1. Home
  2. Latest News
  3. Foreign Interest Company and Fast Track Mechanism

Foreign Interest Company and Fast Track Mechanism

Latest News, Law Articles

Foreign Interest Company and Fast Track Mechanism

On 3rd of September 2020, the Council of Ministers of the Republic of Cyprus approve the creation of the Fast Track Business Activation Mechanism (“FTBA”). This for Foreign Interest Company. The purpose of the enactment of this mechanism. Further, this in conjunction with amendments to the immigration legislation with regards to the provision of permanent residency. Also, working permits for companies of foreign interest, is to attract foreign business to Cyprus. This through the provision of  swifter establishment procedures. Also, more efficient services.

Eligible business entities for Foreign Interest Company

The Ministry of  Energy, Commerce, and Industry (“MECI”). Also, which is a body responsible for the administration and oversight over the FTBA. Further, provides for several eligibility criteria that must comply with. That in order for the business to be eligible to participate in the mechanism.

  • The first criterion is that the business entity must have a physical presence in Cyprus. That including the establishment/operation of independent offices that are separate from any private residence.
  • With regards to the existing companies, they should have a minimum turnover of €500.000 per year for 3 out of the last 5 years.
  • Lastly, new Foreign Interest Company should provide a reliable 5-year business plan illustrating growth potential.

FTBA benefits for Foreign Interest Company

According to Mrs. Pilidou, a Minister of MECI, the mechanism will provide eligible companies with the following services:

  • Assisting companies to obtain all the necessary registrations from a single point of contract. That in order to fully establish a presence in Cyprus with procedures taking not more than 7 days. These include:
  1. the Foreign Interest Company registration and name approval.
  2. Registration with the Social Insurance Registry and the Employer’s Registry.
  3. Registration with the VAT registry and Income Tax.
  • Guidance, and provision of all the necessary information for the company to start operations.
  • Facilitation of the issuance of residence and employment permits in the Republic.

The last category is of particular importance for companies who wish to attract and employ skilled professionals from third countries That in order to support their business operations in Cyprus.

Special scheme for the issuance of residence and employment permits in Cyprus.

On the 7th of October 2020, the Council of Ministers approved a revised policy for the issuance of the residence. Also, employment permits for companies of foreign interest. Further, certain Cypriot companies involved in few selected areas, and registered in the Republic of Cyprus. As per Mrs. Pilidou,  these companies, which also accept to the FTBA. This will be able to receive necessary permits within 4-6 weeks dependent on demand.

A company, which apply for the mechanism. That in order to enjoy a preferable treatment from the Civil Registry and Migration Department. This with regards to the issuance of immigration permits, must present the below characteristics:

  • Third country shareholders should own the majority of the company’s shares.

The following categories exclude for Foreign Interest Company:

  1. Public companies registered in any recognised stock exchange;
  2. Former offshore companies that were operating in Cyprus by approval of the Cyprus Central Bank. That before the change of their offshore status.
  3. Cypriot shipping companies.
  4. Cypriot companies of high technology/innovation, that will be certified by the Deputy Ministry of Research, Innovation and Digital Policy based on the applicable framework (please refer to the guide and documents in the “Applications & Documents”).
  5. Cypriot pharmaceutical companies or companies operating in the fields of biogenetics and biotechnology;
  6. Persons who acquire Cypriot citizenship by naturalization base on economic criteria, that they prove that the conditions under which they naturalize are still meet.

Also, exclude:

  • If the percentage of foreign participation in the company’s share capital is equal to or less than 50% of the total share capital. That in order for the company to consider as eligible, then the foreign participation should represent an amount equal to or greater than the amount of € 200.000;
  • Foreign direct investment of at least € 200.000, for the purposes of operating the company in Cyprus;
  • The establishment/ operation of independent offices in Cyprus, in suitable premises, separate from any private housing or other offices, except in the case of business co-habitation.

If the company qualifies for the above requirements, there are specific categories of employment positions a third-country national can occupy, provide a temporary residence and employment permits obtain.

Categories of employment of Foreign Interest Company

  • Directors.

In this category the following third-country nationals are included:

  1. Directors or Partners registered with the Registrar of Companies and Official Receiver;
  2. General Managers of branches and of subsidiary companies of foreign companies;
  3. Departmental Managers;
  4. Project Managers;

The minimum acceptable gross monthly salary for directors is €4.000, which may adjust from time to time, depending on fluctuations in the wage index. The maximum number of third-country nationals under this category cannot pass five. However, it is possible to increase this number if the Civil Registry and Migration Department are satisfy that the employment of a greater number is justify, depending on the circumstances of each company.

Middle management executives and other key personnel.

In this category the following third-country nationals are include:

  1. Upper / middle management personnel;
  2. Other administrative, secretarial, or technical staff;

The minimum acceptable gross monthly salary for this category is € 2.000 which may adjust from time to time. This depending on wage index fluctuations. The maximum number of third-country nationals that can employ under this category is ten unless the Civil Registry and Migration Department is satisfy that the employment of a greater number is justify, depending on the circumstances of each company.

Specialists

Companies are entitled to employ third-country nationals in professions/skills listed below:

Software and System Engineers, Application and Data Architects, ICT and Enterprise Solution ArchitectsTechnical Assurance ProfessionalsTelecom and Space Engineers Data Scientists, Machine Learning Engineers, Web Developers and Designers, UX User Experience Professionals, Quantitative Analysts, Quality Assurance Analysts, Mobile Application Developers, Augmented Reality/ Virtual Reality Programmers, Digital Marketing Specialists, Video Production Multimedia Specialists for Mobile Apps and Software, Analysts for Mobile Apps and Software, Designers of Prototype for Mobile Devices, DevOps Engineers, Cyber Security Specialists, Artificial Intelligence, Robotics, and Big Data Specialists, Pharmaceutical Formulation Technologists, Pharmaceutical Engineer Validation SpecialistsPharmaceutical Patents Specialists, Pharmaceutical Regulatory and Quality Assurance Professionals, Marine Engineers, Naval Architects

Table of number of employees

The number of employees that may be employed by each company will be determined based on its turnover, as described in the below table.

Turnover               Number of Employees       Application Examination Timeframe

≤1 million                                  Up to 5                                         4 weeks

>€1 – €3 million                       Up to 10                                       4 weeks

>€3 – €5 million                       Up to 20                                       4 weeks

>€5 – €10 million                    Up to 30                                       4 weeks

>€10 – €20 million                  Up to 50                                       4 weeks

>€20 – €30 million                  Up to 100                                     6 weeks

>€30 millions                             100-200                                      6 weeks

 

The minimum acceptable gross monthly earnings for Specialists is €2.000, an amount that can be adjusted from time to time, depending on fluctuations in the wage index.

Support staff of Foreign Interest Company

In this category are included all third-country nationals, who do not fall in any of the above categories. A company may employ third-country nationals in this category by following the general employment procedure, by first securing the positive recommendation (sealed employment contract) of the Department of Labour.

Given the market test by the Department of Labour, a company may staff up to 30% of its total personnel with third-country nationals in posts in this category. The market test is not necessary for third-country nationals with free access to the labor market.

Department Submision of Foreign Interest Company

For employing a greater number of third-country personnel under the above categories, duly justified and documented requests by the company must be submitted to the Department. The requests must include information on the salary offered as well as:

  1. The company’s turnover
  2. The ratio of third-country employees to Cypriots / EU Nationals and
  3. The company’s operating time in Cyprus.
  4. In order to exceed the limit of more than 300 third-country nationals employed in categories 1-3 above, the consent of the Council of Ministers is required.

Special scheme benefits

  • There are no restrictions on the maximum duration of stay of third-country nationals under this category of stay in the Republic (directors, key personnel, specialists).
  • It is not required to secure a sealed employment contract from the Department of Labour for third-country nationals under the categories of directors, key personnel, and specialists, as defined above.
  • Third-country nationals with residence and employment permits under this scheme have direct access to family reunification with their family members (spouse and minor children), provided that the relevant conditions of the Aliens and Immigration Law, as amended, are met.
  • The issuance of a temporary residence and employment permit under the abovementioned categories of employment (directors, key Personnel, specialists) is allowed when the entry of the third county national into the Republic was made with a visa and not by previously securing an entry permit from the Civil Registry and Migration Department.

Application Process

Businesses expressing interest in transferring their operations to Cyprus and wishing to benefit from the FTBA should submit a request to MECI at businessincyprus@meci.gov.cy accompanied by:

  • A letter of expression of interest in establishing a presence in Cyprus (in the case of companies not already operating in Cyprus).

A letter should include the following:

  1. General Information (company name, year of establishment, type of legal entity, representative details (if applicable, company’s contact information, address of new premises).
  2. Company Activities (business history, activities, facilities, and infrastructure, equity, organisation and management, staff, customers – distribution network).
  3. Proposed Investment Information (purpose and objectives, place of installation, capital expenses, investment implementation schedule, investment financing, number of third-country nationals expected to be employed as specialised employees in Cyprus, total number of jobs expected to be created in Cyprus).
  4. Financing of the investment (own funds, borrowed funds).
  5. Financial forecast (economic forecast, profitability, return on Investment ).

Also, include:

  • The certificate of incorporation of the company, shareholder certificate and articles of association (in English or Greek), Certificate of directors;
  • Audited Financial Accounts for the 3 of the last 5 years (only in the case of existing companies operating abroad and wishing to set up a presence in Cyprus);
  • Business plan for the next 5 years (only in the case of completely new businesses which do not have a presence abroad and wish to set up a presence in Cyprus);

The business plan should include information on the following:

  1. Executive Summary
  2. Description of the Business / Project
  3. Product and Services Description
  4. Description of Management and Personnel
  5. Market Analysis and Competition
  6. Marketing and Sales Plan
  7. Operating Plan
  8. Financial Projections

It is noted that Due Diligence Checks will be conducted for all companies wishing to join the Fast Track Mechanism.

Source of information: https://www.businessincyprus.gov.cy/fast-track-business-activation/