Republic of Cyprus Ministry of Commerce, Industry & Tourism 1 Frequently Asked Questions 1. Which...

Republic of CyprusMinistry of Commerce, Industry & Tourism 1

Frequently Asked Questions

1. Which are Cyprus's competitive advantages?

2. Can EU and non-EU nationals register a company in Cyprus and what is the minimum capital for establishing a business?

3. What are the Legal Forms of Entities?

4. What is the procedure for registering a company?

5. What are the advantages of Cyprus tax system?

6. What are the labor costs in Cyprus in comparison to the European Union?

7. What is the cost for incorporating a company?

Question: 1-7 of 14


Frequently Asked Questions

8. What is the procedure for obtaining a work permit?

9. How many third country nationals can a company employ?

10. What are the figures of FDI inflow during the last years?

11. Give some examples of foreign companies that have invested in Cyprus.

12. What measures have been taken by the Government in order to encourage more FDI investment?

13. What are the main sources of FDI inflows?

14. What are the main changes since Cyprus's accession to the EU?

Question: 7 -14 of 14


1) Which are Cyprus's competitive advantages?

Cyprus offers a unique basket of advantages to foreign investors utilizing Cyprus as a base for conducting their business activities worldwide. Its competitive advantages derive from:

• Strategic geographical location

• Favourable business climate

• Fiscal regime

• Stable macroeconomic environment


…Which are Cyprus's competitive advantages?

• High educational level of the labour force in conjunction with the comparatively low level of graduates’ remuneration

• Modern legal, banking and financing systems

• Excellent infrastructure with advanced transport and telecommunications network

• Ease of communication


2) Can EU and non-EU nationals register a company in Cyprus and what is the minimum capital for establishing a company?

In order to enhance further the foreign investment intensity, the Cyprus Government has fully liberalized the Foreign Direct Investment (FDI) policy. Thus, EU nationals as non-EU nationals have the same right to establish a company in Cyprus since foreigner’s participation percentage limitation has been abolished. Notably, there is no minimum share capital.


3) What are the Legal Forms of Entities?

• Companies (private or public) • General or limited partnerships • European Company (SE) • Branches

Foreign investors may establish any of the following legal entities in Cyprus by registering at the Department of the Registrar of Companies and Official Receiver in Nicosia:


4) What is the procedure for registering a company?

The procedure for registering a company in Cyprus is fast and straightforward:

• Initially, an application for the approval of the legal entity’s name is submitted.

• After securing the legal entity's name, the relevant documents for the legal entity’s registration (i.e. Memorandum of Understanding, Articles of Association, etc.) are to be submitted depending on the type of the legal form of the entity.


… What is the procedure for registering a company?

• In the case of registering a company (private or public) the documents are to be submitted through an advocate / lawyer practicing in Cyprus.

Note: For a complete list of lawyers, visit the Cyprus Bar Association's website (www.cyprusbarassociation.org).


5) What are the advantages of Cyprus tax system?

Cyprus tax system has been reformed to comply with the EU Acquis Communautaire, the appropriate actions have taken place to maintain Cyprus’ competitiveness as an international business centre and enhance its attractiveness as a suitable jurisdiction for holding companies.

• Corporate Tax: All companies are subject to a uniform tax rate of 10%, the lowest tax rate in the European Union.

Personal Income Tax: Based on the Eurostat´s statistics Cyprus does not only exhibit the lowest corporate tax rate, but also one of the lowest top statutory personal income tax rate at 30%


• Double taxation agreements: Cyprus has developed a wide network of Double Tax Agreements with over 40 countries, ensuring that the same income is not taxed twice

• Special Tax treatment: Cyprus is considered as one of the most competitive shipping centers in the world in terms of registration fees and taxes.

• Value Added Tax: Value added tax rate is imposed on the supplies of goods and services as well as on the imports to Cyprus. The standard rate of 15% applies to Cyprus, the lowest rate permitted in the EU

… What are the advantages of Cyprus tax system?


•The labour costs in Cyprus are significantly lower compared to the European Union average. Specifically, the average hourly labour costs, based on Eurostat Yearbook 2008, of Cyprus was €11.98 while that of EU27 was €20.35; while, within the structure of the labour costs, Cyprus exhibits one of the lowest shares of social security costs paid by the employer.

• It is worth mentioning that, based on Eurostat statistics 2007, Cyprus was among the leading member states exhibiting a labour productivity in all high-tech sectors above the EU-25 average and a total personnel costs per person employed below the EU-25 average.

6) What are the labor costs in Cyprus in comparison to the European Union?


7)7) What is the cost for incorporating a What is the cost for incorporating a company ?company ?

Type of Company Type of Company Fee in Fee in €€

Name Approval 8,54 Normal Procedure 25,36 Accelerated procedure

Registration of a limited liability company by shares or guarantee, with share capital

102,52 plus 0.6% subscription tax on nominal capital 187,95 Accelerated procedure

Registration of a limited liability company by shares or guarantee, without share capital

170,86 Normal Procedure256,29 Accelerated Procedure


Type of Company Type of Company Fee in Fee in €€

Application for registration of a general or a limited partnership

102,52 Normal Procedure136,69 Accelerated Procedure

Application for registration of a Brach

256,29 Normal Procedure 341,72 Accelerated Procedure

Application for registration of a Business Name

68,34 Normal Procedure 102,51 Accelerated Procedure

……What is the cost for incorporating a What is the cost for incorporating a company ?company ?


8) What is the procedure for obtaining a work permit?

1. The majority of the company’s shareholders should be foreign shareholders and in the case of shareholders whose ultimate owners are foreign companies, they should be declared in order to be approved by the Civil Registry and Migration Department (CRMD).

Third country nationals and all companies of foreign interest wishing to register a company in Cyprus and employ other third country nationals need to obtain a residence and employment permit by the Civil Registry and Migration Department. Some of the most important requirements they need to fulfill are the following:


2. In case where the percentage of foreign participation in the share capital of a company is equal or below fifty percent (50%) of the total share capital, this percentage should represent an amount equal or higher than €171.000 in order for a company to be considered eligible.

… What is the procedure for obtaining a work permit?


9) How many third country nationals can a company employ?

Eligible companies which fulfill the above conditions may employ third country nationals in the following positions. Companies should not commit themselves to employing third country nationals for all the following positions before securing a Temporary Residence and Employment Permit from the Civil Registry and Migration Department (CRMD):

A) Executive DirectorsB) Middle Management StaffC) Supportive Staff


A) Executive Directors

The term ‘Executive Directors’ includes third country nationals registered as:

• Consulting Directors or Partners (in the Registrar of Companies)

• General Managers of branches and subsidiary foreign companies

• Departmental Managers


A) Executive Directors

- The maximum number of such executives is five (5) unless the CRMD is persuaded that a greater number is justified.

- The minimum acceptable total annual salary (annual salary plus any additional allowances/benefits) for a newly appointed Executive Director is €41.000. This amount may be adjusted from time to time according to fluctuations in the salary index.


B) Middle-management staff, executive staff and any other key personnel

- The abovementioned staff includes Directors who are not considered to be Executive Directors as well as other Executive/Middle-management staff or other managerial, clerical or technical personnel with an annual salary ranging from €20.503 to €40.999. The amounts may be adjusted from time to time according to fluctuations in the salary index.


B) Middle-management staff, executive staff and any other key personnel

- The maximum number of employees permitted in this category is 10. The CRMD has the discrete authority to decide on the employment of more than 10 people if justified, depending on each company’s operation data. In the case that the total maximum number is exceeded, the company should justify the necessity of the employment of third country nationals, taking into consideration the payments as well.


C) Supporting Staff

-All third country nationals employed in other professional, managerial, technical, clerical etc. positions in Cyprus and do not fall under the abovementioned categories (a) and (b), are classified in the remaining supporting staff.

- Companies are expected to employ Cypriots or European citizens for this category. In case that there are not available or suitable Cypriots or European citizens with the required qualifications, a company may employ third country nationals in positions of this category.


10) What are the figures of FDI inflow during the last years?

Cyprus ranks among the front runners of the world according to the latest UNCTAD "World Investment Report 2008", indicating both high FDI performance and high FDI potential.

• Notably, Cyprus has moved upwards in 2007 and ranks among the top 20 rankings for inward FDI performance; whereas, as per the outward FDI performance index it ranks as the 21st top in the world.

•The FDI inflows for 2007 were above 2 billion dollars continuing an upward trend for fourth consecutive year, while showing an increase in the range of 75% from year 2005; indicating the country's attractiveness as an international investment and business centre.


11) Give some examples of foreign companies that have invested in Cyprus?

Some examples of foreign investments taking place in the recent years in Cyprus is

● Kommunalkredit International Bank Limited ● Austria (Banking sector) ● Neptune Marine Oil & Gas Limited ● Norway (Drilling contractor specialized on drill ships) ● Aer Rianta International ● Ireland (PW, utilities , logistics), Intracom Holdings Ltd ● Greece (Telecommunications, information technology) ● Carrefour ● France (Retail), International Air Charter plc ● UK head office (Aerospace sector) ● Bank of Beirut ● Lebanon (Financial services), Starbucks ● USA (Restaurant) ● GFI ● UK (IT & software)


12) What measures have been taken by the Government in order to encourage more FDI investment?

The Ministry of Commerce, Industry and Tourism by realizing the importance of FDI it has demonstrated a clear and unequivocal commitment to investment promotion, attraction, facilitation and support by:

• Liberalizing the FDI Policy

• Reforming the favorable tax regime

• Establishing the Cyprus Investment Promotion Agency

• Establishing the One Stop-Shop


… What measures have been taken by the Government in order to encourage more FDI investment?

In order to encourage FDI, the Government:

• Is planning to establish by the end of 2009 the ´Point of Single Contact´

• Provides to the investors investment incentives

• Undertakes the responsibility of accelerating the Licensing Procedures related to the realization of investments


13) What are the main sources of FDI inflows?

• The leading sources of FDI inflows to Cyprus in 2007 were from the European countries (95.38%); out of which 64% were from EU-25.

• Over the years 1997 to 2007, the FDI inflows to Cyprus from European countries, on average, corresponded to 84.4% of the total FDI inflows.

• Meanwhile, the top sources, of inward investments to Cyprus for the year 2007, by country, were United Kingdom, Russian Federation and Netherlands while that of 2006 were United Arab Emirates, Russian Federation and Greece.


14) What are the main changes since Cyprus's accession to the EU?

• The accession to the EU has confirmed Cyprus’ position as an important player in the European and Middle East region, and reaffirmed its potential as a rapidly developing market.

• Remarkably, ever since Cyprus’ accession to EU, the total number of FDI investments to Cyprus has shown a continuous upward trend; the total FDI´s for the year 2007 was double that of 2003 (increase in the range of 101%).


… What are the main changes since Cyprus accession to the EU?

• The Euro provides long term opportunities for further increase of foreign direct investments due to, among others, the enhancement of macroeconomic stability and investors confidence, the reduced transactions costs i.e. for exports and imports, the elimination of the exchange risk, the anticipated lower interest rates that will lead to lower cost of financing


… What are the main changes since Cyprus accession to the EU?

•The first year since adoption of Euro has proven to be successful for Cyprus. The Government has achieved a smooth transition from the Cyprus’ pound to the Euro. It is estimated that the euro currently contributes towards the safeguarding of Cyprus’s healthy macroeconomic framework against the possible impacts of a global economic crisis

•In parallel, joining the EU and euro zone positively affected the tourist industry and have facilitated the boosting of trips between Cyprus and the European Union countries

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