Also in the news...
What UK goods vehicle operators need to do to carry out international road haulage.
Find out how to import firewood, such as logs and kindling, into England, Scotland and Wales (Great Britain).
If you’re a business that currently buys goods from or sells goods to countries outside the UK, or are planning to trade with Europe from January 2021, HMRC’s new tool can help you identify ways you might be able to make the customs process easier for cheaper for your business. This short video shows you how to use the tool.
If you’re a UK business thinking about moving goods into or out of the UK , this video is here to help you understand how customs intermediaries or agents can help you. For more information have a look at the guidance available on gov.uk.
If you're buying or selling goods abroad, you need to work out the amount of duty or VAT you owe. This short video tells you how to find out the ‘commodity code’ classification for your goods, using our Trade Tariff tool. Find out more on GOV.UK
Incentives for investing/relocating in Cyprus
As part of its effort to attract foreign high net worth individuals as well as to attract qualified individuals to relocate and work in the country, either on their own or as part of a group structuring/reorganisation, Cyprus offers some very attractive incentives
These incentives, together with some other advantages that Cyprus has to offer, such as its geographical location, its sunny weather, the business-friendly time zone, low crime and pollution and the top quality of facilities and services on offer, such as marinas, golf courses, professional services, private schools and universities, are expected to significantly increase the number of foreign people investing in Cyprus over the coming years.
These incentives are already giving fruits, especially for investing in the country, since in the last few years a considerable number of foreign nationals were granted permanent permit or nationality, amongst them some of the richest people in the world.
Incentives to invest in Cyprus
Cyprus offers two schemes for attracting investment by third-country nationals which, since their implementation, have created increased interest, especially from Asian investors, who see Cyprus as the gateway (being the far eastern border of the EU) to the great freedoms granted by the EU to its Member States and their citizens, especially the freedom to conduct business in the Union.
Permanent Residence Permit Scheme
This special class of permit relieves its holders from time consuming procedures associated with other types of permits, such as consular inspections, renewal etc.
The Ministry of Interior implements a “fast-track” procedure in order to issue the relevant permit, assuming the requirements set by the scheme are satisfied. These requirements have been streamlined in order to match the needs and expectations of the modern investor while bringing some real benefits to the country and also to make the whole procedure much more straightforward.
Investment in immovable property
The main criterion in order to qualify for the scheme is the acquisition of up to two properties in Cyprus with a total value of not less than EUR300,000 (excluding VAT and transfer fees). Below there is a summary of the main conditions, surrounding this investment:
⦁ At least 66% of the acquisition price must be financed with funds transferred from abroad.
⦁ The purchase of a house will also be accepted even if it is made under the name of a company and not under the applicant’s name, provided that the Company is registered in the applicant’s name and/or the applicant’s name and his/her spouse and s/he/they are the sole shareholders.
⦁ As from 7 May 2013 with regards to houses, qualifying properties for the scheme will be only those sold by a development company to a buyer for the first time. Applications concerning the resale of houses will not be accepted.
⦁ Houses/apartments can be independent from each other, but must be sold by the same company.
⦁ The permit will be withdrawn if the holder becomes a permanent resident of another country (not his own).
⦁ In case the property/ies based on which the permit was granted is/are sold, the permit will be withdrawn. Periodic checks will be undertaken towards this direction.
Application and supporting documents
The applicant, along with his application for a permanent permit, must submit the following:
⦁ title deed or property purchase agreement deposited with the Land Registry Department as a proof of investment in immovable property and receipts as evidence for settlement of at least 66% of the value of the property;
⦁ •certificate of clean criminal record from the country of the applicant;
⦁ evidence (tax returns, bank statements, share certificates, rental agreements, etc.) of an insured annual income of at least EUR30,000 per annum, increased by EUR5,000 for each dependant;
⦁ certificate from a Cyprus bank that s/he has deposited an amount not less than EUR30,000 in an account blocked for a period of at least 3 years;
⦁ confirmation by the applicant that s/he does not intend to be employed or self-employed in any direct or indirect way in Cyprus;
⦁ evidence of visiting Cyprus at least once every two years – failure to provide this on a continuing basis will lead to cancellation of the permit once granted.
An immigration permit may also be granted to the applicant’s children, even if they are over 18 year old and are not financially dependent on the applicant, provided that each one of the said children has a minimum share in the purchase value of the acquired property amounting to EUR300,000 (e.g. if the applicant has a 30-year old child and wishes to acquire an immigration permit, then s/he must purchase a house worth EUR600,000; if s/he has 2 adult children that are financially independent, then s/he must purchase a home worth EUR 900,000, etc.).
It is implied that in such a case, each child must submit with the application, all the necessary documents (e.g. insured annual income of EUR30,000, deposit of EUR30,000 in a Cypriot financial institution, which will remain blocked for 3 years).
The requirement for the applicant to visit Cyprus at least once every two years, also applies for the members of his/her family that are included in his/her immigration permit.
The applications will be submitted directly to the Civil Registry and Migration Department (CRMD) together with a payment of an examination charge of EUR500. For the purpose of this particular type of immigration permit, an interview with the applicant will take place only in certain cases, when deemed necessary by the General Director of the Ministry of Interior. The examination, assuming the application is complete and no further information is requested, takes on average 2 months.
This scheme involves the provision of citizenship to individuals upon meeting certain criteria, either personally, or through participation as a shareholder or senior executive in a company/companies. The criteria have recently been made more attractive by expanding the range of possible investments and reducing the relevant thresholds.
In the case of senior manager of a company, he/she may submit an application provided that his/her remuneration generates tax revenue for the Republic of Cyprus of at least EUR100,000 over a period of three years and provided that this tax has already been paid or prepaid.
The applicant should make the necessary investment in the three years preceding the date of application and shall keep the said financial assets in his/her possession for a minimum period of three years from the date of his/her naturalization.
At least one of the following investment options must be implemented.
1. Direct investments
The applicant must have made a direct investment of at least EUR5.0 million in Cyprus. Direct investments may fall under one of the following categories:
a. (Purchase of state bonds of the Republic of Cyprus
b. Purchase or construction of buildings or other land development projects (residential buildings, offices, stores, hotels etc. or developments of a similar nature, with the exception of unused land).
c. Acquisition of businesses with registered seat and operations in the Republic of Cyprus which employ at least 5 Cyprus citizens.
d. Purchase of shares of companies registered in the Republic of Cyprus which employ at least 5 Cyprus citizens. Mandatory conversion of deposits in to shares is included within the term “Purchase” for this purpose.
e. Purchase of financial assets (e.g. debentures/securities convertible in to shares/bonds registered and issued in the Republic of Cyprus).
f. Participation in a company/consortium of companies with registered seat and operations in the Republic of Cyprus which employs at least 5 Cyprus citizens.
2. Bank deposits
The applicant shall have personal deposits in Cypriot banks or deposits of his/her private companies or trusts (for which the applicant is the final beneficiary) registered in the Republic of Cyprus of at least EUR5.0 million at a three-year fixed term.
3. Combination of the Investment Options 1 and 2 above
The applicant must have a combination of above EUR5.0 million.
4. Individuals whose deposits at Laiki Bank were impaired due to the resolution measures implemented after 15 March 2013.
The applicant’s deposits must have suffered an impairment of at least EUR3.0 million.
In case that the applicant's deposits were impaired for an amount below EUR3.0 million, the applicant can still qualify upon making an investment as per Investment Options 1 or 2 above for the outstanding required amount of the said criterion.
5. Large Collective Investments
The Council of Ministers has the right, in special cases, to reduce the threshold of direct investment, as per section 1 above to EUR2.5 million for foreign investors participating in a collective investment scheme, worth at least EUR12.5 million. The investment can be accomplished through a different seller / provider (natural or legal person).
Terms and Conditions
Besides satisfying one of the investment options above, in order to qualify for the scheme the applicant must satisfy some other conditions, as follows:
a. The applicant must have a clean criminal record. Furthermore, the applicant’s name shall not be included in the list of persons whose assets are required to be frozen within the boundaries of the European Union.
b. The applicant must own a permanent privately-owned residence in the Republic of Cyprus, of a minimum market value of €500,000 (excluding VAT).
c. In case that any condition is found by periodic controls not to be satisfied, the citizenship may be revoked.
It should be stressed that even if the figures stated above are not fully achieved, as long as the potential investor has the correct profile and commits himself to a considerable and respectful investment in the island, he might be eligible for the passport, as the Council of Ministers has the absolute discretion in approving or rejecting an application.
Application and supporting documents
Several documents must accompany the application for citizenship, such as the deed of purchase and certificates of settlement for the residence, certificate of clean criminal record, documents to substantiate the Investment Option/s followed by the applicant (specified by a guideline issued by the Ministry of Interior for each Investment Option), etc.
3. Other incentives
The VAT provisions related to the application of the reduced rate of 5% (as compared with the standard VAT rate of 19%) on the construction or acquisition of residential property in Cyprus which is to be used as the primary and permanent residence were extended some time ago so as to include acquisitions by individuals, from all over the world, who do not ordinarily reside in Cyprus but acquire property to be used as their residence while they are in Cyprus.
The Land Registry (Duties and Fees) Law provides for full exemption from transfer fees for all transfers of real estate property for which VAT was payable on the transaction and 50% exemption from transfer fees for all other transfers for which properties are sold for the first time upon the issue of a title. This exemption is valid for all contracts signed after 2 December 2011. Furthermore, one of various new bills that have been passed into new laws by the House of Representatives on 9 July 2015, provides for 50% reduction on transfer fees for all transfers of immovable properties that will take place until 31 December 2016, irrespective of the date of signature of the purchase contract and whether are sold for the first time.
In addition, one of the new bills passed into Law in July 2015 provides for full exemption from the 20% Capital Gains Tax on any future gain from the sale of a Cyprus situated property (land or buildings), if purchased until 31 December 2016.
Incentives to relocate to Cyprus
With regards to incentives to relocate to Cyprus, Cyprus offers schemes for different purposes, from promoting the physical establishment/relocation of foreign companies and groups to motivating Cypriots studying abroad to return to Cyprus upon graduating, to giving yet one more motive for non-residents to retire in Cyprus.
1. “Domicile” concept in Special Contribution for Defense
In accordance with a new amendment to the law adopted in July 2015, the concept of ‘domiciled’ persons for what concerns Special Contribution for Defense was introduced. Individuals who are tax residents of Cyprus but are not considered to be “domiciled” in Cyprus are exempt from payment of Special Contribution for Defense on dividends, interest and rental income.
An individual can be considered as domiciled in Cyprus either (i) by domicile of origin or (ii) by domicile of choice, as defined by the Wills and Succession Law of Cyprus.
An individual who has a domicile of origin in Cyprus can still be considered not to be “domiciled” in Cyprus for this purpose under certain conditions.
2a. Tax exemption on income of a non-resident moving to Cyprus for employment
This measure was implemented recently to attract foreign companies or groups to establish themselves or, as is usually the case, transfer their base and substance of operations in Cyprus by offering 50% exemption on personal income. The exemption applies to employment income of a non-resident person taking up residence in Cyprus to work for an employer in Cyprus, effective from 1 January 2012. This exemption applies for a period of five years staring from the first year of employment provided that the employment income of the employee exceeds €100.000 per annum.
A new bill for extending the exemption period from five to ten years has recently been submitted to the House of Representatives and it is expected to be adopted in September 2015.
2b. Tax exemption on income of a non-resident moving to Cyprus for employment
This exemption has been in effect for many years and it has been mainly targeting to attracting Cypriots studying abroad to return to Cyprus for employment. The exemption relates to the lower of 20% of employment income or EUR8,550 and applies for three years starting from the 1st of January of the year following the year of employment.
A new bill for extending the exemption period from three to five years has recently been submitted to the House of Representatives and it is expected to be adopted in September 2015.
3. Special tax rate for pension income for expats
Foreign pension have a very favourable status in Cyprus, involving a flat annual income tax charge of 5% for amounts exceeding EUR3,420 per annum. What is more, the tax payer has the right to choose to be taxed either under the special mode of taxation as stated above or at normal rates. The latter option might be more beneficial, depending on the circumstances, considering that the first EUR19,500 of personal income per annum is tax free.
It should be stressed that as pension income is generally treated as earned income in the country of origin, it is only by concession that a lower rate can be paid by living abroad as an expat. Such concessions are usually determined by Double Tax Treaties (DTTs) and Cyprus has many such treaties, which include the specific provisions. For example the DTT between Cyprus and UK, allows UK expatriates living in Cyprus to have their UK-source pension income taxed in Cyprus and not in the UK.
Contact us here