Cyprus Company of Foreign Interests (CCFI)

Cyprus Company of Foreign Interests (CCFI) Program

The Cyprus Company of Foreign Interests (CCFI) program, that is overseen by the Republic of Cyprus’s Business Facilitation Unit (BFU), is a key part of attracting non-EU investors to Cyprus. It offers them a direct path to EU residency and employment.

The CCFI program is tailored to attract global businesses and talent into the EU marketplace, establishing Cyprus as a key center for international commerce. It highlights efficient processes for residency and company operations, reaffirming Cyprus’s dedication to cultivating a vibrant, globally-linked business landscape while boosting the island’s status as a high-growth international business center.

New Strategy for Attracting Companies to Cyprus

On 15.10.2021, the Council of Ministers approved a new strategy aimed at enticing companies to establish or expand their operations in Cyprus. This strategy has been in effect since 2.1.2022 and replaces the former policy regarding the employment of personnel from third countries by foreign companies. The new strategy includes several provisions such as:

• The cancellation of maximum quotas for foreign staff allows companies to hire any number of well-paid third-country nationals without needing to perform a labour market assessment;
• The current categories of directors, key personnel and specialists are retained for administrative structure and statistical purposes.  Specialists are not limited to specific professions or skills;
• All businesses pledge to allocate 30% of their total workforce to Cypriots/EU citizens within five years.  After January 2, 2027, the ratio of new hires will be assessed.

Tax Benefits of Cyprus Foreign Interests Companies

Foreign interests companies, along with stakeholders such as employees and shareholders, can take advantage of several tax benefits, that include the below:

• A corporation tax rate of just 12.5% on company profits – this is among the lowest in Europe;
• Currently active double taxation treaties that may enable tax-registered companies in Cyprus avoid double taxation;
• Expenses related to scientific research and research and development are deducted from taxable income;
• The Cyprus tax regime offers several exceptions, for example the exemption of dividend income from corporate taxation and dividend distributions to shareholders not subject to withholding tax.  Moreover, individuals investing in an approved innovative company can receive a 50% exemption on their investment;
• Non-domiciled employees earning €55,000 or more can enjoy a tax benefit of 50% for a period of 17 years.

Other Benefits of a Company of Foreign Interests in Cyprus

Registering a company of foreign interests in Cyprus offers several other compelling benefits for investors:

• Employment of third-country nationals: Foreign interests companies can employ third-country nationals;
• Simplified residency for third-country nationals: Third-country nationals employed by a company of foreign interests can qualify for residency and work permits, that allows them and their families to live and work in Cyprus;
• No Restrictions on repatriation of profits: Companies that are registered in Cyprus can repatriate profits with no restrictions, making it an attractive base for international operations;
• Strategic access to markets: Positioned at the crossroads of Europe, Asia, and Africa, Cyprus provides access to a wide range of markets, with the added advantage of being part of the European Union;
• Idyllic Mediterranean location and weather – Residents of Cyprus enjoy a sunny climate, rich history, beautiful beaches, wonderful cuisine, relaxed lifestyle and lively culture;
• Family members: Employees of companies of foreign interests may opt to have their family members join them and reside with them in Cyprus;
• Highly skilled workforce: Cyprus has a highly educated and multilingual workforce, and English is widely spoken across all sectors of the economy.

Eligibility Criteria

Businesses that qualify for companies of foreign interests need to satisfy at least one of the following conditions:

1. Majority ownership: Third-country nationals must hold most of the company’s shares;
2. Minority share: If a third-country national owns 50% or less of the company’s shares, the company qualifies provided that this foreign investment is valued at a minimum of €200,000, in addition to the initial investment of €200,000 as explained further below;
   In both aforementioned scenarios (1&2), the ultimate beneficial owner (UBO) is required to deposit €200,000 into an account maintained by the company at a credit institution authorized by the Cyprus Central Bank, excluding payment institutions. Alternatively, the company may provide proof of an investment of €200,000 intended for its business operations in Cyprus, such as purchasing an office or office equipment. If there are additional UBOs, this sum can either be deposited or invested individually by one UBO or collectively by multiple UBOs.
   In cases 3-9 below, the investment criteria applies as well, and it is necessary to demonstrate that the company’s initial investment in Cyprus is a minimum of €200,000 by providing relevant certificates, such as a bank statement at the time the amount was deposited or documentation of the investment (like the acquisition of office space and/or office equipment).
3. Companies publicly listed on any recognized stock exchange;
4. Firms engaged in international activities (previously referred to as offshore) that were operating prior to the regime change, with their information retained by the Central Bank;
5. Cyprus shipping companies;
6. Cyprus high-tech / innovation companies;*
7. Cyprus pharmaceutical companies or Cyprus companies that are active in biogenetics and biotechnology;
8. Cyprus private institutes of higher education that are licensed by the Cyprus Ministry of Education;
9. Companies whose majority share capital is held by individuals who obtained Cypriot citizenship through naturalization on economic grounds must demonstrate that they still meet the conditions of their naturalization.

*A business is considered a ‘High Technology Company’ if it meets the following criteria:

a. It is already established and has a market presence;
b. It demonstrates a significant level of experimental R&D intensity;
c. It has created products that belong to one or more of these categories:

• aviation and space industry products
• computers
• information and telecommunication technology (ICT)
• research and development equipment
• pharmaceuticals
• biomedical items
• chemicals
• electrical machinery
• non-electrical machinery

Important Note: The Cyprus authorities might examine requests from companies that are not included in the above-mentioned list of eligible business activities.

Categories of Employees Eligible for Residence Permits

A significant benefit of setting up a foreign interests company in Cyprus is the opportunity to obtain residency for company executives, skilled personnel and their families. This residency is issued under advantageous terms, especially for employees who earn above €2,500 monthly.

Under this scheme, there are two primary classifications of employees who qualify for residence permits:

• Employees who are highly skilled and highly paid: are exempt from requiring approval from the Ministry of Labour and can obtain a visa to enter Cyprus;
• Support level personnel: These workers need to acquire approval from the Ministry of Labour prior to obtaining a work permit and they are allowed to enter Cyprus solely with an entry permit granted by the Migration Department.

Highly paid employees can renew their residency indefinitely, and the application usually takes around a month. This option provides a reliable residency solution, along with the advantages of residing in an EU nation as described above.

Application Procedure for Company of Foreign Interests in Cyprus

The duration for reviewing all actions, such as foreign interests company registration, entry visa issuance, and work permit applications, is roughly two to four months.

Businesses looking to either expand their activities or transfer operations to Cyprus must follow the below procedure:

1. Submission of the BFU Application (note: The BFU is operated by the Ministry of Energy, Commerce and Industry): The application includes a letter expressing interest in establishing or expanding activities in Cyprus. This “Letter of Intent” must provide a concise description of the company’s profile, the nature of its business as outlined in the Articles of Association, the staff count and plans for expansion, along with the necessary supporting documents, copies of which are required in electronic form – see list of documents below;
2. The applicant will be informed via email by the Unit about the receipt of their application, as well as any subsequent changes in its status;
3. Provided that the applicant meets the eligibility criteria and the application satisfies the requirements, the registration process for the register of companies with foreign interests will be finalized within a maximum of ten (10) business days from the date the application is properly submitted;
4. You will receive a confirmation letter regarding your registration via email.

Documents Required for the Application Process

1. Certificate of Incorporation;
2. Certificate of Registered Office Address;
3. Directors’ Certificate;
4. Shareholders’ Certificate;
5. Director’s Affidavit on the company’s ownership (from one of the directors if there are more than one);
6. Ultimate Beneficial Owners’ valid passport(s);
7. Articles of Association of the company;
8. Rental agreement or title deed or a sales document of the new business’ offices (duly stamped if its value is the annual amount of €5,000 or above);
9. Audited Financial Statements (for companies operating in Cyprus);
10. Tax Clearance Certificate for the company (for companies operating in Cyprus);
11. Deposited amount of at least €200.000, that is supported by a Bank SWIFT or other similar document that provides proof of a foreign direct investment by the ultimate beneficial owner who is in Cyprus from abroad. The investment must be executed by the actual UBO, not someone else.

When legal entities such as local or foreign companies and trusts hold shares, a diagram illustrating the entire chain of ownership leading to the ultimate beneficial owners (natural persons) must be declared and documented.

Conclusion

The Cyprus Company of Foreign Interests program offers non-EU nationals a fast-track and advantageous pathway to establishing a business presence in the European Union. Its blend of favourable tax conditions, streamlined residency processes, favourable regulatory environment, strategic location, and access to talent presents a unique opportunity for business success and lifestyle enhancement in the EU.