How to Register a Company in Cyprus and Secure Residency Through the Business Facilitation Unit
- papacleovoulou
- 4 days ago
- 10 min read
Cyprus has rapidly gained popularity as a destination for entrepreneurs and business owners due to its attractive tax system and sunny climate. If you are looking to start a business here, you can also explore how to secure a residency permit through the Business Facilitation Unit (BFU). This guide will discuss the benefits of registering a company in Cyprus and how the BFU can assist you.
Benefits of Registering a Company in Cyprus
Attractive Tax Regime
Cyprus is known for its low corporate tax rate of 12.5%, one of the lowest in Europe. This favorable rate allows entrepreneurs to maintain a larger portion of their earnings. Additionally, capital gains tax is set at 20% for profits from the sale of property, and certain sectors, such as shipping and intellectual property, can enjoy even lower rates due to specific exemptions.
Business owners also benefit from zero inheritance tax and no tax on foreign dividend income. This allows entrepreneurs to reinvest their profits and continue growing their operations without unnecessary financial burdens. Navigating this tax system is simpler than in many other countries, making it easier for both startups and established businesses.
Strategic Location
Cyprus is located at the crossroads of Europe, Asia, and Africa, making it a strategic hub for businesses looking to tap into multiple markets. Companies can reach major economic zones in less than a few hours. For instance, it takes only 30 minutes to fly to Athens and just over 1 hour to reach Istanbul. Cyprus also boasts a robust transportation network, including two international airports and a modern port system, facilitating smooth logistics and trade operations.
Robust Legal Framework
With a legal system based on English law, Cyprus provides a familiar environment for international business owners. The supportive legal structure protects foreign investments, allowing entrepreneurs to operate confidently. As a member of the European Union, businesses in Cyprus gain access to the vast European market and its numerous trade agreements, further enhancing business opportunities.
Skilled Workforce
The talent pool in Cyprus is impressive. A significant portion of the population is highly educated, with around 43% of adults holding a tertiary education degree. Many of these professionals are fluent in English, so businesses can easily communicate and collaborate without facing language barriers. This accessibility enables companies to fill skilled positions efficiently, contributing to overall business success.
How the Business Facilitation Unit Can Help You
The Business Facilitation Unit (BFU) is an essential resource for both local and international investors aiming to establish a presence in Cyprus.
Streamlined Process
The BFU offers a clear and structured process for registering your business. They assist with all necessary procedures, including registrations, licenses, and permits. This help can significantly reduce the time and effort required, allowing you to direct your energy toward growing your business. Many entrepreneurs report that working with the BFU helped them complete the registration process in as little as 4-6 weeks, compared to several months without their support.
Extensive Guidance
The BFU provides in-depth guidance at every stage of the company registration process. They help you understand local regulations and offer insights into best business practices. This support is invaluable, particularly for those unfamiliar with the Cypriot business landscape. It minimizes the risk of mistakes that could lead to legal issues or financial penalties.
Networking Opportunities
Partnering with the BFU can also open networking doors with local businesses and government entities. These connections foster smoother operations and collaborations. The BFU frequently hosts workshops and events, helping you engage with stakeholders and build relationships within the local business community.
Gaining Residency Through the Business Facilitation Unit
Eligibility for Residency Permit
Foreign investors establishing a company through the BFU can qualify for a residency permit. This legal status not only allows you to reside in Cyprus but also enables easier access to its quality healthcare and lifestyle. Generally, you must maintain a significant level of investment in the country, which typically starts at €200,000 to €300,000.
Application Process Simplified
The BFU streamlines the residency application process. After registering your company, they assist you with the necessary documentation and guide you through compiling all essential information. This support plays a crucial role in avoiding delays or complications, increasing the chances of a timely approval.
Application is made by email and a letter of expression of interest to the BFU.
The letter should contain the following information:
A description of the nature of the business.
The number of employees.
Expansion plans and other details.
Services the company wishes to obtain through the BFU.
The letter must be accompanied by any relevant documents.
Several services facilitate the working of a business under the BFU.
Briefly, the BFU:
Helps establish a company by assisting with the necessary registrations*. All the necessary registrations will be completed within 7 working days.
Facilitates the licensing for the establishment and operation of companies in Cyprus. It provides all the information needed to obtain the company's permits to begin work.
Facilitates issuing Cyprus residence and employment permits, especially for third-country nationals. Residence and employment become a fast-track process.
*The necessary registrations are:
Name approval and estanish a Cyprus company that meets the finanancial conditions
Registration at the Social insurance registry and the Employers’ registry.
Registration at the VAT registry and Income Tax.
In Cyprus, companies eligible for the BFU facilities are:
1. Companies where third-country shareholders own the majority of the shares;
2. If a foreigner holds only 50% (or lower) of the shares, then the foreign participation must equal at least EUR 200,000 in the capital;
For categories 1 and 2, the company must show an investment of EUR 200,000 in the Republic, or the ultimate beneficial owner (UBO) must deposit EUR 200,000 in an account held by the company in a credit institution licensed by the Central Bank of Cyprus.
3. Public companies registered in any recognised stock exchange;
4. Former offshore companies approved by the Cyprus Central Bank, which have now changed their offshore status;
5. Cypriot shipping companies;
6. Cypriot high technology* / innovation companies; or,
7. Cypriot companies that operate in pharmaceuticals, biogenetics, and biotechnology.
8. Companies in which the majority of the total share capital is owned by persons who have acquired Cypriot citizenship by naturalisation based on economic criteria, provided they can show that the criteria continue to apply.
For categories 3-8, the EUR 200,000 investment criterion applies. The company must be able to prove the investment by showing an appropriate certificate(s).
The maximum number of foreign nationals employed by the company must be 70%.
Current national legislation (laws and rules) may determine the support staff's salary.
* A high technology company is a company that:
has an established presence in the market,
has a high level of experimental research and development intensity,
develops products that fall into categories such as aviation, space, computers, and electrical machinery.
Guidelines for Support Staff
Applicable to employees earning a gross salary below EUR 2,500.
Support staff employment is permitted if there is a properly stamped and validated employment contract. Additionally, support personnel from third countries must not make up more than 30% of the total support staff. Work permits are issued for a maximum duration of 3 years.
Family Reunification
There is a process for family reunification for family members of third-country national key personnel.
The third-country national employee (referred to as the “Sponsor”) must adhere to the family reunification procedure and submit an application to the Civil Registry and Migration Department.
Eligible family members (those who can join the sponsor) include spouses, children, and other children under the sponsor's custody. The marriage must have taken place at least one year prior to submitting the application.
If a family member is not eligible for family reunification (such as a spouse married for less than a year), they may apply for a temporary residence permit as a dependent visitor.
Advantages of Residency in Cyprus
Possessing a residency permit comes with many advantages, including enjoying the high quality of life in Cyprus, which consistently ranks well in global livability indices. Residents experience a low cost of living, especially in comparison to many Western European nations. Moreover, as a resident, you gain access to the EU's extensive travel freedoms, making it easier to move around the region.
Criteria for third-country nationals
To get the working visa/ permit under the BFU, third-country nationals must satisfy the following criteria:
They must belong to the key personnel.
Hold a university degree, diploma or equivalent qualification or credentials, and confirmed relevant experience in an employment position of at least 2 years.
Have a minimum gross monthly salary of EUR 2,500.
Have an employment contract of 2 years or less.
if you already have a company under the previous regime and have current key personnel whose salaries satisfy the previous threshold of EUR 2,000. Is it necessary to raise it to EUR 2,500 immediately to renew their licenses?No. You have a 5-year grace period (until 31 December 2026) to raise the salaries of current key personnel.Existing companies have until December 31st, 2026, to secure at least 30% of key personnel from EU countries.
Moving Forward
Facilities and Benefits
Some key advantages for high-skilled nationals from third countries include:
Exemption from submitting a sealed employment contract to the Labour Department. The market test requirement* indicates that this is a role for which no Cypriot could have been hired.
Right to family reunification. Spouses of key personnel (those earning a minimum gross monthly salary of EUR 2,500) will have immediate and unrestricted access to paid employment without needing to meet the market test requirement.
A streamlined and expedited process for obtaining a work permit.
* The market test requirement involves a stamped employment contract from the Department of Labour. A contract is "stamped" when the employer demonstrates that a third-country national is being hired due to the unavailability of a local employee. Employers must advertise the job vacancies in the local press and receive no suitable responses (copies of the advertisement must be included with the application). This requirement will no longer apply to key personnel and their spouses.
Tax Incentives
The tax incentive program was updated on 20 July 2022. These revisions align with the Cyprus Long Term Vision 2035, which was presented by the then Minister of Finance, Constantinos Petrides, at a forum in Dubai on 24 February 2022, focusing on Cyprus Tax incentives and the BFU.
The tax incentives include:
For personnel earning over 100,000 euros annually, there is a 50% exemption for 10 years, provided they have not lived in the Republic for 3 out of the 5 years prior to starting employment in the Republic.
For salaries ranging from 55,000 to 100,000 euros annually, there is a 50% exemption for 17 years, provided they have not resided in the Republic for 15 years.
For salaries under 55,000 euros annually, there is a 20% exemption for 5 years, provided they did not reside in the Republic before starting employment.
Individuals investing in an approved innovative company receive a 50% exemption on their investment. This regime was initially valid until 31 December 2023 and has been extended to the end of 2026.
Expenses related to scientific research and research and development can be deducted from taxable income.
This last exemption was introduced in July 2022 and included in the Cyprus Income Tax Law (ITL) Article 9(1)(d). It applies to:
Individuals engaging in any business.
The R&D exemption for small and medium-sized enterprises (SMEs). SMEs are defined by Article 9A ITL and must not be SMEs of foreign interest.
Research and development must align with types recognized by international accounting standards. ACCA (the Association of Chartered Certified Accountants) defines research as an original and planned investigation to acquire new scientific or technical knowledge and understanding. Development refers to applying research findings or knowledge to a plan or design to create new or improved materials, products, systems, and so on.
Eligibility for Naturalisation Application-Cyprus Passport
According to the BFU, employees from non-EU countries have the right to apply for naturalisation. They may apply for and obtain Cypriot nationality after 5 years, or 4 years if they pass the Greek language examination.
One-stop shop: the point of single contact
The BFU serves as the primary contact for interested companies and also functions as a single point of contact for international businesses.
This single point of contact handles requests from foreign companies looking to establish a presence in Cyprus or expand their current operations.
Applications can be submitted via letter or email to the BFU (refer to the information above).
The applicant will receive written confirmation of approval and instructions on which documents to provide to the BFU. Within 7 working days of document submission, the company is registered with the Registrar of Companies.
Using the confirmation, the company must reach out to the CRMD regarding the residence and employment of third-country national staff.
Registering a company in Cyprus offers major financial benefits and a robust infrastructure that supports business growth. With the help of the Business Facilitation Unit, you can navigate the incorporation process and secure residency smoothly. This opportunity is particularly appealing for entrepreneurs worldwide looking for a strategic and supportive environment.
What constitutes a company of foreign interests in Cyprus?
A company of foreign interests in Cyprus can be defined in two ways. Firstly, it refers to a company where third-country nationals own more than 50% of the shares. Secondly, it applies when third-country nationals own 50% or less of the shares, but the value of these shares is at least 200,000 euros.
In addition to this, either type of company must deposit 200,000 euros in a credit institution to be eligible for registration and the benefits offered by the Business Facilitation Unit (BFU). The credit institution must be licensed by the Central Bank of Cyprus.
As you consider making Cyprus your business base, remember the diverse advantages and resources available to help you succeed. By leveraging the insights and assistance from the BFU, your business can thrive, allowing you to soak in all that this beautiful island nation has to offer.
The Cyprus Business Facilitation Unit (BFU) forms a part of Cyprus's “Strategy for Attracting Businesses for Activities or/and Expansion of their Activities in Cyprus”. This strategy was approved by the Council of Ministers on 15 October 2021, and the BFU became operational on 1 January 2022. According to the Civil Registry and Migration Department (CRMD), it replaced the existing policy regarding employees in companies with foreign interests.
The BFU offers services to companies by streamlining registration, operations, and the issuance of employment permits, particularly for third-country nationals who wish to work and live in a foreign-interest company in Cyprus. Additionally, it includes tax and other incentives to ease business operations and improve the quality of life for foreign companies, their managers, and staff.
