In recent years, the aim of the state has been to promote Cyprus as an attractive investment destination and as a credible business center, through the attraction and establishment of foreign companies on the island. For these companies, the most important element for their development is the personnel, since they need specialized personnel to operate smoothly in Cyprus.
These members of staff are either already employed by the companies with the appropriate experience or their area of expertise cannot be found in the local personnel. In many cases, these specialists come from countries outside the European Union. Unfortunately, hiring these people is still a time-consuming process, with many demands from the Civil Registry and Migration Department (Company of foreign interests section).
“In many cases, these specialists come from countries outside the European Union. Unfortunately, hiring these people is still a time-consuming process.”
This bureaucracy is blocking the decision of many investors to re-domicile their seat to Cyprus or expand their operations in Cyprus, thus choosing other investment destinations.
The restrictions that apply to the number of third-country nationals who can hold the positions of Senior Managers and Senior executives, with 5 and 10 persons respectively, raise significant negative issues as they cannot organize new investment plans.
An extension of the above limitations can be given but it is the result of time-consuming procedures. It would be more beneficial if this figure was indicative and adjusted according to the confirmed future expansions of the turnover of foreign interest companies or even on a percentage basis to the existing number of Cypriot and European employees with an extension right.
Furthermore, the mandatory criterion of € 171,000, according to which companies must transfer to Cyprus by bank instrument or other document proving their intention or direct foreign investment on the island, provides no guarantee that the money will not be disbursed by the account after the registration of the company. Perhaps more substantial would be a request for proof of purchase of a building in the country or a long-term lease agreement of a building (eg over two years), which can be regarded as sufficient investment evidence in the country.
“It would be useful to set up a management committee with a supervisory role to facilitate foreign companies wishing to invest in Cyprus.”
Another issue that needs improvement is the under-staffing of the foreign interests companies section of the Civil Registry and Migration Department which delays in finalizing the required procedures, whilst it is urgent to establish a horizontal communication mechanism of the relevant government authorities in order to have an immediate exchange of information between them in regards to the forms which must be filed by the companies. This will help companies get rid of the complex and often repetitive, time-consuming document collection processes of the various government departments involved. In this context, it would be useful to set up a management committee with a supervisory role to facilitate foreign companies wishing to invest in Cyprus.
However, in addition to the general simplification of the procedures, a specific plan should be settled, providing further facilities and incentives to foreign interest companies that can prove through their business plans that they intend and can make major high value-added investments for the Cypriot economy.
All the points mentioned above are food for thought as many foreign companies, considering the complexity of the existing procedures and the time taken to complete them, make second thoughts about their consolidation in Cyprus. Therefore, all necessary measures should be taken to help attract international investors and promote Cyprus as an attractive business hub.
by Theodoros Mantis, Head of People Advisory, Payroll and Corporate Immigration Services of Ellinas Finance PCL
