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Cyprus Naturalisation: updated and more flexible rules

Cyprus naturalisation – updated and more flexible rules

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On the 30th November 2023, the Cypriot House of Representatives approved an amendment of the Civil Registry Law, relaxing the rules for granting Cypriot citizenship to foreign nationals and modernising the current legal framework. The aim is to attract and encourage highly skilled tech professionals and their families to stay in Cyprus. The bill is subject to government approval before it comes into force.

This initiative enhances the country’s reputation as a continuously developed international business hub and is expected to foster innovation, cultivate domestic talent and fuel economic growth.

The amendments relate mainly to the amount of time that foreign nationals are expected to reside in Cyprus before applying for naturalization, as well as their knowledge of the Greek language. There are also special provisions which apply to individuals with high qualifications and skills in the technology sector.

Applicants must meet the following main criteria:

• Legal and continuous physical stay in Cyprus for the twelve months preceding the application for naturalisation (periods of absence should not exceed 90 days in total).
• Legal physical stay in Cyprus for at least seven out of ten years preceding the aforesaid 12-month period (periods of absence should not exceed 90 days in total, per year).
• To be of good character and have a clean criminal record.
• To be financially self-sustained and have a suitable place of residence.
• To have sufficient knowledge of the Greek language (certificate of basic knowledge, Level B1) and basic knowledge of the country’s political and social status.
• To have the intention to stay in Cyprus.

Individuals with high skills in the technology sector and working in companies of foreign interest should meet the following special provisions:

• The period of seven years (out of the last ten) of residence in Cyprus is reduced to four years for applicants having a certificate of knowledge of the Greek language of A2 level, and three years if the certificate is of B1 level.
• Family members of the applicants may also apply for naturalisation, under the same conditions. Spouses or civil partners of the applicants should have the same certificates of knowledge of the Greek language as the applicants. Children of the applicants that reach adulthood (18 years of age) during the examination of their parent’s application should still be considered minors for the purpose of the Law and be eligible for naturalisation. Dependent adult children with disabilities are also eligible.

The applications of highly specialised professionals are examined on a ‘fast-track’ basis which does not exceed eight months, upon the payment of a fee. The details of this process and the relevant fee should be determined by way of a Ministerial decision.

It is also noted that applications for citizenship that were submitted before the aforementioned amendments shall be examined under the new criteria as described above.

For any assistance, our experienced team can guide and support you through the naturalization process. Contact us here.

Cyprus ultimate beneficial owners electronic register

Register of Beneficial Owners: Implementation of the final solution of the Electronic System

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The Department of Registrar of Companies and Intellectual Property following its announcement “Notice for registration of details of Beneficial Owners (BOs) in the Register of Beneficial Owners (BO register) and imposition of fines” dated 09/01/2023, has announced the commencement of the application of the final solution of the electronic system of the BO register from November 14, 2023.

The final solution of the electronic system will be implemented in its entirety within 2024 and constitutes of three phases:

Period 1: 14/11/2023 – 31/12/2023

All companies established or registered under the Companies Law, Cap. 113, all European Public Limited Liability Companies and all Partnerships (hereinafter ‘Organizations’) or their officers/partners are invited to enter the system of the final solution and proceed with the updating/re-registering their Beneficial Owners, even if they have already done so in the interim solution system. For re-enrollment purposes, the Beneficial Owners’ data that have already been provided in the interim solution will be shown, in order to see what has been submitted and then re-submit the same. No financial charge will be imposed during the first period. The way to enter the final solution system will be the same as that of the interim solution.

From this period as well as in the following periods, it will be possible to:

  • Exercise due diligence,
  • Obtain an exception to the information disclosure,
  • Request access to the data of minors,
  • Organizations that are listed on a regulated market, which is subject to disclosure requirements under European Union Legislation will be able to declare their exemption,
  • Organizations subject to equivalent international standards that ensure adequate transparency of proprietary information will be able to declare their exemption;
  • The Obliged Entities and the Competent and Supervisory Authorities will be able to carry out an electronic search in the system on their own. Regarding the Obliged Entities, there will be an examination and then acceptance or rejection of their role by Department officials. The online survey of Obliged Entities will be completed by paying the corresponding fee of 3.50 Euros per Organization.

It should be noted that those Organizations which have demonstrated or intended to demonstrate due diligence during the interim solution should do so in the final solution. The same applies to Organizations that will have to declare their exemption from the final solution either because they are listed on a regulated market, which is subject to disclosure requirements under European Union Legislation, or because they are Organizations subject to equivalent international standards that ensure sufficient transparency of ownership information, which should state their exemption  in the final solution.

Period 2: 01/01/2024 – 29/02/2024

Those companies incorporated or registered under the Companies Law, the European Public Limited Liability Companies and Partnerships or their officers/partners, that have not updated/re-registered the data of their Beneficial Owners into the final solution system during Period 1, will be subject to a penalty.

The charge will be applicable from 01/01/2024 until the date of updating/re-registering the Beneficial Owners’ data. After the above Organizations have paid the relevant penalty, they will be able to proceed with registration and/or suspension and/or change without any further penalty that governs the specific actions based on the relevant Directive as amended.

Those companies that have been established or registered under the Companies Law, the European Public Limited Liability Companies and Partnerships or their officers/partners, that have updated/re-registered the Beneficial Owner’s data, will not incur a penalty and will be able to register and/or suspend and/or make changes without any penalty that governs the specific actions based on the aforementioned Directive.

Period 3: from 01/03/2024 onwards

During this period, the following actions will be available:

  • Updating the Register of Beneficial Owners
  • Confirmation of Beneficial Owners
  • Mismatch
  • Electronic search in the Register of Beneficial Owners
  • Request for exemption from disclosure of information
  • Request for access to the data of a minor
  • Calculations of monetary charges where applicable

Our team can provide you with any assistance you might need with regards to the Register of Beneficial Owners. For any clarifications or questions, do not hesitate to contact us.

View original source here.

registration of ultimate beneficial owners Cyprus companies

Registration of beneficial owners data to avoid imposition of fines

Posted on | by [email protected]

The Department of the Registrar of Companies and Intellectual Property, following its announcement on the Functioning of the Register of Beneficial Owners in the interim solution, and in view of the imminent implementation of the final solution of the electronic system of the Register of Beneficial Owners, which is expected around the end of October 2023, invites all companies incorporated or registered under the Companies Law, Chapter 113, the European public limited liability companies (SE) and Cooperatives as well as their officers/partners, if they have not already done so, to register the details of their beneficial owners in the Register of Beneficial Owners of Companies and other legal entities maintained by the Department, in order to avoid the imposition of a monetary burden and/or the initiation of criminal proceedings due to non-compliance. The deadline is on 30th of September 2023.

In addition, following the start of the final solution, a period of one month will be granted for confirmation and completion of the information that has been registered in the system of the interim solution and will have been transferred to the final system by all entities. During this period, requests for information release exemptions should be filed along with reasons for exercising due diligence.

It is pointed out that, at the end of the one-month period, the automatic imposition of fines through the final solution of the electronic system of the Register of Beneficial Owners for the non-compliant companies will begin.

It is reminded that, regardless of the criminal responsibility or prosecution of any person, in case of non-compliance the company or other legal entity and each of its officials are subject to a fine of two hundred euros (€200) and a further fine of one hundred euros (€100) for each day of continued infringement with a maximum total charge of twenty thousand euros (€20,000).

Our firm has extensive expertise on the matter and would be pleased to assist your organization to meet its compliance requirements.

For further inquiries and assistance, please contact us and we will get back to you.

Income tax law amendments, Cyprus, June 2023

Income Tax Law Amendments

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On 22 June 2023, the House of Representatives passed additional amendments to the Income Tax Law with regards to Article 8(23A).

The Article provides a 50% exemption from income tax on the remuneration of individuals employed in Cyprus, subject to certain criteria. The recent amendments are as follows:

• The exemption will be granted if the individual was not a resident of Cyprus for 15 consecutive years prior to any employment in the Republic. Previously, the exemption was applicable if the individual was not a Cyprus resident for 10 consecutive years.
• The exemption will be granted for a period of 17 years from the date of employment regardless of whether the individual changed employer during this period. Previously, the exemption was only granted for the first employment of the individual in Cyprus.

It is important to note that these amendments also apply to the transitional provisions that were formerly introduced in Article 8(23A) in 2022 and that the individuals that were entitled to the 50% income tax exemption based on the old provisions of Article 8(23A), will continue to claim the exemption, provided that they meet all the requirements.

Article Amendments to the Cyprus Residency Programme

Revised Cyprus Permanent Residency

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Pursuant to the provisions of Regulation 6(2) of the Aliens and Immigration Regulations, the Minister of Interior has decided to revise the current Permanent Residency programme with the new rules coming into force on 02/05/2023.

The revision includes updated restrictions and verification procedures with regards to the granting of an immigration permit.

The recent amendments are as follows:

A.    Investment Criteria

The applicant should make an investment of at least €300,000 in one of the following investment categories:

1.    Investment in a house/apartment: purchase should be from a land development company, which should concern a first sale of at least €300,000 (plus VAT).

2.    Investment in real estate (excluding houses/apartments): purchase of another form of real estate such as offices, shops, hotels or similar developments or a combination of these with a total value of €300,000. The properties in question may also be subject to resale.

3.    Investment in share capital of a Cypriot Company with activities and personnel in Cyprus: Initial investment in the share capital of a new company or increase of the share capital in an existing company registered in the Republic of Cyprus, which is based and operates in the Republic of Cyprus and has a proven physical presence in Cyprus and employs at least five (5) people.

4.    Investment in shares of a Cyprus Investment Organization for Collective Investments (type AIF, AIFLNP, RAIF): Investment in shares of a Cyprus Investment Organization for Collective Investments whose investments should be made in the Republic of Cyprus.

When investing in residential or other properties, the applicant must make a payment into the seller’s account at a Cypriot financial institution and prove that the contract of sale was filed with the Land Registry and provide official receipts of payment, regardless of the date of delivery of the property. It must also be proved that funds come from abroad and are not a product of internal borrowing. In cases where the applicant chooses to invest in a company’s share capital or in shares of an investment organisation, his total income or part of it may also arise from sources originating from activities within the Republic, provided that it is taxable in the Republic.

Additionally, the applicant, should prove that he/she has at his/her disposal a secured annual income of at least €50,000. The annual income is increased by €15,000 for the dependent spouse and €10,000 for each minor child, and dependent adult children up to the age of 25 years.

More specifically, when the applicant invests in a house or apartment, this income can be from salaries, pensions, stock dividends, fixed deposits or rents emanating from abroad, which will only be proven by the tax declarations from the country in which he/she is a tax resident. In calculating the total income, the income of the applicant’s spouse may also be taken into account.

B.    Quality Criteria

1.    Submission of a certificate of a clean criminal record from the country of origin as well as from the country of residence (if different), which should be provided on an annual basis.

2.    Submission of a valid health insurance cover which should be provided annually, if not registered with the national health scheme GHS.

3.    Certification that the applicant and his/her spouse do not intend to work in the Republic with the exception of being employed as Directors in a Company in which they have chosen to invest within the framework of this policy.

4.    In cases where the investment does not concern a Company’s share capital, the applicant and/or his spouse may be shareholders in Companies registered in the Republic and receive dividends. They may also hold the position of director in such companies without remuneration.

5.    Where an applicant chooses to invest in real estate, a company’s share capital or in shares of an investment organisation, he/she should present information about his/her residential place and that of his/her family members in the Republic.

In addition, applicants are required to prove on an annual basis that they continue to hold the investment and that they continue to receive the required annual income for themselves and their dependants.

An Immigration Permit may also be granted to the applicant’s children who are over 18 years old and are not financially dependent on the applicant, considering that an additional investment of €300,000 will be made for each adult child. Besides, each adult child should prove that they have at their disposal a secured annual income of at least €50,000 which is increased by €15,000 for a dependent spouse and by €10,000 for each dependent minor. However, permanent residency is no longer provided to the applicant’s parents and parents in-laws.

The application period takes approximately two months and the Cyprus Permanent Residency is indefinite, provided that the applicant and his/her dependents comply with their annual obligations.

Nobel Trust has a dedicated team of experts specializing in immigration services and can be of assistance in your relocation journey. For further information please contact us at [email protected] or call us at +357 22 022 777.

Regional or Global Headquartering in Cyprus

Regional or Global Headquartering in Cyprus

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Cyprus is becoming increasingly popular as a country of choice by many international groups looking to relocate their headquarters. The country has drawn international attention and is becoming a top destination for doing business, investing and living. The benefits are multifaceted and attributed to the country’s status as a European Union and Eurozone member state with progressive legislation, regulatory regime, a stable financial environment with its advantageous tax system, and highly experienced professional service providers.

Corporate structuring is one of the country’s areas of expertise. Headquartering companies are established to channel investments into key global markets for many international companies that do business in Cyprus, the Eastern Mediterranean and even globally. With headquarters in Cyprus, companies enjoy free movement of goods, services, and capital.

As a leading jurisdiction for relocation and set up of regional headquarters, Cyprus offers an ideal location, with natural beauty, and strong history and culture, attracting human capital required to control and manage business activities.

Cyprus Tax system: tax advantages offered

  • Simple, transparent, and harmonized EU tax system
  • Tax benefits of EU directives
  • Cyprus double tax treaties with more than 60 countries
  • Notional Interest Deduction for companies receiving new equity financing which reduces significantly their taxable income
  • An Intellectual Property regime based on the Nexus approach and allowing an 80% imputed deduction on qualifying profits from the business use of qualifying intellectual property. Exemption of 4/5 of profits means that only about 20% of IP revenues are taxed at a corporate tax rate of 12.5%.
  • Attractive Cyprus tonnage tax (TT) scheme for shipowners, managers, and charterers
  • Attractive tax regime for Cyprus funds and for Cyprus fund managers
  • Capital gains are exempt from Cyprus taxation (excluding capital gains arising from the sale of immovable property located in Cyprus)
  • Profits of a foreign Permanent Establishment are exempt from tax
  • Securities trading proceeds (stocks, bonds, and certain other financial instruments) are exempt from Cyprus tax
  • Unilateral credit relief is granted to Cyprus companies for foreign taxes in Cyprus
  • No withholding tax on dividends paid by a Cyprus company, interest, or royalty payments (for use of royalties outside Cyprus) to its shareholders
  • There is no inheritance tax in Cyprus
  • There are multiple tax incentives and relieves for expatriates and individuals who seek to become tax resident in Cyprus
  • There is a friendly investor scheme for work-permits granted to non-EU employees of the employer company

Cyprus Foreign Investments

The traditional key driving forces of the country’s economy include traditional sectors of shipping, real estate, tourism and professional services. Over the last few years there is an increasing trend towards industries including energy, education, healthcare, and technology.

This latter industry is supporting the country in its transition from a global business centre to a growing technology and innovation hub. ICT companies can establish an IP holding and development company in Cyprus. The benefits include lower effective tax rates while having the legal protection applicable as per EU legislations, protocols and treaties. 

Tax incentive expenditure

TAX INCENTIVES FOR EXPENDITURE ON RESEARCH, DEVELOPMENT AND INNOVATION

Posted on | by techlink

On 18 May 2022, the government approved a tax deduction of 20% for legal entities and individuals investing in research, development and innovation, in a campaign to support the growth and competitiveness of Cyprus as a business and technology hub.

The tax deduction would be valid for three years, starting from tax year 2022. This is the second pillar of incentives followed by the incentives for headquartering being part of the scheme to attract foreign investments and businesses to Cyprus.

Following the recent geopolitical developments as well as other global factors, Cyprus has been experiencing an influx of high-tech and other companies which choose the island as a base for their operations or for relocating a part of those together with the respective human capital.

Cyprus is an emerging hi-tech jurisdiction, and such initiatives are likely to produce long term tangible results, assisting in both the island’s prosperity as well as that of the investors located here.