A new strategy aiming to attract foreign businesses to establish and expand their activities in Cyprus through a plan, was presented by the Cypriot Government and will be implemented from January 1, 2022.

The plan targets areas or fields interrelated to, inter alia, High Technology Companies, Innovation Companies, Shipping Companies, Pharmaceutical Companies, Biogenetics and Biotechnology Companies.

This plan aims to make Cyprus a Sustainable Business and Trade Center of the wider area and Europe that will be fully in line with the guidelines of the European Commission and the Recovery and Resilience Facility.

In this context, several incentives were prepared in order to attract foreign Companies to operate and/or relocate their headquarters and/or expand their business activities in Cyprus, which can be summarized as follows:

1. Business Facilitation Unit

A Business Facilitation Unit will be established which will act as the central point of contact for all Companies of international interest, which operate in Cyprus and/or relocate their headquarters and/or expand their business activities in Cyprus in specific areas of economy activity.

1. Company creation (Company registration, name approval, registration in the Social Insurance register, Registration in the VAT register and in the Income Tax)
2. Guidance for relevant permits for activation in Cyprus

• Acceleration in the issuance and renewal of residence and employment permits

2. Revised Policy for the issuance of Temporary Residence and Employment Permits to third country nationals employed in Companies of foreign interests operating in Cyprus

The Government of Cyprus has revised the existing policy for the employment of staff from third-countries who is employed by Companies of foreign interests operating in the Republic of Cyprus and/or Companies of foreign interest which intend to operate and/or relocate their headquarters in Cyprus and/or expand their business activities in Cyprus and have a physical presence in Cyprus including establishment/ operation of independent offices that are separate from any private residence.

Furthermore, the issuance of employment permits is facilitated, and work permits will be issued immediately within 1 month from the submission of the application and will last up to 3 years.

The eligible Companies are the following:

• Cypriot shipping Companies.
• Cypriot high technology / innovation Companies.
• Cypriot pharmaceutical Companies or Companies operating in the fields of biogenetics and biotechnology.

The necessary preconditions for the third country nationals to be employed in Cyprus are the following:

2. Minimum gross monthly salary of €2.500,00.
3. Possession of a university diploma or degree or equivalent qualification or certificate of relevant experience in a corresponding employment position of a 2-year duration and that the employee in question is presented with an employment contract of not less than two years.

The maximum number of third-country nationals that can be employed is set at 70% of the total number of employees of the Company over a period of 5 years.

The Company is also allowed to employ third-country nationals as support staff provided that it does not exceed 30% of the overall support staff. The aforementioned applies if there is a duly validated employment contract between the third country national and the employer in question which is in accordance with current legislation.

In addition, there is the right of family reunification of third country nationals who are part of the Business Facilitation Unit. Through this very Mechanism, the Labor Market will be directly and freely accessible to the Spouses of Employees who have Residency and Work Permits in the Republic. Said access will be limited however, to the Spouses who receive a minimum monthly salary of €2500, while, it does not apply at all to the family of the support staff.

3. Digital Nomad Visa

It should be noted that the Action Plan introduced the initiative of the “Digital Nomad Visa” according to which, Visas are granted to an initial maximum limit of 100 beneficiaries.

The Digital Nomad Visa concerns only residency permits in the Republic of Cyprus and not work permits, for people who live in Cyprus but work in Companies operating abroad.

Beneficiaries of the “Digital Nomad Visa” scheme, will be third-country nationals who are self-employed and/or are employees who work remotely using information and communication technology in order to communicate with their employers and/or clients. Said employers and/or clients must not be residents of the Republic.  The Visa is valid for a period of 12 months, with the right of renewal for another 2 years once said 12-month period has lapsed.

The holders of Digital Nomad Visa can be accompanied by their family members, who are granted, upon their request, a residence permit that expires at the same time as the beneficiaries’ does, but are not granted a work permit.

Moreover, if they have been residents of the Republic of Cyprus for a period of time which in total exceeds 183 days within the same tax year, then they are considered tax residents of Cyprus meaning they are not tax residents in any other Country.

They also have to present evidence which clearly indicate that they have sufficient resources, at a fixed income level, to cover their living expenses during their stay in Cyprus. The amount of resources required is set at €3.500.00 per month, together with medical coverage and a clear criminal record from the country of residence.

4. Tax Incentives

The possibility of extending the 50% tax exemption for investment in certified innovative Companies and by corporate investors is being considered. The regime that was in force until the end of June 2021 allowed tax exemptions only to natural persons. For this purpose, the opinion of the Directorate-General for Competition of the European Commission is expected and subsequently, the approval of the relevant bill is also expected by the Parliament.

In addition, the plan provides for the following:

• The extension of the tax exemption that applies to employees in the Republic, provided that they were non-residents of the Republic before starting their employment, for a period of 17 years.

• The expansion of the existing tax exemption to cover new residents-employees with a salary from employment of €55,000 and above with a tax exemption of 50%.

• Existing employees have the opportunity to extend the benefit from 10 to 17 years. Potential beneficiaries are persons with income (€55,000- € 100,000) for the remaining period of 17 years.

• At the same time, the abolition of the existing tax provision of 20% exemption from employment exercised in the Republic or €8,550 – whichever is lower – will be promoted, since incomes over €55,000 will receive a 50% income tax exemption.

• An increased deduction will also be granted for research and development costs and a deduction of taxable income equal to 120% of the actual cost.

These tax incentives also apply to Cypriots who have lived abroad for at least ten years, in order to persuade them to repatriate back to the Republic.

5. Naturalization

Furthermore, the right to apply for naturalization will be given to the employees of these Companies after five years of residence and work in the Republic or after four years if they meet the criterion of holding a recognized certificate of very good knowledge of the Greek language.

6. Social Insurance

Additionally, the transfer of social security contributions will be ensured so that when third-country nationals who have paid social security contributions in Cyprus, wish to return for permanent residence in their country, they will be entitled to transfer the contributions they paid, provided that they did not acquire any right in regards to age pension and/or disability etc.

The content of this article is valid as at the date of its first publication. It is intended to provide a general guide to the subject-matter and does not constitute legal advice. We recommend that you seek professional advice on your specific matter before acting on any information provided. For further information or advice, please contact Mrs. Stephanie Nicolaou, Advocate, Mediator, Legal Consultant & Certified AML Compliance Officer (CySEC) at the Law Firm CHAMBERSFIELD ECONOMIDES KRANOS, in Limassol Cyprus, # +357 25 356 800 or email at s.nicolaou@eklawyers.com, info@eklawyers.com.

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1. the definition of tax and the residency for companies incorporated in Cyprus,
2. the introduction of withholding taxes on payments of royalties, dividends, and interest to a company tax resident in a country included on the EU blacklist or to a company incorporate dinany of the EU back listed countries which is not considered tax resident anywhere.

Both laws are coming into force on December 31^st, 2022.

Until today, a company was considered as tax resident of Cyprus if its management and control is exercised in Cyprus. After this amendment, any company incorporated or registered in Cyprus whose management and control is exercised outside Cyprus will still be considered as tax resident of Cyprus, unless this company is considered as tax resident in any other state. As a result, a Cyprus-incorporated company can no longer be considered not to be tax resident anywhere. Unless a company is tax resident in a country included in the EU black list or if the company is incorporated in a country not included on the list, it is not tax resident in any jurisdiction

Royalties

The 10% withholding tax will apply to royalty payments made to a company that does not have a residence in Cyprus but which has a residence in a country that is included in the EU blacklist of non-cooperative jurisdictions, or to a company incorporated in such a backlisted country which is not tax resident anywhere, regardless of whether the assets for which the royalty is paid will be used in Cyprus or elsewhere.

Dividends

Dividends paid by Cypriot tax resident companies to companies tax resident in countries included in the EU black list of non-cooperative jurisdictions or to companies incorporated in such countries which are not tax residents anywhere will be subject to a 17% special defense contribution (“SDC”).

The above does not apply to companies listed on a recognized stock exchange.

Interests

The SDC rate on interest paid to a company that is not tax resident of Cyprus but tax resident in a country that is listed on the EU blacklist of non-cooperative jurisdictions, or to a company incorporated in one of those countries that is not considered tax resident anywhere, will be 30%.

The above does not apply to interest paid on securities listed on a recognized stock exchange.

Black listed countries

The list is adopted by EU on the 5^th of October 2021 and consists of the below countries

American Samoa, Fiji, Guam, Palau, Panama, Samoa, Trinidad and Tobago, US Virgin Islands and Vanuatu.

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One of the latest achievements of Chambersfield Economides Kranos is to receive the award of the Leading Adviser for Cyprus for 2021.

Acquisition International has been a monthly digital business magazine for more than 11 years.

Professionals in more than 170 countries rely on AI’s vital updates on business knowledge.

Each year AI nominates the leading business in different fields, such as Finance, Legal, NPO’s, Audit & Tax, CFO, Businesswoman and others.

For Chambersfield Economides & Kranos is the second time receiving a distinction from Acquisition International.

The first time was in 2019, for its Corporate Excellence and this year is appointed as the Leading Adviser for Cyprus.

More precisely, Chambersfield Economides Kranos is the leading Full-Service Cross-Border Law Firm of the year in Cyprus.

Chambersfield Economides Kranos is an international law firm with a physical presence in more than 9 countries and having offices in Limassol, London, and Singapore.

The legal firm provides a variety of services to international individuals and institutions.

A highly experienced team of professionals undertakes with ethos, professionalism, respect and personal approach, legal and business cases on all legal and corporate services.

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Mediation is an Alternative Dispute Resolution Method (ADR Method) which can be an alternative option for resolving a dispute between two (or more parties), other than through the Courts.

Mediation, like other ADR Methods (such as Arbitration), has advantages over a court process: it is faster, more cost-effective, and involves the confidentiality of the process, as opposed to a trial which is a general procedure open to the public.

In addition, Mediation, has the added advantage of being a more conciliatory and peaceful way of resolving a dispute between two parties, without necessarily causing the two parties to derail and terminate the relationship and/or cooperation of the two parties, as is almost always the case when a dispute leads to Trial or Arbitration.

In terms of its practical application, it is a structured process (regardless of the name), in which two or more parties try to reach an agreement on resolving their dispute voluntarily with the help of a Mediator, as a third, a neutral, independent and impartial party.

This impartial third party is a Certified Mediator, who is selected jointly and with the consent of all parties involved in a dispute.

Ways, the Disputing Parties, can enter into a Mediation process in Cyprus:

Under the current legal regime in Cyprus, there are three ways for the disputing parties to enter into a Mediation process:

1) By a voluntary agreement of the parties when a dispute arises

2)  Through a Mediation Clause in a Contract signed between the parties

3) During a court case, when both parties agree or when one party requests it and the Court deems that this is the best course of action in this particular case (rare application).

Informatively, it should be noted that in other countries, such as Greece and Italy, there is a mandatory pre-trial mediation procedure prior to the adjudication of the civil action, something which is not currently applied in the Cypriot legal system.

The Stages of Mediation:

When and if the disputing parties enter into a Mediation process, then the Mediation process is divided into the following five stages:

1)Preparation:  Where any possible conflict of interest of the Mediator is examined, e.g., if he had previously cooperated with one of the parties of the dispute (as it also happens in an Arbitration process for the selection of an Arbitrator), the acceptance of his appointment, the drafting and signing of the agreement affiliating the dispute to Mediation, the Mediator’s briefing, the appointment of the session, the venue, and the authorizations by the parties.

2) Opening Statements: Both of the Mediator (where he outlines his role, the way the procedure is conducted and the ultimate goal which is the resolve of the dispute) and of the Parties (where each party expresses its position on the dispute being mediated).

3) Investigation: Where separate confidential discussions take place between the Mediator and the parties, questions, investigation of the history of the dispute and the pursuit of interests.

4) Negotiations: Where the parties with the help of the Mediator create options and solutions for the dispute with proposals and dialogue between them.

5) Dispute Settlement Agreement: In case of a successful mediation process, the dispute is closed with the «Mediation Settlement Agreement» signing.

Mediation Settlement Agreement

«The Mediation Settlement Agreement» is probably the most crucial part of Mediation, as the Mediation process (and what has been agreed in it) is not binding until the two parties sign the Mediation Settlement Agreement.

The Mediation Settlement Agreement is drafted up by the Mediator, where what has been agreed is recorded in writing. It is then signed by him, and the parties and a true copy is given to each party of the Mediation. In this case, any party involved can file and register the Mediation Settlement Agreement in Court (as it is the case with an Arbitral Award) and then an Implementing Order is issued, and the Mediation becomes fullybinding.

 Laws and Procedures governing Mediation in Cyprus

The Laws governing Mediation in Cyprus are the following:

Law on Certain Matters of Mediation in Civil Disputes of 2012 (159 (I)/2012), which is the national law that governs the application and the procedure of Mediation in Cyprus, as well as the qualifications that a potential certified Mediator should possess.

Additionally, the above law stipulates the existence of two separate Registers of Mediators which are kept by the Ministry of Justice of the Republic of Cyprus:

Register of Mediators for Commercial Disputes

 Register of Mediators for Civil Disputes other than Commercial Disputes

Directive 2008/52/EC of the European Parliament and of the Council, of 21 May 2008, on certain aspects of mediation on civil and commercial matters, where this European Directive applies in the event of cross-border disputes in civil and commercial matters other than certain rights and obligations which the parties are unable to decide on the basis of the applicable law, and which dispute may be referred to Mediation as an ADR.

The European Code of Conduct for Mediators, which is currently the applicable Code of Conduct for Mediators in Cyprus, as the Cyprus Code of Conduct for Mediators has not yet been created.

Law on Family Disputes Mediation of 2019 (Ν. 62(Ι)/2019), which regulates issues that fall within the scope of Family Law such as Property Disputes, Alimony, and the Use of the Family House. Matters concerning Divorce and Child Custody remain in the exclusive jurisdiction of the Family Court.

Furthermore, informatively, due to the peculiarity of Family Mediation, discussions and actions have been taken to create a third separate Register of Mediators for Family Disputes.

The Future of Mediation in Cyprus: 

In recent years the number of registered Mediators in Cyprus has increased dramatically and the interest of the business and commercial world in finding an ADR Method, both from the Court and from Arbitration, which is not confrontational, has turned the eyes of several stakeholders to Mediation as an economic, speedy confidential and peaceful option to resolve a dispute between 2 two parties.

*Το περιεχόμενο του παρόντος άρθρου έχει ισχύει κατά την ημερομηνία της πρώτης έκδοσής του. Αποσκοπεί στο στα παρέχει μια γενική εισαγωγή και καθοδήγηση στον εν λόγω θέμα και σε καμία περίπτωση δεν συνιστά νομική συμβουλή. Σας συνιστούμε να αναζητήσετε επαγγελματικές συμβουλές σχετικά με το συγκεκριμένο σας θέμα προτού προχωρήσετε σε οποιαδήποτε ενέργεια με γνώμονα τις πληροφορίες που περιέχονται στο πιο άνω κείμενο. Για περισσότερες πληροφορίες ή συμβουλές, παρακαλώ επικοινωνήστε με τον Ko. Χρίστο Γ. Γεωργίου, Δικηγόρο, Διαμεσολαβητή & Νομικό Σύμβουλο στην δικηγορική εταιρεία CHAMBERSFIELD ECONOMIDES KRANOS, στην Λεμεσό, τηλ. +357 25 356 800 ή στα emails c.georgiou@eklawyers.com, info@eklawyers.com.   

* The content of this article is valid as at the date of its first publication. It is intended to provide a general guide to the subject-matter and does not constitute legal advice. We recommend that you seek professional advice on your specific matter before acting on any information provided. For further information or advice, please contact Mr. Christos G. Georgiou, Advocate, Mediator & Legal Consultant at the Law Firm CHAMBERSFIELD ECONOMIDES KRANOS, in Limassol Cyprus, # +357 25 356 800 or email at c.georgiou@eklawyers.com, info@eklawyers.com.

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Michalis Economides, a distinguished approved Barrister of the Cyprus Bar Association and Barrister of the United Kingdom and Wales founded the multi-awarded international law firm.  Chambersfield Economides Kranos has a physical presence in more than nine jurisdictions and undertakes a wide range of internationally complex, integrated, legal, corporate, and consulting services.

The Firm focuses on providing legal and advisory services in civil, political, maritime, commercial, banking, corporate, labor, energy, European, immigration, family, criminal law, liquidation, and issues resolution of commercial disputes and mediation.

The Great Britain-Cyprus Business Association is a business association based in Great Britain that helps to promote both Cypriot and British companies and allows its members and subscribers to view any future potential of cooperation between the two countries. The Association is often organizing business events, roadshows, and private business meetings for networking.

Mr. Michalis Economides stated that he is pleased for the Firm to be part of this distinguished Association and is looking forward to an excellent cooperation ahead.

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Press Release Publications: Philnews, Capital.com.cy, Sigmalive.com.cy, Gold News, InBusinessNews, Cyprustime.com, Cyprusdaily.net, Economytimes.com

With a great pride we announce that the International ACQ Law Awards awarded Michalis Economides, CEO and Founder of Chambersfield Economides Kranos, as Cyprus Gamechanger of the Year.

ACQ Law Awards recognise industry leaders, eminent individuals, exemplary teams and distinguished firms, which readers believe that represent the benchmark of achievement and best practice in a variety of fields, on a global level.

In London, April, 2017 – ACQ proudly released the results of the voting process closed on November 30th, 2016. The total number of nominations received stood at an amazing number of 39,146 the highest ever for the Law Award Program.

“Exceptional individuals, teams and firms across the marketplace represent the very best in their field from around the world and truly deserve the accolade of being an ACQ Law Award winner.” said Jake Robson, Editor in Chief of ACQ.

ACQ Law Awards after the completion of the process announced that Michalis Economides was awarded as Cyprus – Gamechanger Attorney of the Year.

Michalis Economides is an advocate and legal consultant who followed his dream of creating a law firm that meets all International Standards of customer satisfaction, providing always the best of service. He started his career as an Advocate and Legal Consultant in one of the Top 5 Law Firms of the world based in London and then continued by being partner in other reputable Law Firms, in Cyprus, prior to creating his own law firm Chambersfield Economides Kranos.

Chambersfield Economides Kranos deals with all legal and corporate practice areas regarding any multijurisdictional issue, with the aim to consistently exceed customers’ expectations. The law firm has physical presence in more than 8 countries and provision fiduciary and corporate services in more than 21 jurisdictions.

Furthermore, the law firm provides a full spectrum of Corporate and Commercial services such as company formation, administration, Nominee – Fiduciary, Re – Domiciliation, Mergers & Acquisitions, Escrow, opening of Bank Accounts, Incorporation of Foundations, contracts and agreements, commercial dispute resolution, commercial negotiations, settlement agreements and various other international multi-complex legal and business issues.

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