Fast Track Business Activation Mechanism announced for setting up businesses in Cyprus by third country nationals  
  1. As a way of attracting foreign investment to Cyprus and providing fast and efficient services to foreign businesses wishing to establish presence in Cyprus, the Council of Ministers approved on 3 September 2020, a Fast Track Business Activation Mechanism (the “Mechanism”), found here: https://www.businessincyprus.gov.cy, which has been set up by the Ministry of Energy, Commerce and Industry.
 
  1. In order for companies to be able to join the Mechanism, they will need to meet certain qualitative and quantitative criteria – thus contributing positively to the country’s economic growth – the main criteria of which are:
 
  1. Creating a physical presence in Cyprus, including personnel and the establishment/operation of independent offices that are separate from any private residence.
 
  1. Existing companies should have a minimum turnover of €500,000 per year for 3 out of the last 5 years.
 
  1. New companies should provide a reliable 5-year business plan illustrating growth potential.
 
  1. The Mechanism facilitates the following:
 
  1. PROVISION OF SERVICES FOR THE ESTABLISHMENT OF A COMPANY:
 
  1. It assists companies to obtain all necessary registrations for the establishment of a business from a single point of contact, including:
 
  1. Company registration and name approval.
 
  1. Registration with the Social Insurance Registry and the Employers’ Registry.
 
  1. Registration with the VAT Registry and Income Tax.
 
  1. All necessary procedures for the registration and incorporation of a company in Cyprus will be completed within 7 working days from the day of submission of all required information to the Ministry of Energy, Commerce and Industry.
 
  1. GUIDANCE FOR ESTABLISHMENT AND OPERATION OF COMPANIES IN CYPRUS:
 
  1. It provides information for all the necessary permits required by a company in order to start operations in Cyprus.
 
  1. When accessing the Mechanism link, it lists a wide range of professions and/or businesses, and provides licensing information for each one (e.g. general information on the said profession/business, information on application submission, licence validity period, what to do in case of dispute with the competent authority’s decision and the relevant legislation and obligations governing the said profession/business).
 
  1. According to the aforementioned Council of Ministers decision dated 3 September 2020, where additional permits are required for the operation of a business, these will be completed within 30 working days, with the exception of building and planning permits.
 
  1. FACILITATION FOR THE ISSUANCE OF RESIDENCE AND EMPLOYMENT PERMITS IN CYPRUS:
 
  1. The Council of Ministers approved on 7 October 2020 a new policy for the issuance of residence and work permits to third country employees employed by Cypriot companies of foreign investment (i.e. international companies), whether these companies are subsidiaries of foreign companies or branches thereof.
 
  1. Namely, amendments have been made to the criteria of eligible third country employees, eligible employers and to the documents that need to be submitted to the Civil Registry and Migration Department (hereinafter the “CRMD”), including the following changes:
 
  1. The UBO of the Cypriot company interested in employing third country nationals shall need to invest at least €200,000 in Cyprus, for the purposes of operating the company (previously: the amount of foreign investment used to be €171,000). This requirement only applies to companies which will employ staff from third countries for the first time.
 
  1. There is no longer a requirement for the said company to present a recent bank account statement with a balance of at least €41,006.
 
  1. A new category of eligible staff has been introduced, that of Specialists. The CRMD provides a list of specific professions/skills that are regarded as Specialists.
 
  1. The minimum gross monthly salary for each staff category has changed, as follows:
 
  1. For Directors – €4,000 (previously: it used to be €3,872)
 
  1. For Middle-Management Executives & Other Key Personnel – €2,000 (previously: it used to be between €1,936 and €3,871)
 
  1. For Specialists – €2,000 (new category)
 
  1. As regards the maximum number of third country employees of each staff category:
 
  1. For Specialists, it depends on the eligible company’s annual turnover – it begins from 5 employees (if the company’s annual turnover is ≤ €1 million) and can goes up to 200 employees (if the company’s annual turnover is > €30 millions).
 
  • : For eligible companies that relocate to Cyprus and have joined the Mechanism, the turnover that will be taken into account will be the one of the company’s abroad. This will be valid for the first 2 years of operations in Cyprus. Following the first 2 years, the annual turnover of the company in Cyprus will be taken into account.
 
  1. For Support Staff, 30% of the total company’s staff may fall into this category (previously: there did not used to be a maximum number). This will be reviewed by the Department of Labour during the labour market test.
 
  1. There is no longer a requirement to provide a bank guarantee for potential repatriation expenses of the third country national. Instead, the employer now has to sign a Declaration on Honour to cover all costs of return of the employee.
 
  1. All the information relating to the issuance of residence and work permits to third country employees employed by Cypriot companies of foreign investment can be found on the relevant CRMD webpage here.
 
  1. In summary, the Mechanism link provides a detailed walkthrough of all the stages that a business may go through in Cyprus:
 
  1. Planning a business: e.g. coming up with a business plan, a financial plan, a marketing plan etc. (https://www.businessincyprus.gov.cy/doing-business-in-cyprus/plan-your-business/)
 
  1. Starting a business: e.g. choosing the type of legal entity, the business name, registering the entity, obtaining a licensed business/office space, protecting intellectual property rights, creating an online presence for the business etc. (https://www.businessincyprus.gov.cy/doing-business-in-cyprus/start-your-business/)
 
  1. Running and growing a business: e.g.  appointing auditors, complying with various company obligations (like annual levy, AGMs, financial statements, income tax), obtaining insurance coverage, buying/leasing commercial vehicle for the business, complying with environmental legislation, complying with health & safety legislation, hiring employees (EU and non-EU), registering them with Social Insurance, making necessary social insurance contributions, entering into and termination employment agreements etc. (https://www.businessincyprus.gov.cy/doing-business-in-cyprus/running-and-growing-your-business/)
 
  1. Getting the business funded: e.g. getting funding from start-up incubators, government grants, bank funding and loans, benefiting from Cyprus’s simple and attractive tax system etc. (https://www.businessincyprus.gov.cy/doing-business-in-cyprus/getting-your-business-funded/)
 
  1. Evaluating/exiting a business: e.g. preparing formal valuation of the company for investors, obtaining professional advice in case of exiting the business, dissolving the company/partnership/business name, restoring the company, selling the business, initiating bankruptcy proceedings, proceeding with liquidation etc. (https://www.businessincyprus.gov.cy/doing-business-in-cyprus/exit-strategies/)
 
  1. Any businesses wishing to transfer its operations to Cyprus and to benefit from the Mechanism must submit a request to the Ministry of Energy, Commerce and Industry at businessincyprus@meci.gov.cy, accompanied by the following:
 
  1. A letter of expression of interest in establishing presence in Cyprus (in the case of companies not already operating in Cyprus), which must include the information indicated here.
 
  1. The certificate of incorporation of the company, certificate of shareholders, certificate of directors and articles of association (in English or Greek).
 
  1. The audited financial accounts for the 3 of the last 5 years (only in the case of existing companies operating abroad and wishing to set up presence in Cyprus).
 
  1. A business plan for the next 5 years (only in the case of completely new businesses which do not have presence abroad and wish to set up presence in Cyprus).
 
  1. It is noted that due diligence checks will be conducted for all companies wishing to join the Mechanism.
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