As a result of the invasion of Ukraine, we are seeing unprecedented interest in people from both Russia and Ukraine expressing an interest in coming to work and living in Cyprus – which boasts some 300+days of sunshine a year, writes Kevin Austin, managing director of overseas work advisory Access Financial.
Unconnected with the war, on October 15th 2021, the Cypriot government announced a new scheme with the creation of a Business Facilitation Unit. The system came into force on January 1st 2022.
BRITISH? THEN YOU’RE INCLUDED THANKS TO YOUR 3RD-COUNTRY NATIONAL STATUS
Under the scheme, exiting or planned companies of foreign control incorporated in Cyprus can engage ‘third-country’ nationals, and, post-Brexit, this includes British people to work as employees.
There are a few restrictions. First and foremost, the companies must be majority-owned by non-Cyprus residents. Also, the company needs to register under the scheme. And at the end of five years, the company must employ at least 30% Europeans in its headcount.
Crucially, the scheme provides a fast-track process to obtain a work permit for you, the employee, within a month or so.
ELIGIBILITY
But to be eligible, staff must have a gross salary of no less than €2,500 a month.
They can bring their immediate families with them to Cyprus. Then, after five years, they are eligible to apply for Cypriot citizenship.
In addition to the attraction to companies of being able to recruit third-country nationals, there are exciting tax breaks for employees and UK company-owners who relocate to Cyprus.
There is a 20% income deduction on employment income, with a maximum deduction of €8,550 per year, starting the following year after commencing employment in Cyprus. The concession is available up to 2025.
For higher earners making at least €55,000 a year, there is a 50% employment income deduction, and this is available for up to 17 years, starting on a pro-rata basis on the same year commencing the employment.
TAX-FREE DIVIDENDS ARE AN ADDED BONUS
Of particular interest to foreign business-owners, is that dividends in Cyprus are tax-free. Further appealing, Cyprus taxes foreign pensions at a special, flat-rate of 5%. And lastly regarding tax — but definitely not least, there is no tax on capital gains (apart from immovable property situated in Cyprus), wealth tax, inheritance tax, or death duties.
If you are interested in exploring the scheme (‘Employment licenses for staff from third countries employed by foreign companies’), please contact us. We can assist with immigration, company set-up, company management, and tax services.
SELF-EMPLOYED? YOU’LL WANT CYPRUS’ DIGITAL NOMAD SCHEME
But FreelanceUK readers, in particular, should be aware that the above scheme is not open to self-employed sole traders.
For such independent workers, all is not lost if you too want to work as an unincorporated business-owner but still relocate to Cyprus and live on the Mediterranean’s third largest island.
If that’s you, then you need the so-called ‘Digital Nomad’ scheme.
The digital nomad scheme is part of a new visa programme announced by the Republic of Cyprus to give incentives to people who would like to take advantage of living there, while working for companies that operate abroad. The purpose of the programme is to stimulate business activity in Cyprus.
WHAT IS THE DIGITAL NOMAD SCHEME?
The scheme offers a new residence permit for people who wish to live only in Cyprus but work for companies operating abroad, mainly in wake of the rapid rise of remote working policies adopted by companies worldwide, notably since coronavirus accelerated the ‘work from anywhere’ trend.
QUALIFYING AS A DIGITAL NOMAD
The beneficiaries of the digital nomad visa are third country (non-EU or non-EEA) nationals, who:
- Work remotely using information and communications technology;
- Are employed and work remotely by their own company or another company located outside the Republic of Cyprus; or
- Are self-employed, and their customers are outside the Republic of Cyprus;
- Can prove that they have adequate net monthly income of at least €3,500 to support their living in Cyprus.
But freelancers, you might have to get a move on! There is an initial limit of 500 applications for the Digital Nomad scheme.
WHAT ARE THE BENEFITS OF THE DIGITAL NOMAD VISA FOR CYPRUS?
Individuals granted a Digital Nomad residence permit will benefit from:
- The right to stay in Cyprus for up to one year. But note, it’s possible to renew your stay for two more years.
- Your family members can also stay in Cyprus for the same period and receive a residence permit that expires simultaneously with the individual’s permit. However, during their stay in Cyprus, the family members are not allowed to carry out ‘dependent’ work or engage in any economic activity in the country.
- If they spend more than 183 days in Cyprus during the same calendar year, they will be considered Cyprus tax residents and eligible for several generous tax breaks.
GETTING THE DIGITAL NOMAD VISA
The UK applicant must apply to the Civil Registry and Migration Department with the required documents within three months from their arrival in Cyprus. The applicant can enter Cyprus using a tourist visa.
TURNAROUND TIME
The Civil Registry and Migration Department deal with applications between 5 and 7 weeks from submission.
FINAL THOUGHT
Whether you want to use the digital nomad route because you’re a self-employed sole trader wanting to change-up your freelance career, or the employee-orientated scheme, Cyprus is a hot ticket to consider. Not just because it’s showing itself to be remote-worker-ready, but also because, quite frankly, it is a very pleasant place to live. With a population of around 1 million, 500 digital nomad visas may not sound like many — but it’s the equivalent to 30,000 in the UK. Cyprus is not a high tax country and the very generous impatriate tax breaks could very well be the clincher in choosing where you should spend a few years or even longer in a sunny, friendly clime.