While Cyprus is experiencing a tech boom with the relocation of companies in recent years, stakeholders appear confident the island will see more arrivals after parliament approved a government incentive package.
Earlier in July, the House passed a set of ‘generous’ tax incentives to attract talent and promote headquartering in Cyprus, in line with the Strategy for Attracting Businesses for Activities or/and Expansion of their Activities.
The head of KPMG Cyprus International Tax and Corporate Services, Costas Markides, told news site Stockwatch that the regulations boost the island’s profile as an ideal destination for high-tech businesses and skilled employees.
For existing employees, the bill provides a 50% tax break on remuneration from employment earnings of €55,000 pa by an individual already in Cyprus, provided that they were abroad for 12 consecutive years before their employment.
The new law reduces the minimum required salary from €100,000 to €55,000 per annum.
It also provides a grace period of six months for obtaining the benefit, while the exemption will continue to apply for 17 years from the commencement of employment.
At the same time, for equal treatment, a corresponding exemption is granted to existing employees with a salary exceeding €55,000, provided they were residents outside the Republic for at least ten consecutive years before the start of their employment.
For incomes that do not exceed €55,000, beneficiaries are given an exemption of 20% or an amount of €8,550, whichever is smaller.
Markides notes that the more favourable tax arrangements will attract foreign professionals with a high standard of living, benefiting other sectors of the economy.
A recent webinar held by PwC, “Headquartering in Cyprus: The why and the how” gathered a lot of interest.
PwC executives thoroughly analysed the tax advantages offered by the country, the legislative framework for businesses, the option of creating regulated entities such as Investment Funds, and the data concerning the licensing of Investment Organisations and the provision of services to Crypto Assets.
Special emphasis was placed on issues related to the human resources of foreign companies, from immigration procedures to living conditions in Cyprus and the new incentives recently announced by the government.
“The ever-increasing interest of highly specialised international companies to relocate to Cyprus, even during the pandemic and the recent unprecedented developments, creates optimism the economic model of Cyprus is evolving in line with the provisions of the long-term Strategy of the Cypriot economy “Vision 2035 “, said PwC Partner and Head of Headquartering Tony Hadjiloucas.
The headquartering project for attracting foreign investment aspires to replace the disgraced investment for citizenship scheme, which was shut down in November 2020.