Companies of Foreign Interest
Cyprus Lawyers, G. Kouzalis LLC, would like to inform about the Companies of Foreign Interest.
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. The existing investment policy has been radically reviewed, broadened and simplified to include a series of actions and reforms in several areas of intervention, aiming to enhance Cyprus’ position as an international high-growth business centre.
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.
As of 1 January 2022 the current “Fast Track Business Activation Mechanism” will evolve into the “Business Facilitation Unit (BFU)”. The Unit will be the single point of contact for foreign companies.
The purpose of the new unit will be the fast and efficient processing of requests received from foreign companies for the establishment of a company in Cyprus or the expansion of activities of existing companies.
On 30/11/2022, the Council of Ministers approved the Amendment of the Policy for the Registration of Companies in the Register of Foreign Interest Companies.
The Decision modified the eligibility criteria of foreign interest companies and specifically includes the criterion of a company’s obligation to prove an initial investment in the Republic of at least €200,000, which should be proven by presenting the appropriate certificates.
The Decision entered into force on December 12, 2022.
Eligible businesses must meet one of the following criteria:
- Majority share: the majority of the company’s shares are owned by third-country nationals.
- Minority share: in case that, the percentage, of the company’s shares, owned by a third-country national is equal or less than 50%, the company is eligible if that foreign participation has a value of at least €200.000; that is on top of the initial investment of €200.000 as clarified below.
In both cases above (1&2), the ultimate beneficial owner (UBO) must deposit an amount of €200,000 in an account held by the company in a credit institution licensed by the Central Bank (payment institutions are not included). Alternatively, the company can submit evidence of an investment amounting to €200,000, for the purposes of operating its business in Cyprus (e.g. office purchase, office equipment purchase, etc.).
If more UBOs exist, then this amount can be deposited or invested by a single UBO or collectively.
For cases 3-9, the investment criterion is also applicable and the company’s initial investment in the Republic of at least €200,000, must be proven by presenting the appropriate certificates (e.g. bank statement at the time of deposit of the amount or proof of investment (purchase of office space and/or office equipment).
- Public companies registered on any recognized 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*.
- 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.
- Cypriot Private Institutes of Tertiary (Higher) Education licensed by the Ministry of Education, Sport and Youth.
* An enterprise qualifies as ‘High Technology Company’ if:
(a) it is already established and has a presence in the market, and
(b) it has a high level or experimental R&D intensity, and
(c) it developed product/s that fall into one of the following categories: products related to aviation and space industry, computers, information and telecommunication technology (ICT), pharmaceuticals, biomedical, research and development equipment, electrical machinery, chemicals, non-electrical machinery.
This article is provided for informational purposes only and does not constitute legal advice. Readers are advised to consult with legal professionals for advice specific to their individual circumstances.
For more information contact G. KOUZALIS LLC, Lawyer in Cyprus at lawfirm@cytanet.com.cy, tel. +357 23811788.