued. The scheme was officially launched on the 15th of February 2022.
The “Digital Nomad Visa” scheme allows nationals from non-EU and non-EEA countries, who use technology to work remotely, to reside temporarily in Cyprus and work for an employer registered abroad or for companies or clients located abroad.
Individuals granted a Digital Nomad Visa have the right to stay in Cyprus for up to 1 year, with the right to renew for an additional 2 years. Such visa holders will have the right of family re-unification for their family members whereby a residence permit would be granted, following a successful application. The family’s residence permit would then expire when the digital nomad’s visa expires, as the visa holder acts as the family’s sponsor.
During their stay in Cyprus, the spouse or the civil partner of the person who is granted a Digital Nomad Visa, and the minors of their family are not permitted to work or engage in any kind of economic activity in Cyprus.
The scheme aims to strengthen Cyprus’ development as a hub for digital nomads aiming to benefit of the island’s many advantages.
Who can benefit Non-EU or non-EEA nationals who:
Can perform work remotely digitally;
Are employed in a company registered abroad, for which they can work location-independently, or are self-employed offering services remotely for clients located abroad;
Can prove that they have stable and sufficient monthly net income of at least €3500 (after the deduction of contributions and taxes).
What are the benefits
Individuals that are granted with a Digital Nomad Visa will benefit from the following:
Right of residence for a year in Cyprus, with a possibility of renewal for further two years.
Right of residence for family members, for the same period as the Digital Nomad, without the right to be employed of perform economic activity in Cyprus.
If they reside in the Republic for one of more periods that in total exceed 183 days within the same tax year, then they are considered tax residents of Cyprus, provided they are not tax residents in any other country.
Family members
Digital Nomad’s family members can reside in Cyprus for the same period as the Digital Nomad, without the right to be employed of perform any economic activity in Cyprus.
Family members include the spouse/ partner in a civil union and children below the age of 18.
Family members also need to obtain a temporary residence permit following the procedure below.
Examination time
The time of examination is between 5 – 7 weeks.
Duration of Digital Nomad Visa
The Digital Nomad Visa is issued with a validity of one year.
On renewal, the Digital Nomad Visa is issued with a validity of maximum two years.
What we do
Panayiotis Z. Toulouras LLC provides corporate services to clients worldwide. Our law firm, with it’s team of experts, provides strategic advice for individuals and entities, seeking the foreign interest company route, and ensures a smooth transition for all clients aiming to relocate an existing business or launch a new business in Cyprus.
Incorporation of a Cyprus company
Registration of a Foreign Interest Company
Digital Nomad Visa applications
Launch and Setting up consultation
Family reunification
Employment agreements
Purchase and/or rental of commercial and residential premises
Applications for permanent and temporary residence
Applications for naturalization
IP registration
Advice on all related tax aspects
Opening of corporate and personal bank accounts in Cyprus and abroad
The 31st of December 2021 saw the end of the previous scheme regarding the registration of foreign interest companies and the issuance of immigration permits for employees of foreign interest companies registered in the Republic of Cyprus.
January 2022 sees the commencement of the new Government Strategy aimed in attracting foreign interest companies to relocate their activities to Cyprus or allow existing companies to expand their activities in Cyprus.
The new policy ends the requirement of transferring €200,000 from abroad, for Cyprus companies that are majority owned by third country nationals. The new policy also removes the €4,000 and €2,000 minimum monthly salary for different categories of personnel, with the new scheme setting the salary for highly skilled personnel at a minimum €2,500 per month.
Key things to know:
Which companies are considered as ‘’foreign interest’’ in order to be eligible for new incentives?
Third Country Shareholders – Majority Owned Company
Third-country shareholders should own the majority of the company’s shares.
The new policy no longer requires third country shareholders who own the majority of the foreign interest company to transfer an amount equal to or greater than the amount of € 200.000 to a Cyprus corporate bank account from abroad.
OR
Third Country Shareholders – No Majority Owned Company
In cases where the percentage of the foreign participation (third-country shareholders) in the company’s share capital is equal to or less than 50% of the total share capital, in order for the company to be eligible, the foreign participation should represent an amount equal to or greater than the amount of €200.000 as nominal capital stated in the Company’s Memorandum of Association.
OR
Companies that fulfil the following criteria:
Public companies registered in any recognised stock exchange
Former offshore companies that were operating in Cyprus by approval of the Cyprus Central Bank, before the change of their offshore status.
Cypriot shipping companies.
Cypriot companies of high technology / innovation – this relates to companies which meet the below criteria
The company is established and present in the tech market, and
The company has high levels of Research and Development intensity, and
The company focuses on products that are included in the below categories:
i. Space industry
ii. Telecommunication, electronic products or computers
iii. Pharmaceutical or biomedical
Cypriot pharmaceutical companies or companies operating in the fields of biogenetics and biotechnology.
Persons who have acquired Cypriot citizenship by naturalization based on economic criteria, given that they will prove that the conditions under which they were naturalized are still met.
AND
The company has established and operates independent offices in Cyprus, in suitable premises, which are separate from any private housing or other office – except in the case of business cohabitation.
Temporary Residence, Immigration Permits and Family Reunification
Employment of highly skilled personnel
Positions based on categorisation of employment such as Directors, Specialists, Managers Key Personnel, Specialists and on minimum gross monthly salaries such as €4,000 and €2,000 will no longer apply. The new policy enacted, introduces a minimum gross monthly salary of €2,500 for all highly skilled employees provided that:
they have the proven required academic skills or at least 2 years of relevant experience; and
a minimum of 2-year employment contract.
The maximum number of third country nationals is 70% of the total number of employees in a 5-year period from the date of the registration of the company as a foreign interest company by the Business Facilitation Unit.
This is a great shift from the previous policy which permitted foreign interest companies the ability to employ a maximum number of 15 third-country nationals, with the exemption of employing more than 15 employees if certain conditions applied.
Employment of support personnel
Companies can employ third country nationals as support personnel, with a maximum gross monthly salary of €2,500 provided that the number of third country nationals employed does not exceed 30% of all the support personnel.
Duration
All Residency and work permits will be issued within 1 month and will have a validity period of up to 3 years.
Family re-unification rights of third country nationals
Spouses, of third country nationals that obtain a temporary residence and work for foreign interest companies and receive a minimum gross monthly salary of €2,500 (i.e. other than for support staff), are able to enjoy immediate and free access to the Cyprus labour market and have the right to work in Cyprus. The dependents of third country nationals employed at a foreign interest company (i.e. minors under the age of 18) can live and attend school in Cyprus.
The Cyprus Digital Nomad Visa
In accordance with practices employed by other European countries regarding remote work, the government has introduced the Digital Nomad Visa scheme, allowing third country nationals who are self-employed, freelancers or employees working remotely for employers/clients based outside of Cyprus to reside and work in Cyprus. A maximum limit of 100 beneficiaries will benefit from the Digital Nomad Visa scheme, however this number may increase in the future if the scheme proves successful.
Individuals granted a Digital Nomad Visa have the right to stay in Cyprus for up to 1 year, with the right to renew for an additional 2 years. Such visa holders will have the right of family re-unification for their family members whereby a residence permit would be granted, following a successful application. The family’s residence permit would then expire when the digital nomad’s visa expires, as the visa holder acts as the family’s sponsor.
During their stay in Cyprus, the spouse or the civil partner of the person who is granted a Digital Nomad Visa, and the minors of their family are not permitted to work or engage in any kind of economic activity in Cyprus.
Tax incentives
A number of tax incentives are currently being considered, which if approved will come in effect in 2022:
Expansion of the 50% income tax exemption to new employees with a salary of minimum €55.000 per annum. This exemption, already in effect for annual salaries over €100.000 per annum, will be extended from 10 to 17 years (covering existing employees who currently enjoy this benefit). Existing employees who earn between €55.000-€100.000 per annum can benefit for the remaining period of the 17 years;
Extending the 50% tax exemption for investment in certified innovative companies and by corporate investors;
Increased deduction of research and development costs from taxable income to an amount equal to 120%;
Right to transfer social insurance contributions based on bilateral agreements to come into force.
Cypriot naturalisation
A draft bill amending the Aliens and Migration Law Cap. 105 will be presented proposing:
the reduction in the eligibility period for applying for the Cypriot citizenship from 7 years of residence and work in Cyprus to 5 years; and
the further reduction to 4 years for holders of certifications proving that they are fluent in the Greek language.
Summary
This strategy aims to strengthen the island’s position as a key business hub in the European Union. The incentives given at a corporate and individual level will allow international companies to relocate and operate in Cyprus, along with their key personnel, which will add great value to the Cyprus economy and boost its reputation as a key business destination. The strategy’s focus on high innovation/tech companies, pharmaceutical companies and shipping companies, shows that the scheme enacted, aims to reach out to 3 key industries that can drastically boost the country’s business model and attractability across the globe.
What we do
Panayiotis Z. Toulouras LLC provides corporate services to clients worldwide. Our law firm, with it’s team of experts, provides strategic advice for individuals and entities, seeking the foreign interest company route, and ensures a smooth transition for all clients aiming to relocate an existing business or launch a new business in Cyprus.
Incorporation of a Cyprus company
Registration of a Foreign Interest Company
Business visa applications and other visas
Launch and Setting up consultation
Family reunification
Employment agreements
Purchase and/or rental of commercial and residential premises
Applications for permanent and temporary residence
Applications for naturalization
IP registration
Advice on all related tax aspects
Opening of corporate and personal bank accounts in Cyprus and abroad
A Cyprus ‘Foreign Interest Company’ (FIC) is an avenue that gives a Cyprus based company with non-EU shareholders the ability and priority to employ non-EU nationals instead of locals and EU nationals.
Non-EU shareholders are able to reside and set up shop in Cyprus by relocating their existing business from a non-EU country or launching a new business from scratch, whilst simultaneously hiring their key personnel from around the world and taking advantage of the island’s many benefits i.e. lifestyle, cheaper operating costs, EU membership and tax advantages – find out Why Cyprus here.
We break down the 10 advantages of a Cyprus Foreign Interest Company:
Residency, Family & Key Personnel
Non-EU Shareholders of a FIC can apply for a business visa (work permit) and residency through employment in their Cyprus registered company. This allows any non-EU citizen to live and work freely in Cyprus for as long as the FIC is active, with them employed at the FIC.
This provides non-EU individuals or groups of individuals with the ability to relocate their existing business or launch a new business in an European Union member country.
2. Non-EU Shareholders of a FIC are also eligible and allowed to move their families to Cyprus, with their children able to attend any public or private schools available. Their spouses are also allowed to work in Cyprus.
This allows non-EU shareholders the ability to live and work freely in Cyprus without having to constantly fly back to their families. This also allows families the ability to enjoy the exquisite lifestyle of Cyprus with no concerns or worries regarding their residency.
3. A FIC can register and hire up to 5 non-EU employees as senior management, who are able to obtain a business visa (work permit), allowing them to live and work in Cyprus.
4. A FIC can register and hire up to 10 non-EU employees as middle management or other administrative, secretarial or technical staff, who are able to obtain a business visa (work permit), allowing to live and work in Cyprus.
5. All non-EU employees hired by the FIC are also eligible and allowed to move their families to Cyprus, with their children able to attend any public or private schools available.Their spouses are also allowed to work in Cyprus.
This allows all non-EU employees hired by the FIC the ability to live and work freely in Cyprus without having to constantly fly back to their families. This also allows families the ability to enjoy the exquisite lifestyle of Cyprus with no concerns or worries regarding their residency.
Additional Key Personnel (Specialists)
6. A FIC can register and hire up to 200 or even more additional non-EU employees which are considered as Specialists (e.g., tech industry, marine industry, pharmaceutical industry). The amount of additional non-Eu employees considered as Specialist that a FIC can hire, depends on the annual turnover of the company and the overall operations, and needs of the FIC.
This allows a FIC to invest further into its relocation or launch, by hiring more non-EU employees that are needed to push for growth.
Citizenship, Social Insurance & National Health System (GESY)
7. Non-EU shareholders and FIC employees, and their families, can benefit from Cyprus’ social insurance schemes and register to the Cyprus national health system for subsidized medical care.
8. Non-EU shareholders and FIC employees, and their families, are able to apply for citizenship after a period of 7 years, if they resided fully for the 7 years (more information can be provided on this)
This allows all non-EU individuals with the ability to enjoy the full benefits of being a Cypriot citizen, with a Cypriot passport, which includes all the benefits of Cyprus being a member of the European Union.
Tax Benefits – Corporate and Individual
9. Non-EU shareholders who register their companies as foreign interest can benefit both individually and corporately from Cyprus’ advantageous tax benefits (see in detail below) for companies and individuals.
10. All non-EU employees hired by the FIC can benefit individually from Cyprus’ advantageous tax benefits (see tax benefits here)
Eligibility Criteria:
Criteria that companies must meet in order to benefit from this decision, and the categories of staff and the maximum numbers of third country nationals who can be employed are all described below.
Eligibility Criteria In order to register a Cyprus company as a foreign interest company:
Non-EU shareholder/s should own the majority of the company’s shares. (more than 50%),
Foreign direct investment of capital amounting to at least €200.000, legally admitted to a Cyprus bank account from abroad. This amount can be used for company’s activities.
Staff Categories:
a) Senior Management – Directors, General managers, Heads of Departments, Project Managers
Maximum number of third country nationals employed: 5 persons (unless the Civil Registry and Migration Department is satisfied that the employment of a greater number is justified, depending on the circumstances of each company.)
Minimum Acceptable Gross Monthly Salary: €4.000
b) Middle Management – Upper / middle management personnel, Other administrative, secretarial or technical staff
Maximum number of third country nationals employed: 10 persons (unless the Civil Registry and Migration Department is satisfied that the employment of a greater number is justified, depending on the circumstances of each company.)
Minimum Acceptable Gross Monthly Salary: €2.000
c) Support Personnel
A company may employ third country nationals in support positions by first securing the positive recommendation of the Department of
A company may staff up to 30% of its total personnel with third country nationals in posts in this category.
d) Additional personnel: Exceeding the maximum allowed number of employees from third countries in each category
To employ more third country personnel, requests by the company must be submitted to the Department for approval. The requests must include information on the salary offered along with:
The requests must include information on the salary offered as well as:
The company’s turnover
The ratio of third country employees to Cypriots / EU Nationals and
The company’s operating time in
e) Specialists
Companies are entitled to employ a number non-EU nationals, up to 200 or even more, over and above the categories stated above, if they fall within the professions/skills listed below.
Minimum Acceptable Gross Monthly Salary for Specialists: €2.000.
Professions / Skills
Software and System Engineers
Application and Data Architects
ICT and Enterprise Solution Architects
Technical Assurance Professionals
Telecom and Space Engineers
Data scientists
Machine Learning Engineers
Web Developers and designers
UX User Experience Professionals
Quantitative Analysts
Quality Assurance Analysts
Mobile Application Developers
Augmented Reality/ Virtual Reality Programmers
Digital Marketing Specialists
Video Production Multimedia Specialists for Mobile Apps and Software
Analysts for Mobile Apps and Software
Designers of Prototype for Mobile Devices
DevOps Engineers
Cyber Security Specialists
Artificial Intelligence, Robotics and Big Data Specialists
Pharmaceutical Formulation Technologists
Pharmaceutical Engineer Validation Specialists
Pharmaceutical Patents Specialists
Pharmaceutical Regulatory and Quality Assurance Professionals
Marine Engineers
Naval Architects
Maximum number of third country nationals employed as Specialists
The number of non-EU Specialists allowed is based on the annual turnover of the company, as following (unless the CRMD is satisfied that a FIC requires a number higher than 200 employees):
Number of Specialists permitted based on turnover.
What we do
Panayiotis Z. Toulouras LLC provides corporate services to clients worldwide. Our law firm, with it’s team of experts, provides strategic advice for individuals and entities, seeking the foreign interest company route, and ensures a smooth transition for all clients aiming to relocate an existing business or launch a new business in Cyprus.
Incorporation of a Cyprus company
Registration of a Foreign Interest Company
Business visa applications and other visas
Launch and Setting up consultation
Family reunification
Employment agreements
Purchase and/or rental of commercial and residential premises
Applications for permanent and temporary residence
Applications for naturalization
IP registration
Advice on all related tax aspects
Opening of corporate and personal bank accounts in Cyprus and abroad
Since the end of the Special Permission requirement for the Lebanese traveling to Cyprus, on the 1st of April 2021, the island has received a large influx of Lebanese individuals, families, and companies seeking a new home away from the current turmoil plaguing Lebanon’s economy and society.
Our firm has been advising and assisting Lebanese clients as they embark on shifting their residency and business activities to the robust economy of Cyprus.
Cyprus has strategically established itself as an attractive destination, both within the EU and globally, through its competitive, modern, and transparent legal, financial and regulatory framework. The country’s advantageous tax policy and strong banking system have made Cyprus attractive for all types of businesses and individuals.
Individuals and Families
Temporary Residence
Valid for 1 year & renewed yearly,
Holders are allowed to live in Cyprus as visitors without the right to work,
A spouse, children (under 18 years old), and parents (parents of the couple) are able to apply as dependents,
Eligible through renting or purchasing a property.
Main applicants and qualifying dependents can apply and stay as permanent residents in Cyprus indefinitely,
Approval within 2 months,
The P.R. does not expire and the holder does not need to renew it,
Eligible through purchasing investing at least €300,000 (excluding VAT) in one of the following options (a) residential properties (b) commercial properties (c) company share capital and (d) Cyprus investment funds,
Option (c) investing at least €300,000 (excluding VAT) in a company share capital gives the right to the main applicant to work in Cyprus,
All options give the right to applicants to be shareholders in Cyprus.
Personal or Joint Bank Account in a Cyprus bank
Lebanese individuals, both residents, and non-residents are eligible to open a personal or joint bank account in Cyprus at one of the local banks our firm cooperates with.
Companies
Register a Cyprus Company
A company registered in Cyprus enjoys all the advantages of operating in an E.U. country
Registration of a Company is quick and easy for all Lebanese clients
A Cyprus company benefits from an advantageous 12.5% corporate tax (one of the lowest in Europe) on profits, with possibilities for further reductions in taxation
Shareholders benefit from no withholding tax on dividends paid to them (if non-residents)
A Cyprus company with a majority of non-EU shareholders (over 51%) is eligible to employ up to 15 non-EU employees (including the shareholders themselves),
All 15 non-EU employees are able to work and live freely in Cyprus whilst they are employed for the Cyprus Company through receiving residency cards,
A direct deposit of capital amounting to at least €200.000, deposited into the Cyprus company’s bank account from abroad, is required to be eligible. This amount can then be used for company activities in Cyprus and abroad,
The company can also employ additional Specialists that have specific skills (click here for more info),
Family members (spouse, children, parents, and in-laws) of the Employees can also work and reside in Cyprus through family reunification,
The foreign interest company benefits from an advantageous 12.5% corporate tax (one of the lowest in Europe)
Corporate Bank Account for a Lebanese Company
Lebanese companies are eligible to open a corporate bank account in Cyprus at one of the International Business Units that our firm cooperates with.
Our areas of work include:
Real Estate acquisition or rental
Company Registration and Nominee Services
Investment Advice
Permanent and Temporary Residence Applications
Employment permits
Registration of foreign interest companies for the employment of Lebanese nationals in Cyprus
THINGS TO KNOW ABOUT THE CYPRUS FAST-TRACK PERMANENT RESIDENCE
The Immigration Permit under Regulation 6.2 of the Aliens and Immigration Regulations, has always been considered the best avenue for non-European investors seeking an expedited immigration permit, that allows them to reside permanently in Cyprus.
One of the key benefits of this Immigration Permit, other than its expedition, is the ability for all the family to obtain the Permanent Residence, such as the married spouse, children under 18 years old, financially dependent children up to 25 years old (provided they are engaged in a tertiary education at the time), parents and in-laws.
On the 24th of March 2021, Regulation 6.2 got the revamp it needed, by introducing new investment options for applicants and the possibility for the main applicant to be a Director with a salary.
Here are the 6.2 Things to Know about the Newly Revamped Cyprus Fast-Track Permanent Residence – Regulation 6.2:
1. New Investment Options for Applicants
The previous Regulation 6.2 required applicants to invest in new residential properties that have a total purchase value of at least €300,000 (excluding VAT) – classified as Investment (A).
The newly improved Regulation now permits applicants the option of investing either with a:
Minimum investment of €300,000 (plus VAT if applicable) in commercial properties, including offices, shops, and hotel (NEW or RESALE), classified as Investment (B),
Minimum investment of €300,000 in the share capital of a existing or a new Cyprus company having a physical presence and activities in Cyprus and employs at least 5 persons, classified as Investment (C),
Minimum investment of €300,000 in compartments of Cyprus UCITS funds (AIF, AIFLNP, RAIF types), classified as Investment (D).
2. Time for a Return of Investment
Whilst the previous Regulation 6.2 focused mostly on the purchase of new real estate properties for residential purposes, the newly improved Regulation 6.2 aims to encourage and attract applicants that are seeking a Return on their Investment from the get-go.
The introduction of the new investment options (B), (C) and (D), will result in the Residence Permit becoming a lot more attractive and offer more value for applicants that are able to see their investments become fruitful from their first year of residency.
3. Time to depart from Pledging €30,000 in a Cyprus bank account
The previous Regulation 6.2 required applicants to pledge the amount of €30,000 for three years. Thew newly improved Regulation 6.2 has scrapped this requirement, making it more attractive to applicants that seek to utilize this amount of money on other matters.
4. Directorship with a salary and Shareholding
Investment (A), (C), (D):
The newly revamped Regulation 6.2. continues to request applicants to declare that they do not intend undertake any sort of employment in Cyprus when investing in residential properties, commercial properties and UCITS.
Applicants and their spouses, can be shareholders in any other type Cyprus company, not associate with Investment (B) and receive dividends from the said company, however they cannot be employed with a salary.
Investment (B):
However, Investment (B) allows for the main applicant (not the spouse) to be employed as a Director with a salary, in the company in which they choose to invest the minimum of investment of €300,000. This is an exception to the previous notion that no Permanent Resident holder is able to be employed in Cyprus. Furthermore, the main applicant can be included in the minimum number of employees that the company should have to be eligible for the Fast-Track process (at least 5). This is will be widely seen as a great advantage and boost for the Fast-Track scheme’s popularity and for the main applicants, who will benefit from being more actively involved in their investment.
Applicants and their spouses, can also be shareholders in the company and receive dividends from the said company.
The Main Applicant will continue to prove a secure annual income (including salaries from employment, pensions, dividends, fixed deposits, rentals) of at least €30,000,
Each dependent added to the application will require the proven annual income to be increased by €5,000 for every dependent person (spouse and children) and by €8.000 for every dependent parent or parent-in-law.
Income should derive from abroad in cases where the applicant invests in new residential units, however income can be generated from sources within Cyprus derived from the new investment options. The income of the applicant and the spouse can be taken into consideration.
The funds invested for Investments (A), (B), (C) and (D) should be transferred and emanate from abroad
The applicant and the spouse should provide a Clean Criminal Record from their country of residence.
6.2. Find the right investment and choose the right option
The introduction of the new investment options allows investors to do ‘investment shopping’ , prior to investing the minimum €300,000, that fits their needs and objectives.
Our Team is able to provide various opportunities for applicants seeking a favourable return on their investment made for the Cyprus Permanent Residence – Fast Track Immigration Permit (Regulation 6.2).
Our Team also assists in all the requirements needed to be eligible and to apply for the Permanent Residency Regulation 6.2, from the formation and registration of a company, Immigration Permit applications, purchase of property to the opening of bank accounts that may be needed to facilitate any of the above investment options a client may choose.
Find out why Cyprus is the best option for British companies to set up an EU base.
With the full impact of Brexit still unclear for many businesses, British businesses exporting into the European Union are being encouraged to set up a separate entity in an EU Member State to help avoid the extra charges, paperwork, and taxes resulting from Brexit, as revealed by the Guardian newspaper.
Trade advisers at the British Department for International Trade (DIT) have advised businesses, that the best way to avoid border issues and VAT problems, is for them to register new companies in jurisdictions within the EU single market, such as Cyprus, which would allow them to operate more freely and with less bureaucratic hassle.
So, now that the Transitional period is over, what happens to companies?
The UK is no longer in the EU-wide VAT system, which means UK retailers that want to import the goods into the EU and sell them to customers will have to register in the EU member state of the consumer, pay import VAT, and charge local VAT.
UK businesses will have to consider VAT registering in Europe immediately. Any UK business with a foreign VAT registration in the EU may now face the obligation to appoint a special VAT fiscal representative. These agents will hold direct liability for any unpaid VAT, and therefore require cash deposits or bank guarantees in exchange.
End of zero-rated B2B intra- community supplies, all movements are now considered imports or exports, which are subject to U.K. or E.U. import VAT. Businesses that move goods are now required to have two EORI numbers to move goods between the UK and EU.
Example: UK importers will have to pay the import VAT at the point of importing goods from Cyprus, while importers may also have to make import declarations, paperwork, and all necessary customs procedures should be properly applied as well.
UK has already introduced a Postponed VAT Accounting import VAT deferral scheme, meaning no cash VAT payment has to be made by business importers to UK customs.
Many EU countries do not offer the same referral scheme for UK businesses importing their goods, thus impacting their cash flow.
Digital Services
UK sellers of digital services to EU consumers
UK is no longer a member of the EU Mini One-Stop-Shop (MOSS) single VAT return scheme.
UK sellers of electronic, broadcast or telecoms services to EU consumers will need to register in any other EU state, as a non-Union business, to continue to file their VAT declarations for EU e-service sales.
EU sellers of digital services to UK consumers
Have to register with the UK’s HMRC to file their VAT declaration.
Third-Country sellers of digital services to consumers
Any non-EU business which used the UK MOSS registration now has to re-register for MOSS in the EU and separately in the UK under a regular VAT return.
Any non-EU business will no longer be able to report their UK sales on their Non-Union MOSS return. They will have to register for UK VAT and report UK sales on a UK VAT return.
Since 1 January 2021, if you are a UK, EU or US seller of digital services to, then you will need new VAT registrations to avoid being fined by the tax authorities.
This includes cross-border sales to UK and EU consumers of downloadable or streaming media, apps, online software, e-learning; e-books, online journals, and dating or similar membership websites.
As of 1 January 2021, a UK business should register with a new EU VAT MOSS in the non-union scheme, by choosing which of the 27 member states they would like to serve as their ‘’base’’ in the European Union.
B2B Transactions
If a UK business only sells digital products in B2B transactions, then they do not need to register for EU VAT as Reverse Charge applies.
When the Reverse Charge applies, the responsibility for the recording of a VAT transaction from the seller to the buyer for that good or service.
CYPRUS UNIQUE SELLING POINTS
Why Cyprus?
Cyprus has strategically established itself as an attractive jurisdiction, both within the EU and globally.
The competitive, modern, and transparent legal (based on the English Common law system), financial and regulatory framework along with the highly skilled and multilingual workforce that Cyprus possesses has established Cyprus as a credible and highly reputable jurisdiction for companies to set up a trading or holding company.
The country’s stable and advantageous tax policy has made Cyprus attractive for all types of businesses and individuals. As Cyprus is a European Union member, companies can enjoy all the advantages of operating in an E.U. country.
Tax Advantages
Corporation tax only 12.5%
Profits generated from transactions in shares, bonds and other qualifying securities are exempt
Exemption from dividends paid by a foreign subsidiary to a Cyprus Holding Company
No withholding taxes on dividend distribution to foreign non- resident shareholders whether corporate or individual
No withholding taxes on royalties and interests paid to non-resident shareholders, whether corporate or individuals.
No Capital gains tax on sales of shares
Extensive Tax Treaty network with more than 60 countries
Tax losses are carried forward for 5 years.
Cyprus & UK Connection
Cyprus has a competitive advantage of having an effective legal system based on English Common Law principles.
Government departments, financial institutions and local authorities accept documents in English. This provides bureaucratic transparency and clear regulations for UK businesses wishing to set up shop in Cyprus.
With English being a predominant language spoken between businesses, when setting up your business you can benefit from the island’s high percentage of English-speaking citizens:
73% of Cypriots speak English – official language due to British colonization
English widely accepted for business transactions, government services, contracts, banking and other day-to-day operations
Cyprus trade relations existed before the EU and will continue strongly after Brexit as Cyprus belongs to the Commonwealth and has sovereign British Bases on the island
Key legislations such the Companies law, Contract law and Tort law are modelled on the British law. The Cyprus courts follow the precedents of the English courts and in general Cyprus can be characterized as UK-friendly country, this results in more clarity and certainty in the legal system and a preferred jurisdiction for U.K. companies
European Union Member
At the core of the EU is the single market – the programme of freeing up the trade of goods and services and the movement of people between EU countries. Cyprus has access to 40 + EU trade agreements with countries outside the E.U along
Intellectual Property
Cyprus IP box regime provides a tax benefit of up to 80% for the IP profit that qualify. As corporation tax is Cyprus is 12.5%, this will result to a tax rate of up to 2.5%. The IP box regime has been reviewed by the EU Code of Conduct and is fully compatible with EU standards.
Qualifying assets under IP BOX regime:
Patents
Software programs with a copyright
Other intangible assets that is not obvious but are useful and novel.
The new IP regime is compliant with the provisions of the revised ‘Nexus approach.’
Banking
The European Union has a well-developed and regulated banking sector, thus opening a bank account with a Cyprus bank will allow companies a swift process when opening bank accounts in other EU nations.
Bank transfers or payments from any EU bank account can be transferred to any other country in the world without any restrictions or limitations. A Cyprus company will be able to trade and open a bank account in various currencies as there are no exchange control limitations.
Foreign Interest Company
Cyprus companies with non-EU shareholders that provide a paid-up capital of the company of minimum EUR 171.000 can employ up to 15 non-EU persons in management positions, and many more in specific specialists positions, with residence and work permits issued by the Cyprus authorities. Family members can join by way of family reunification.
Setting Up Costs
Launching and running your business in Cyprus reduces your overall set-up costs compared to other EU countries resulting in more budget being allocated other segments of your business.
Lower labour costs – costs for technical and professional talents lower than other EU countries
Lower office rental costs – office rental rates among lowest in Europe, range of serviced offices and co-working spaces make initial office setup easy
Lower business support costs – services like I.T., accounting, legal are greatly affordable
Lifestyle
Choosing Cyprus ensures you and your teamwork in a Mediterranean island that provides you with a very high standard of living that includes:
One of the EU’s best all-year climates and one of the best worldwide
Over 65 Blue Flag status beaches for all tastes (highest % per capita) – sports, entertainment etc,
High level public & private healthcare services
Short distances – can travel from one side of the island to another in 2 1⁄2 hours
Considered one of the world’s safest countries with one of the lowest crime rates in the EU
Reasonable cost of living with great choice fresh products always available – both local and international
Quick access to three continents –Europe, Asia and the Middle East.
What we do
Panayiotis Z. Toulouras LLC provides legal services to clients worldwide. Our law firm, with the assistance of our vast network of associates, provides strategic legal advice for:
The incorporation of a Cyprus company
Setting up a branch/subsidiary in Cyprus or outside of Cyprus
Opening of bank accounts in Cyprus and abroad
Business visa applications and other visas
Work permits
Employment contracts
Purchase/rental of property for commercial purposes
Purchase/rental of property for residential purposes
