Headquartering and Business Relocation to Cyprus

Natalie Petrides

Lawyer – Partner - Property Department

Russian Version


By now everybody knows that Cyprus belongs to the EU, about our unrivalled sunny days and our strategic location. This is old news. Why bring Cyprus back on the Headquartering map? Does Cyprus have something new to offer to businesses and individuals that wish to relocate their businesses to Cyprus?

The answer is affirmative.

The Government of the Republic of Cyprus has launched a new action plan which has been implemented from the 1st of January 2022 to attract foreign businesses to establish or expand their activities in Cyprus. The aim of this report is to analyse this Governmental action plan. Further to highlight the headquartering investment option introduced under the permanent residency permit pursuant to regulation 6(2) of the Aliens and Immigration Regulations.



The policy for the employment of third country nationals by eligible companies in Cyprus has been simplified and thus has become more attractive. As financial issues along with human element considerations are the core of every decision to be taken, we highlight the fact that as from the 1st of January 2022 it is no longer obligatory for eligible employer companies in Cyprus to establish a bank account in Cyprus and remit to such a bank account from abroad an amount of Euro 200.000. This abolition has been most welcomed by the business world.

There are criteria to be met both at the level of the eligible company which will act as the employer in Cyprus and for the third country national employees to be employed.

Eligible companies for the employment of third country highly skilled nationals

The Business Facilitation Unit (BFU) of the Ministry of Energy, Commerce and Industry in Cyprus will need to give its approval that the prospective employer company is indeed eligible under this policy.

Eligible companies fall under the following categories:

  1. Foreign companies/undertakings operating in the Republic of Cyprus or foreign companies/undertakings intending to operate in the Republic of Cyprus, that operate in appropriate independent offices in Cyprus, separate from residences or other offices
  2. Public companies listed on any recognised stock exchange
  3. International business companies (ex -offshore companies) which operated under an older policy and the particulars of which are held by Central Bank of Cyprus
  4. Cypriot shipping companies
  5. Cypriot high-tech innovative companies
  6. Cypriot pharmaceutical companies or companies active in the sectors of biogenetics and biotechnology
  7. Companies which belong by majority to persons who have obtained Cypriot citizenship on the basis of economic criteria provided such persons are in a position to show that they still meet the conditions under which they had obtained Cypriot citizenship.

Of particular interest to foreign businesses wishing to set up headquartering in Cyprus is category 1 above, which requires that the issued share capital of such a foreign company needs to be owned at least by 50% plus 1 share by third country nationals. An affidavit by a director of the eligible company confirming this fact is one of the supporting documents that needs to be submitted to the BFU in order to obtain such an approval. Further passport copies of ultimate beneficial owners of the eligible company will need to be provided both to the BFU and to the Migration department later on the issuance of the work permits for the third country nationals.

We focus also on the fact in the event that the foreign participation of third country nationals in the issued share capital of the foreign company under category 1 above is less than 50% of the issued share capital of the company, the foreign company would still qualify as an eligible company when the percentage of third country participation in the company represents an amount equal or bigger than the amount of Euro 200.000.


A Cypriot company has an issued share capital of 2.000 shares of Euro 1 each. These 2.000 shares were issued to its shareholders at a premium i.e for the price of Euro 1.000 per share. This means that the amount which was paid by the shareholders of this company to acquire these 2.000 shares is Euro 2.000.000.

If third country nationals own 25% of the issued share capital of this company (2000 shares x 25% = 500 shares), this particular company would still qualify as an eligible company because the third country nationals had paid the eligible company Euro 500.000 (500 shares x Euro 1.000 per share) in order to acquire them. Supporting documentation as to the allotment of shares by the eligible company to its shareholders at a premium along with the relevant payment effected by such shareholders to the eligible company would need to be provided to the BFU.

A response is obtained from the BFU within one week of filing of the relevant application to them by email along with the required supporting documentation.

Employment permits of third country nationals working for companies which have been approved by the BFU

The most important changes regarding the employment permits of third country nationals introduced by the new Government policy are the following:

A maximum number of third country nationals is set at 70% of all employees over a period of 5 years from the date of joining the BFU. Re-assessment will be done by the BFU after 5 years on a case by case basis if the criterion of 30% Cypriot employees is not met.

A threshold has been introduced distinguishing between highly skilled employees and non- highly skilled employees (replacing older distinctions between directors/key personnel/specialists/support staff).

Changes introduced concerning highly skilled personnel:

a)    need to have a minimum gross monthly salary of Euro 2.500

b)    have a university diploma or degree or equivalent qualification or confirmation of relevant experience in a corresponding job of at least 2 years duration

c)    The employment contract of highly skilled personnel is of duration of not less than two years

d)    The duration of work permits issued is up to three years (before it was up to two years)

e)    The issuance of the work permit (the actual card) is ready for collection within 1 month from filing of the relevant application with the Migration department.

Changes introduced concerning non-high skilled personnel (support staff):

a)    Employment of third country nationals is permitted as support staff, provided their number does not exceed 30% of all support staff employed and provided that the third country national and the employer have entered into an employment contract duly ratified by the competent Authority in accordance with the existing applicable law. The salary level is determined on the basis of the existing applicable legislation.

b)    Duration of employment permits are up to 3 years

Family reunification of third country nationals

An important distinction is drawn between highly skilled personnel and support staff. The spouses of highly skilled personnel have an immediate and free access to the labour market once the financial supporter (i.e the employee) has obtained his/her work permit in the Republic. This option is not available for spouses of support staff (i.e who have a gross monthly salary of less than Euro 2500 per month).

It is outside of the scope of this report to outline the supporting documentation third country employees will need to show to the migration department which has remained unaltered, indicatively mentioning the medical examinations, clean criminal record from their country of residence and medical insurance policy.



This is an entirely new type of residence visa which is available to third country nationals. It is targeting third – country nationals that are self-employed or salaried employees, working remotely with employers/clients outside Cyprus, through the use of information and communication technologies.

The very essence of this type of visa is the fact that it is merely a residence visa, not an employment visa. It gives the right to holders to stay in Cyprus for up to one year with the right to renew for another two years. Applicants can be accompanied by family members who are granted a residence permit that expires at the same time as that of the financial supporter. Unlike the spouses of highly skilled employees of who work at companies which have been approved by the BFU, the spouses of a holder of digital nomad visa are not allowed to engage in any form of economic activity in Cyprus.

The holder of a digital nomad visa and his/her spouse will be considered as tax residents of Cyprus if they reside in Cyprus for one or more periods totalling more than 183 days within the same tax year, provided that they are not tax residents in any other country.

Main pre-conditions that will need to be met for a successful application for a digital nomad visa are:

  • Evidence that he/she has sufficient funds, a stable income to cover living expenses during the stay in Cyprus without recourse to the national social welfare system. The amount of sufficient funds is set at a net of Euro 3.500 per month which is proved by:

the employment or works contract or proof of employment for the duration for which the digital nomad visa will be issued

bank statements for at least 6 months showing the secured monthly net income of Euro 3.500.

evidence of receipt of funds of net amount of Euro 3.500 per month

In the event that it is not possible for the applicant to either provide a bank statement or other evidence verifying the net monthly income of Euro 3.500 then he/she will need to make a responsible declaration confirming that his/her monthly stable net income is not below the minimum threshold required for a successful application for a digital nomad visa.

The net monthly amount of Euro 3.500 is increased by 20% for an accompanying spouse and by 15% for each accompanying minor.

Other indicative supporting documentation to an application for a digital nomad visa would be medical examinations, clean criminal record from their country of residence and medical insurance policy.

Another important highlight of the digital nomad application is that upon its filing with the migration department the relevant receipt issued by the migration department gives the applicant the right to live in Cyprus until the application is examined, such period of examination ranging between 5-7 weeks.



Up to March 2021, only investors who were interested in investing in residential properties in Cyprus would even consider the permanent residency permit pursuant to regulation 6 (2) of the Aliens and Immigration regulations. In March 2021 three more investment options were introduced widening the options to potential investors.

For the purposes of this report we shall focus one of the four alternative investment options under this category, being the investment of Euro 300.000 in the share capital of a Cyprus company which operates in Cyprus, has proved physical presence in Cyprus and employs at least five persons in Cyprus. There is no limitation whether these 5 persons employed to be third country nationals/EU citizens/Cypriots.

An expected question would be the following:

Why would a third country national investor make the expense of investing Euro 300.000 in the share capital of a Cyprus company when he/she may, by registering a Cyprus company which will be owned by more than 50% by third country nationals and by obtaining the approval of the BFU as explained in point B above, to proceed to employ third country nationals with no obligation to make a cash investment from abroad?

A reply to the above question would be that under point B the work permit to be issued to third country nationals working in Cyprus are temporary permits subject to renewal. An investor who invests Euro 300.000 in the share capital of a Cyprus company would obtain a permanent residency permit, such permit not being subject to renewals, the only obligation being to visit Cyprus at least once every two years to avoid the automatic cancellation of the permanent residency visa.

So a third country national investor may invest in his/her own company, become employed by his/her company as director and hold a permanent residency permit. An option giving the investor the best of both worlds.

 Additional considerations for the permanent residency permit under regulation 6(2)

An applicant for a permanent residency permit under regulation 6(2) will need to show that he/she has a secured annual income of Euro 30.000, such amount increased by Euro 5.000 for each depended family member and by Euro 8.000 for each depended parent or parent of his/her spouse.

The advantage offered to applicants who choose to invest Euro 300.000 in the share capital of a Cyprus company as opposed to investing Euro 300.000 in residential properties is the fact that such applicants are allowed to provide evidence that the annual income they have of Euro 30.000 emanates from sources within Cyprus.

the applicant and/or spouse of the applicant may hold the position of director in their company in which they invested Euro 300.000

children of the applicant aged between 18-25 may also obtain a permanent residency permit and retain it after becoming 25 years old provided certain conditions are met.



Tax incentives have been broadened, applicable to third country national employees in Cyprus. In particular the tax incentives introduced are the following:

a)    Exemption of 50% from personal Income tax to new employees with employment remuneration of Euro 55.000 and above for a period of 10 years. This exemption will also be granted to existing employees with employment remuneration between Euro 55.000 and Euro 100.000.

b)    Exemption of 50% from personal income tax to existing employees with employment remuneration of Euro 100.000 and above for a period of 17 years (before applicable only for 10 years).



The intention of the Cyprus Government in making Cyprus an attractive hub for headquartering of business in Cyprus can be seen by various other incentives expected to be implemented in the near future, indicatively mentioning the following:

simplification and speeding up of the procedures for granting work permits under category E

extend by 31/12/2023 the existing regime of 50% exemption for investments in an approved innovative company by an individual or through an investment fund or through an alternative trading platform. The existing regime was terminated on 30/6/2021.

incremental tax allowance on research and development expenditure (e.g by 20%). Eligible research and development expenditure will be deducted from taxable income at 120% of the actual expenditure.

having the right to submit an application for naturalization after 5 years of residence and work in Cyprus or after 4 years if they fulfil the criteria for holding a recognised certificate of success in very good knowledge of the Greek language

Intensifying efforts for concluding Bilateral agreements with third countries that will be determined by the Ministry of Labour and Social Insurance, so that when a third country national who has paid social security contributions in Cyprus returns to his/her country of permanent residence he/she will be allowed to transfer the contributions paid, on the condition that with these contributions he/she did not acquire any right to a pension for old age, disability or other.

upgrading of the infrastructure for information and communication technologies and broadband connectivity.




The European Commission on the 22nd of December 2021 published a legislative proposal for a Directive to be issued, the Third Anti-Tax Avoidance Directive, known as “ATAD 3”, which sets forth rules to prevent the misuse of shell companies for tax purposes.

The Directive should be adopted early 2022 by the Council and be implemented by Member States by 30 June 2023 at the latest. The provisions should subsequently be effective in all Member States from 1 January 2024.

The Directive lays down a uniform test that will help Member States to identify undertakings that are engaged in an economic activity, but which do not have minimal substance and are misused for the purpose of obtaining tax advantages.

Once these minimum substance requirements are not met, the undertaking will be classified as “shell entity” and will sustain certain adverse tax consequences.

The above is extremely relevant information to Cyprus registered companies which are tax residents of Cyprus but do not meet the minimum substance requirements. As to which are these minimum substance requirements can be found in a relevant analysis of this concept given in our publication, “The Third Anti – Tax Avoidance Directive (ATAD 3) – The tombstone of shell entities” published, February 2022, which can be found at https://www.kinanis.com/Publications.

Cyprus Headquartering structures given in this report will provide a more solid business environment with in house management and real substance in Cyprus. 



Headquartering in Cyprus is here to stay, once we take into consideration the provisions of the third anti-tax avoidance directive mentioned above, the continuous turbulent times faced in other neighbouring countries and the actual benefits offered to businesses and individuals who do relocate to Cyprus.

By being a small country we can easily be told that we have “fish bowl” mentality in our own little world but we proved, time after time, that Cyprus is not only resilient to the hardships that have reached us but we offer business solutions which are beneficial both to Cyprus and to investors who choose to trust us with the relocation of their businesses and people.



We shall be glad to assist you in advising you as to which is the most suitable headquartering option to your business, provide guidance, drafting & reviewing of all supporting documentation needed in the selected headquartering option. To file an application to the BFU and accompany all employees/investors to the Civil Registry and Migration department for the filing of their applications. Full support will also be provided for payroll/social insurance payments/tax advice and overall co-ordination to ensure that we are your trusted point of reference in your headquartering in Cyprus.



This publication has been prepared as a general guide and for information purposes only. It is not a substitution for professional advice. One must not rely on it without receiving independent advice based on the particular facts of his/her own case.  No responsibility can be accepted by the author or the publishers for any loss occasioned by acting or refraining from acting on the basis of this publication.


March 2022




Natalie Petrides

Lawyer – Partner






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