Author: techlink

On 9 June 2022, the House of Representatives has approved amendments to the Cyprus Companies Law Cap 113 regarding the financial reporting obligations of Cyprus companies.

Companies with less than €200,000 turnover and less than €500,000 of net assets should submit their financial statements for a “review” by a statutory auditor instead a statutory audit as per the provisions of the International Standard on Review Engagements 2400.  A “review” engagement provides limited assurance and confirms that there are no material modifications that should be made to the financial statements to be in conformity with the financial reporting framework.

It should be noted that the Law excludes the following types of companies from the lighter financial reporting obligations :

• Companies that are regulated and supervised by independent authorities.
• Parent companies that are required to prepare consolidated financial statements.
• Subsidiaries whose parent company must prepare consolidated financial statements.

The amendments will apply from 1 January 2023, therefore applicable to the financial year 2022 onwards.

In 2021, India’s Ministry of Finance issued an order advising that Cyprus has been classified as a ‘Category I’ country, being an approved jurisdiction where funds based/regulated in Cyprus can be used for the purposes of investing into Indian securities. Cyprus is the only European Union state to be granted such status as of now.

The Category I FPI includes entities from Financial Action Task Force (FATF) member countries or from any country specified by the Indian government by an order or by way of an agreement or treaty that are:

• Appropriately regulated funds.
• Unregulated funds whose investment manager is appropriately regulated and registered as a Category I FPI.
• University-related endowments of such universities that have been in existence for more than five years.

Although Cyprus is not directly a FATF member, following this Governmental approval, Cyprus-based funds are now eligible to be registered as Foreign Portfolio Investors (FPIs), providing an investment route to Indian securities to non-residents. Such securities include shares, government bonds, corporate bonds, non-convertible debentures and units of business funds. 

Numerous benefits arise from receiving a Category I FPI License including:

• Exemption from Indirect Transfer provisions under the Indian Income-tax Act, meaning that any change in the value of units in an FPI outside India is not subject to capital gains tax in India
• Eligibility to invest in Offshore Derivative Instruments (ODIs)
• Lighter KYC requirements
• Enhanced trading limits to invest in derivatives

Undeniably, such an initiative offers great potential for cooperation between the two countries and creates new opportunities for expanding the Cyprus fund industry.

Cyprus is a unique jurisdiction not only for EU-regulated fund management solutions, for EU inward investments, but also as a vehicle for investments outside the EU. As an EU member, it has adopted all EU directives and regulations regarding Alternative Investment Funds (AIFs) and Undertakings for Collective Investment in Transferable Securities (UCITS). In combination with its strategic geographical location, low setup and maintenance costs, as well as several tax incentives, Cyprus offers the safety and stability that investors are looking for, in a constantly evolving market.

Whether you are a HNWI or a venture capitalist, Nobel Trust can offer you professional advice on local and international investment fund matters. Please contact us for further information or assistance.

On the 13^th May 2022, the Cyprus Securities and Exchange Commission (CySEC) announced that the online platform for the Cyprus Beneficial Ownership Register of Express Trusts and Similar Legal Arrangements (CyTBOR) will be accessible to trustees as of 17/05/2022 and all involved parties as of 17/06/2022.

CyTBOR is the service through which trustees submit beneficial ownership information regarding express trusts and similar legal arrangements, to comply with their registration obligations under section 61C(5)(a) and section 61C(5)(b) of the AML/CFT Law. The function and rules governing the CyTBOR are described in section 61C of the AML/CFT Law and in CySEC’s Directive for the Prevention of Suppression of Money Laundering Activities (Beneficial Ownership Register of Express Trusts and Similar Legal Arrangements) (the ‘’Directive’’).

The purpose of CyTBOR is to enhance transparency in relation to the ownership and control of express trusts and similar legal arrangements, which is expected to act as an impetus to the fight against the use of the financial system for money laundering and terrorist financing purposes.

According to section 61C(5)(b) of the AML/CFT Law, subject to the provisions of paragraph (c), express trusts and similar legal arrangements shall be entered in the CyTBOR, if:

• the trustee of an express trust or the person holding an equivalent position in a similar legal arrangement is established or residing in the Republic, or
• the trustee of an express trust or the person holding an equivalent position in a similar legal position, who is established or resides outside the European Union, enters into a business relationship or acquires immovable property in the name of express trust or similar legal arrangement in the Republic.

The above definitions are applicable to trustees of both existing and new express trusts or persons holding an equivalent position in both existing and new similar legal arrangement.

Paragraph 3(2) of the Directive provides that an express trust is the trust which is expressly and voluntarily set up by a settlor and does not include a trust which comes into being through the operation of the law or a trust for which there is no clear intention or decision of a settlor to establish a trust or similar legal arrangement, such as the Constructive Trust. Whether a trust is considered an ‘’express trust’’, this should be assessed by each trustee, taking into consideration the definition provided in the Directive.

It is the obligation of the trustee of an express trust or the person holding an equivalent position in a similar legal arrangement, to register an express trust or similar arrangement to CyTBOR and provide beneficial ownership information of any express trust or similar legal arrangement under its administration.

When an express trust or similar legal arrangement has multiple trustees or persons holding an equivalent position, it is a matter for the trustees or the persons holding an equivalent position to decide and appoint one of them a) to complete the registration process and b) to submit the relevant information in case of any changes to the express trust or similar legal arrangement. The rest of the trustees of an express trust or the persons holding an equivalent position in a similar legal arrangement will not be able to administer the express trust or similar legal arrangement through CyTBOR but rather only view it upon payment.

A trustee of an express trust or the person holding an equivalent position in a similar legal arrangement who is established or resides in the Republic, must submit an application for registration in the CyTBOR within fifteen (15) days from his appointment.

A trustee of an express trust or the person holding an equivalent position in a similar legal arrangement who is established or resides outside the European Union and enters into a business relationship or acquires immovable property in the name of an Express Trust or similar legal arrangement in the Republic, within fifteen (15) days from the date of forming the business relationship or acquisition of the real estate, as the case may be, submits an application for registration in the CyTBOR.

A trustee of an existing express trust or a person holding an equivalent position in an existing similar legal arrangement, submits an application for registration in the CyTBOR the soonest.

In accordance with the AML/CFT Law, the beneficial owners in the case of trusts and similar legal arrangements are:

• the settlor
• the trustee
• the protector, if any
• the beneficiary, or where the individual benefiting from the legal arrangement or legal entity have yet to be determined, the class of persons in whose main interest the legal arrangement or entity is set up or operates
• any other natural person exercising ultimate control over the trust by means of direct or indirect ownership or by other means.

The following information needs to be registered in CyTBOR with respect to the trusts:

• Name of trust
• Country and date of creation
• Termination date (if applicable)
• Country to which the trustee is located or residing and their residential address
• Date of commencement of the business relationship, the name of the person with whom such relationship is established together with the document which governs the relationship (Applicable only in cases where the trustee resides outside EU and establishes a business relationship on behalf of the trust in the Republic)
• Registration number and address of the immovable property together with the title deed of the property (Applicable only in cases where the trustee resides outside EU and acquires immovable property on behalf of the express trust in the Republic)
• Any other information and/or supporting documentation requested by CySEC for identification purposes.

The following information needs to be registered in CyTBOR for the beneficial owners of the trust:

• Name and surname and father’s name
• Date and place of birth
• Nationality
• Residential Address
• Number, type and country of issuance of identification document
• Date of death (where applicable)
• Date on which the specific person became a beneficial owner
• The nature and extent of the rights which are directly or indirectly held by the beneficial owner
• The role of the beneficial owner in the trust
• Any other information and/or supporting documentation requested by CySEC for identification purposes
• In case the trust has class of beneficiaries, CySEC requests a description of classes and the members of each class and also the nature and extent of the rights each class of beneficiaries has.

It should be mentioned that where there are multiple beneficial owners (e.g. multiple settlors, trustees or persons holding an equivalent position), relevant information should be provided for each beneficial owner.

Whenever there is a change to the beneficial ownership information of a trust which is reported on CYTBOR, the trustee is required to submit updated information on the particular trust on CYTBOR within fifteen (15) days from date on which the change is recorded by the trustee.

Changes to the beneficial ownership information include:

• Changes to the identification details of the beneficiaries (e.g. change in name and surname the settlor, the trustee or person holding an equivalent position or the beneficiary, change in passport details, country of residence, etc).
• Appointment or removal of beneficiaries.

The data submitted to the CyTBOR are not publicly available. Access to beneficial ownership information on CyTBOR is granted to the following persons:

• To a trustee of an express trust or other person having an equivalent position to other similar legal arrangement.
• The responsible Supervisory Authority as defined by Section 59 of the AML Law, Unit, Customs and Excise Department, Tax Department and Police without any limitations.
• To obliged entities for due diligence purposes and identification of their clients upon payment of respective fee.
• To legal or physical persons that can demonstrate legitimate interest in accessing the CyTBOR and proving the same through relevant procedure, upon payment of respective fee.
• To legal and physical persons in relation to a trust which holds or owns a controlling interest in a company that is not incorporated in Cyprus upon the written request of the said persons and payment of the respective fee.

Legitimate interest:

The framework regarding accessing the information on the beneficial ownership of a trust on the basis of a ‘legitimate interest’, is provided in section 61C (12)(c) of the AML/CFT Law and paragraph 13 of the Directive. CySEC will decide ‘legitimate interest’ on a case-by-case basis taking into account that the person requesting access to the information, has satisfactory demonstrated, with supporting evidence and information, that his interest is specifically related to and contributes to the combating of money laundering and the financing of terrorism, including such evidence and information from previous actions and activities taken to that direction.

Organizations that employ personnel in Cyprus have several obligations under Cyprus employment law. The aim of the legislation is to secure the employee’s salary, safety and well-being in the workplace.

The current trend is that a lot of organizations are outsourcing their payroll to free-up valuable time and resources and focus on doing business, while ensuring that all their obligations are handled efficiently.

Nobel Trust offers a comprehensive range of payroll services to organizations that have employees in Cyprus and need support in preparing their payroll, obtaining residence and work permits, and arranging all human resources related matters.

Employment Obligations in Cyprus

Employers are obliged to register all their employees under the Social Insurance Scheme and pay social insurance contributions monthly as a percentage of their employees’ gross salary, including regular bonuses and benefits. They should also withhold social insurance contributions, and Pay-As-You-Earn Tax (PAYE), from employees’ gross salaries, as applicable.

Additionally, employers should keep and maintain employee-related documents such as their employment contract, ID/Passport copy, contact details, social insurance, and tax identification numbers, as well as work and residence permits, where applicable.

Employment/Payroll Management by Nobel Trust

Our professional team can provide you with an all-inclusive range of payroll services that are tailored to meet your company’s needs and contribute to its growth.

• Preparing and safekeeping employment-related information and documentation
• Registering the employer and employees with the relevant authorities
• Calculating salaries and arranging payments at the end of each payroll run
• Preparing and submitting forms to the Tax Department and assisting employees in preparing declaration of allowances
• Ensuring compliance with statutory filing deadlines, reviewing PAYE assessments, and filing objections when necessary
• Advising on any available tax incentives and payroll-related matters
• Obtaining residence and work permits for EU and non-EU employees, if required
• Corresponding with the local authorities and updating on any employment related changes. 

Benefits of working with us

• Smooth and transparent business establishment in Cyprus
• Handling employee payroll in an accurate and timely manner
• Minimization of compliance and regulatory risks
• Time and cost efficiency and enhanced data protection
• Increased flexibility along with specialized local knowledge.

The Nobel Trust team is experienced in both Cypriot legislation and applicable EU Directives and can assist in establishing your company in Cyprus while ensuring full compliance with the applicable laws and regulations.

For further information please contact us at [email protected]  

The Cyprus Government has introduced the “Cyprus Permanent Residency Scheme” aiming to attract and encourage high net worth individuals who wish to invest in Cyprus, by establishing a set of revised criteria and terms based on which non-Cypriot entrepreneurs/investors may be granted the Cyprus Permanent Residence.

ELIGIBILITY CRITERIA

The applicant must meet one of the investment criteria as well as the quality criteria as described below.

A. INVESTMENT CRITERIA

The applicant must invest at least €300,000 in one of the following investment categories:

1. Purchase of a house or apartment of at least €300,000 (plus VAT)
2. Purchase of other types of real estate, non-residential, such as offices, shops, hotels or related estate developments or a combination of these with a total value of €300,000 (plus VAT)
3. Investment worth €300,000 in the share capital of a Cyprus operating company, having a proven physical presence in Cyprus and employing at least 5 people.
4. Investment worth €300,000 in units of approved Cyprus Investment Funds in the form of an AIF, AIFLNP and RAIF.

The applicant should also be able to prove that he has at his/her disposal a secure annual income of at least €30,000 deriving from abroad. The annual income increases by €5,000 for each dependent family member and €8,000 for each dependent parent of the applicant and/or his/her spouse.

B. QUALITY CRITERIA

The applicant and his/her spouse must satisfy all of the below criteria:

1. Clean criminal record from their country of residence.
2. Confirmation of no employment in the Republic with the exception of being employed as Directors in a Company in which they have chosen to invest under this policy.
3. In cases where the investment does not concern the company’s share capital, it is permitted to be shareholders in Cyprus companies. In cases where the applicant chooses to invest as Sections 2,3 or 4, he should provide evidence regarding his/her accommodation in the Republic.

THE PROCESS IN A NUTSHELL

Submission of an application form with all relevant supporting documentation to the Civil Registry and Migration Department, including proof of payment of at least €300,000 in relation to the investment.

It is estimated that the examination period of the application from the date of submission of the completed application will be approximately two months.

OUR ADDED VALUE ADVISORY SERVICES

Our team of experts in Private Client Services can provide professional assistance in the process of obtaining an Immigration Permit. Our comprehensive services include:

• Advice on the required criteria for the Cyprus Permanent Residency Program.
• Assistance with possible investment opportunities.
• Preparation and submission of all the requested documentation and application forms for the program to the relevant authorities.
• Regular communication and monitoring of the process with government officials.
• Conducting real estate due diligence.
• Drafting contracts for purchase of property/other investments.
• Examination of possible tax implications arising from the investment.
• Legal and other professional assistance.
• Structuring and management of the investment.

For more information, please contact us at +357 22 022777 or [email protected]

EMPLOYMENT OF NON-EU NATIONALS IN INTERNATIONAL COMPANIES IN CYPRUS

General Policy

A Cyprus company that is controlled by Non-EU nationals can apply for Cyprus work permits for Non-EU Nationals permitting them and their families to work and live in Cyprus. In such cases, a temporary residence and employment permit is necessary.

The Council of Ministers approved on October 15th, 2021 the “Strategy for Attracting Businesses for Activities or/and Expansion of their Activities in Cyprus”.

The Strategy is a very important initiative towards attracting both international investments and talent and aiming to enhance Cyprus’ position as an international high-growth business center.

The careful and thorough planning ensures that the benefits derived from the successful implementation of the Strategy will significantly contribute to redefining the Cyprus growth model.

Eligible Companies

Companies of foreign interest must meet the following criteria in order to be eligible to employ Non-EU nationals in Cyprus:

− The majority of the company’s shares are owned by third-country nationals. It is noted that in the event that the percentage of the foreign participation in the share capital of the Company is equal to or below 50% of the total share capital, the Company is eligible when this percentage of the share capital represents an amount equal to or greater than the amount of €200,000.

− Public companies registered on any recognised stock exchange.

− Companies of international activities (formerly off-shore), which operated before the change of regime, whose data are held by the Central Bank.

− Cypriot shipping companies.

− Cypriot high-tech/innovation companies. An enterprise qualifies as ‘High Technology Company’ if:

1. it is already established and has a presence in the market, and
2. it has a high level or experimental R&D intensity, and
3. it developed product(s) that fall into one of the following categories: products related to aviation and space industry, computers, electronic and telecommunication products, pharmaceuticals, biomedical, research and development equipment, electrical machinery, chemicals, non-electrical machinery.

− Cypriot pharmaceutical companies or Cypriot companies active in the fields of biogenetics and biotechnology.

− Companies of whom the majority of the total share capital is owned by persons who have acquired Cypriot citizenship by naturalization based on economic criteria, provided that they prove that the conditions under which they were naturalized continue to be met.

Companies satisfying any of the above criteria need to:

1. Establish and operate independent offices in Cyprus, in suitable premises, separate from any private housing or other office except in the case of business co-habitation is necessary.
2. If a company is not new, the audited Financial Statements, tax clearance and proof of payment of the annual levy to the Registrar of Companies need to be submitted together with the application.

Employee Permits

• Minimum gross monthly salary €2,500.
• Holding of a university diploma or degree or equivalent qualifications or certificate/verification of relevant experience in a corresponding employment position of at least two years.
• Presentation of an employment contract for a minimum of two years.

The duration of residence and employment permits could be for up to three years.

The issue of the residence and employment permits will be made within 1 month.

The maximum number of third-country nationals eligible for employment is set at 70% of all employees in a period of 5 years, from the date of the approval. In case the company did not employ the 30% Cypriot workers, the Cyprus Government will review each case independently at the end of the 5^th year and decide accordingly.

Family Members

Direct and free access to the Cyprus labour market with paid work, to spouses whose spouse has obtained a residence and work permit in Cyprus, and who receives a minimum gross monthly salary of €2,500.

The Minister of Finance has announced the intention of the government to introduce the following incentives:

Tax

• Tax exemption of 50% to new residents-employees with annual remuneration exceeding €55,000.
• Existing employees with earnings of less than € 100K have the possibility to extend the benefit from 10 to 17 years. Potential beneficiaries are also individuals with annual remuneration between €55,000 and €100,000 for the remaining a period of 17 years.
• Possibility of extending the 50% tax exemption for investment in certified innovative companies by corporate investors.
• Possibility of an increased deduction on research and development costs (e.g. by 20%). Eligible research and development costs will be deducted from taxable income at 120% of actual.

Citizenship

Right to apply for naturalization:

• After 5 years of residence and work in the Republic, instead of 7 that is valid today.
• Further reduction to 4 years if they meet the criterion of holding a recognized certificate of very good knowledge of the Greek language

The Republic of Cyprus is implementing the Digital Nomad Visa Scheme followed by the decision of the Council of Ministers on 15 October 2021, offering initially 100 residence permits. Further to this, as per the Council of Ministers Decision dated 3rd March 2022, the Digital Nomad Visas number maximum limit has been increased to 500. The Scheme forms part of the Strategy for attracting businesses in Cyprus.

What is this Scheme?

The Cyprus Digital Nomad Visa Scheme allows third country nationals to reside temporarily in Cyprus and perform work for clients located abroad or work for a foreign employer, using digital means.

The Scheme aims to promote Cyprus as a business and innovation hub which provides state of the art technology infrastructure and a pleasant environment to live and work from.  

Who are the beneficiaries?

Non-EU or non-EEA nationals who:

• Can perform work remotely through digital means;
• Are employed in a company registered abroad, for which they can work regardless of location, 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 €3,500 and satisfy additional prerequisites.

What are the benefits?

Individuals who receive the Digital Nomad residence permit will benefit from the following:

• Right to reside in Cyprus for up to one year, with a possibility of renewal for another two years.
• Right to be accompanied by family members, for the same period as the Digital Nomad, without the right to engage in any economic activity in Cyprus.
• Right to receive Cyprus Tax Residency provided that they reside in the Republic for at least 183 days within the same tax year and they are not tax residents in any other country.

Why Cyprus?

Cyprus is an ideal digital nomad location because of its foreigner-friendly culture, and the quality lifestyle offered which stems from various factors including its wonderful climate and beautiful natural surroundings, the low crime rate and the reasonable cost of living. Additionally, Cyprus offers a great combination of economic stability, a favourable taxation system, and ease of setting up a business.

How can Nobel Trust support?

Nobel Trust can provide professional assistance in acquiring a Digital Nomad Visa and support on any other local requirements and filing obligations. For further information please contact any of our team members.

A Cyprus company that has been struck off from the registry maintained by the Registrar of Companies for non-compliance with its statutory obligations as provided for in the Cyprus Companies Law, may currently be reinstated without the need to obtain a court order and be considered to have been in existence as if it had not been deleted from the registry.

A possibility for administrative reinstatement is provided to a company that has been deleted from the companies register due to non-compliance with the Companies Law for the following reasons:

• Failure to register with the Registrar of Companies any document required by law (e.g. Annual Reports)
• Failure to pay the annual fee
• If the Registrar of Companies had reasonable cause to believe that the company did not carry out operations or did not operate.

A director or member of the company may submit an application for administrative reinstatement (form HE64) to the Registrar of Companies within twenty-four (24) months from the date of its deletion. The application form must be accompanied by:

• All forms, reports, financial statements and documents that were due before the date of its deletion
• All fees, charges and/or omission fines due that had arisen and/or were imposed before the date of deletion
• Written consent of the competent representative of the Republic for the reinstatement of the company, in the event that its property and/or rights have been handled by the Republic
• The fee of twenty euros (€ 20) and an additional fee of twenty euros (€ 20) in case there is a need to expedite the procedure.

Provided that the Registrar of Companies is satisfied that the above conditions have been met, it will reinstate the company and the decision will be published in the official Cyprus government gazette.

A certificate of reinstatement will be issued and the date of issue of the certificate of reinstatement by the Registrar of Companies is considered as the date of the company’s reinstatement in the register.

Nobel Trust can be of assistance on the administrative reinstatement of Cyprus companies. For further information please contact us at [email protected]