Cyprus Headquartering – Government Action Plan

Cyprus Headquartering – Government Action Plan

in 2021, Investment, Uncategorized

Cyprus Headquartering – Government Action Plan

The Ministry of Finance has announced the following measures as part of the action plan to enhance Head Quartering in Cyprus, attract foreign investment and or enhance business activity in Cyprus.

  1. Extension of the tax deduction period benefit for those employees that were not Cypriot residents in a prior period of 17 years before their commencement of their employment to Cyprus
  • 50% tax deduction for those new residents/employees with a minimum annual salary of €55,000
    • The current beneficiaries with Salaries over €100Κ can extend their right from 10 to 17 years
    • The employees that have a Salary from €55Κ-€100Κ can benefit for a period of 17 years.
  • New policy for employment from 3rd countries

The companies that are:

  • operating in Cyprus and are of foreign interest/shareholding and maintain fully fledged offices
  • Cyprus Shipping companies
  • Cyprus Companies involved in innovation and technology
  • Cyprus pharmaceutical Companies or Companies that operate in the fields of biogenetics or biotechnology

Can recruit from 3rd countries if the following criteria are met:

  • Minimum monthly gross Salary €2500
  • The candidate must hold a university degree or equivalent, or has a minimum 2 years’ experience
  • Minimum 2 years contract
  • The Company can employee up to a max of 70% from 3rd countries (the limitation applies for a period of 5 years)
  • The work permits will be issued within one month period and will be valid for 3 years.
  • A work permit can also be granted to the spouse/husband of the eligible individual that obtains visa with this scheme.

Can recruit support staff from 3rd countries with a gross salary lower than €2500 as long as the following criteria are met:

  • The Company can employee up to a max of 70% from 3rd countries (the limitation applies for a period of 5 years)
  • The work permits will be issued within one month period and will be valid for 3 years.
  • DIGITAL NOMAD VISA (with a max number of 100)
  • Who can benefit?

Citizens of 3rd countries self-employed/freelancers or employees that are working remotely for employers/customers that are located outside Cyprus, for a 12-month period.

  • Residency status
  • Have the right to stay in the country for a year with option to renew for another 2 more years.
  • Their family has the right to stay in Cyprus but not the permit to work.
  • If they stay in Cyprus for more than 183 days and are not tax residents of any other country will be considered as tax residents of Cyprus.
  • Prerequisites:

The visa is provided if the following requirements are met:

  • A written declaration is filed that confirms that their services/work is not provided to a local Cyprus Company
  • There is a signed contract of employment and or engagement letter with an overseas Company or physical person or any other proof of work for the duration of the period that the visa is granted
  • The applicant can prove that he or she will have a minimum monthly income of EUR3.500. The amount is increased by 20% in case they have a wife/husband/partner and another 10% per child
  • They have a medical insurance and a clean criminal record
  • A 50% tax deduction on investments to innovative Companies both by a Cypriot Tax resident physical person or Company
  • A 120% capital allowance on expenses that relate to R&D
  • Citizenships

An employee that completes 5 years of residency and employment in Cyprus or 4 years and carry a certification of Greek language, can apply for a citizenship.

Ergani – Register as an employer in Cyprus

Ergani – Register as an employer in Cyprus

in 2021, Social Incurance

Amendments to the Social Securities Law (167/2017) affecting Employers in Cyprus are applicable from 13 September 2021.

  1. Application to register as an Employer in Cyprus, must be filed at east 1 day before it/he/she becomes an Employer.
  2. Each Employer must notify the Department of Social Securities for any new recruitments, at least one day prior to his/her employment.
  3. Each Employer must maintain an Employees register that records in recruitment date order the personal details of each employee (Numerical sequence number, Full name, ID number, Social Securities number, employment date, employment commencement date)
  4. Declarations for the commencement of employment confirmation will not be issued as from 13/9/2021.
  5. Employers in Cyprus, as from 14/9/2021, should process all notifications through online portal “ERGANI’

For all employments prior to 14/9/2021, employers can instead use the current system, “SISNET”.

For any assistance and further clarifications please contact us.

EU e-commerce VAT rules

EU e-commerce VAT rules

in 2021, VAT

Changes to the EU e-commerce VAT rules concerning Business to customers (B2C) will take effect as from 1 July 2021.

Below mentioned changes, will align with EU e-commerce VAT rules and are expected to be approved by newly formed parliament.

As a result, from 1 July 2021 there will be two types of distance sales of goods:

  • intra-community distance sales. Business to consumer (B2C) Sales of goods dispatched from EU Member State to a customer in another EU Member State
    • distance sales of goods imported from third (non-EU) countries. These are B2C sales of goods from a third country to a customer in an EU Member State

For intra-community distance (B2C) Sales

  • A new EU-wide turnover threshold of EUR 10 000, irrespective of the VAT registration thresholds per country, will replace the existing thresholds for distance sales of goods within the EU.
  • VAT to be charged will be that of the country of residence of the customer.
  • Existing Union scheme of the Mini One Stop Shop (MOSS) will be extended to cover both cross-border supplies of goods and services under the new portal, the One Stop Shop (OSS). Suppliers can declare and pay VAT due in all other Member States through the portal of their Member State of establishment. Otherwise, suppliers would have to register in each Member State where they make B2C distance sales.

For distance sales of goods imported from third (non-EU) countries

  • VAT small item exemption of EUR 22 will be removed meaning all goods imported into EU from third countries will now be subject to VAT. As a result, customer will collect by the national postal service or a courier service.

To ease the process, the European Commission has introduced two optional systems:

  • the Import one stop shop (IOSS) that allows businesses to collect the VAT at the time of the order and to declare and pay the VAT on these distance sales of imported goods for the whole EU in a single VAT return.
  • the special arrangements that allow post and couriers to declare and pay the collected VAT on a monthly basis.

New Rules for Online Sales Platforms / Electronic Interfaces

Online platforms that are “deemed suppliers” will be responsible (jointly and severably with the actual supplier of the goods) for reporting and paying VAT on sales made by suppliers that use the platforms.

Platforms facilitating supplies of goods become “deemed suppliers” when facilitating the distance sales of imported goods made by a seller and the goods are:

  • distance sales of goods imported to EU with a value not exceeding EUR 150 and not subject to excise duties; and/or
  • supplies of goods to customers in the EU, irrespective of their value, when the underlying supplier/seller is not established in the EU (both domestic supplies and distance sales within the EU are covered).

The OSS/IOSS online portals are also available to online platforms / electronic interfaces facilitating these distance sales of goods. Again, if the electronic interface is established outside the EU, they will normally need to appoint an EU-established intermediary to fulfil their VAT obligations under the IOSS.

Settlement of Overdue Taxes

Settlement of Overdue Taxes

in 2021, Tax

Tax update – May 2021

We would like to inform you that as per an  amending law that is effective as from 29 April 2021 the provisions of the Law Regulating the Settlement of Overdue Taxes  offering part relief from interest and penalties has been extended.

The Law gives the opportunity to companies and individuals that have experienced a decrease in their annual turnover by at least 25% in 2020 compared to 2019, due to business disruption caused by COVID–19 and have overdue taxes, to settle them through a regulated instalment scheme (via the Ariadne Government Portal) benefitting from part relief of interest and penalties due, but not of the tax due.

An application to enter the relief scheme must be submitted within 12 months up until 29 April 2022) provided that all tax returns due, are submitted before the application date and not later than 31 December 2021.

In addition, because of the COVID-19 instalments that have not been paid during March – December 2020, will not be taken into consideration when assessing the 5 delayed instalments as far it concerning the termination of an existing scheme.

The Emerging Companies Market (ECM)

The Emerging Companies Market (ECM)

in 2021

The Emerging Companies Market (ECM) is the unregulated market of the Cyprus Stock Exchange (CSE). The ECM’s concept is like the Alternative Investments Market (AIM) of the London Stock Exchange (LSE).

Companies which are wishing to list their securities on the ECM are not required to comply with the mandatory provisions of regulated markets with respect to both listing requirements, such as size, number of shareholders/ spread and continuous obligations.

The ECM’s simplified regulated environment has been designed to address the needs of:

• Unlisted companies which are seeking finance and easy access to a secondary market, thereby improving the liquidity of their shares, and providing an exit route to existing or future investors;

• Unlisted Companies that are aiming to enhance their permanent establishment status and benefit from DTT provisions. For example, the DTT with Russia provisions that a Company that is listed in a Recognised exchange is exempted from withholding tax on dividends.

• Listed companies that are not able or willing to undertake the higher costs of remaining in a regulated market (subject to first delisting from the regulated market following an acquisition);

• Companies which are seeking to float their securities to a recognised secondary market of an EU member state.

• Investors who are seeking new ways of investment, with awareness of the high risk of the market;

Methods of listing

Floatation in the ECM can be achieved in one of the following methods:

• By public offer which requires a Prospectus, pursuant to the European Prospectus Directive, and an approval by CySEC (unless offering is less than €5 million and is addressed to less than 150 persons) or

• By private placement, which requires only an Admission Document to be submitted to the CSE or

• A combination of the abovementioned methods or

• By listing of existing shares, which requires an Admission Document to be submitted to the CSE.

It should be noted, that whenever the size of a new issue and the number of persons to which the issue applies, falls within the limits of the Prospectus Law/ Directive, the Admission document should be a full Prospectus, that has to be prepared and approved according to the legal provisions (i.e. approved by the CySEC, if in Cyprus). Once the Prospectus is approved, an issuer listed in the ECM will only have the obligations of that market.

Advantages of ECM listing

There are many advantages through ECM listing including:

• Lower cost of listing compared to the regulated markets;

• Easiness of raising capital;

• Shares and bonds are more attractive to investors as listing provides an exit strategy;

• Lower cost of continuous obligations compared to regulated markets;

• The status of a listed company may assist in attracting investors;

• Serves as preparation for listing in the regulated markets of the CSE;

• Offers an alternative for companies delisted from the regulated markets of the CSE.

The tax benefits

The Cyprus tax legislation is fully compliant with the EU Acquis Communautaire and EU Directives. It is in full compliance with the code of Conduct for Business Taxation and against harmful tax competition. Cyprus has a double tax treaty network with over 60 countries. In addition to these advantages, there are significant tax benefits offered by the Cyprus tax legislation such as:

• One of the lowest corporate tax rates in EU at 12,5%

• Group relief availability

• Exemption from tax on foreign dividends (subject to meeting one of two exemption conditions)

• Exemption from tax on profit from sale and/or revaluation of qualified securities

• No capital gains tax on disposal of shares/units

• No withholding taxes on dividend, interest and royalty payments (under certain conditions) to nonresident shareholders or non-domicile resident shareholders

For more information please feel free to contact us at


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