Republic of Cyprus

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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
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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
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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

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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

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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 foreigners participation
percentage limitation has been abolished.
Notably, there is no minimum share capital.

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3) What are the Legal Forms of Entities?
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

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

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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 entitys name is submitted.
• After securing the legal entity's name, the
  relevant documents for the legal entitys
  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.

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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).

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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 Eurostats
  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

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What are the advantages of Cyprus tax system?

• 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

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

• 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.

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7) What is the cost for incorporating a company ?
Type of Company 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 Procedure 256,29 Accelerated Procedure

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What is the cost for incorporating a company ?
Type of Company Fee in
Application for registration of a general or a limited partnership 102,52 Normal Procedure 136,69 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

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8) What is the procedure for obtaining a work
permit?
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
1. The majority of the companys 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).
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What is the procedure for obtaining a work
permit?

• 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.
  

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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 Directors B)
Middle Management Staff C) Supportive Staff
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• 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

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• 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.

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• 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.

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• 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
  companys 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.

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• 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.

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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.

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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)

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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

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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

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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.

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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 FDIs
  for the year 2007 was double that of 2003
  (increase in the range of 101).

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• 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

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• 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
  Cypruss 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