Cyprus is extremely open to foreign investment and actively pursues it. The entry into the Cyprus market can be achieved in several different ways, or by employing people in Cyprus. In entering the market, some regulations should be kept in mind, and they are as follows:
Tax compliance and registration of business in Cyprus
New entrants to the Cypriot market usually decide to establish either limited liability companies (LLCs), public limited companies (PLCs), or free zone companies (FZCs). In order to open up an LLC, one shareholder is required (no minimum paid-in capital) and one director of any nationality, and a secretary who must be resident in Cyprus. In the case of a PLC, the demands are higher. There are seven shareholders required, two directors of any nationality. You will also require a minimum share capital of 25,000 EUR, 25 percent of which should be paid in order to incorporate. There is a single free zone in Cyprus where investors can establish FZCs and enjoy VAT exemptions on non-EU goods in transit and deferment of paying VAT on imports of EU goods.
Cyprus Taxation
Corporate income tax (CIT) is also very low (12.5%). The normal VAT rate in Cyprus is 19%, but there are special reduced rates of 9, 5 and 3% on certain goods and services. Although there is no payroll tax in Cyprus, rates of social schemes are high, as they constitute 23.4 percent of wages of workers. The contributions are made to the state social insurance fund, redundancy fund, training development fund, social cohesion fund, holiday fund and the General Healthcare System (GHS). Employers also have to deduct personal income tax in respect of their employees at a rate ranging between 0 to 35 per cent, depending on the level of income.
Laws of employment in Cyprus
Workers and their employers have their rights, which are stipulated in the Constitution of Cyprus 1960 (amended 2013) and numerous other laws and acts. Cypriots usually have a working week of 38-40 hours and are not allowed to exceed 10 hours of work a day or 48 hours a week, including overtime. Overtime should be compensated in the form of 150 percent of regular wages or provided by paid time off. The workers who work five days a week have the right to 20 working days of annual leave, and the workers who work six days a week have 24 working days. Every employee also has access to 14 paid holidays or holidays in the year. The expecting mothers must get at least 11 weeks of maternity leave, but they can get a full 18 weeks paid by the social security. Social security pays fathers two weeks’ leave on the birth or adoption of the child at 72 percent of their normal wages.
Why is it good to do business in Cyprus
Conducting business in Cyprus may have certain obvious advantages to foreign investors. These include:
Attractive taxation environment
The country of Cyprus has one of the lowest corporate tax rates in the European Union, and thus it is very appealing to foreign firms who are interested in streamlining their tax systems. Also, the island has wide-ranging double-taxation agreements with most countries, and these agreements prevent the taxation of businesses on the same income twice. This is a favourable environment that encompasses other tax exemptions and benefits, like the exemptions on dividends and capital gains.
Strategic location
Being located at the intersection of Europe, Asia, and Africa, Cyprus offers easy access to multiple markets of the region for businesses. Such a location is especially handy to those companies that want to connect the Eastern and Western economies.
Cyprus also has modern ports and international airports, making it a key shipping and logistics hub which facilitates the distribution of goods. The companies also stand to benefit due to their location, which provides a competitive advantage to companies in the Middle East trade with the emerging markets.
Foreign investment incentives
As a means of enticing foreign investors, Cyprus has a variety of incentives and friendly policies, including grants, tax incentives. And financing programsSpecial programs exist that are innovation and research-oriented and aim at making businesses reliant with regard to the island in terms of conducting their development activities. Moreover, the fact that the government is concentrated on the modernisation of the key spheres, including technology, finance, and tourism, creates a positive environment regarding the strategic partnerships. All these incentives, along with the other rewards that Cyprus is able to provide, give a healthy atmosphere of business growth and prosperity.
Faster and easier entity formation
Setting up a business in Cyprus is quite easy, with the help of effective bureaucratic operations and governmental supportive programs. Licensing and registration have also been simplified, cutting red tape for the entrepreneur and the investor over the years. In just a few days, it is possible to establish a new entity with the assistance of local professional services such as law firms and corporate service providers. Such convenience in doing business stimulates foreign direct investment and accelerates market entry.
Cyprus business expansion options
Employing the staff in Cyprus or establishing a presence in this country can be a great business strategy. Expansion into Cyprus can occur in many ways, and different kinds of service providers can help you achieve it.
You can view these posts:
Living in Cyprus
Moving to Cyprus: Full relocation guide
Cyprus immigration quotas and caps – what you need to know
