Cyprus enhances its Startup Visa Scheme to boost innovation and attract global talent.

9 JANUARY, 2025

Cyprus enhances its Startup Visa Scheme to boost innovation and attract global talent.

Cyprus is taking bold steps to cement its reputation as a hub for innovation and entrepreneurship with the recent revisions to its Start-Up Visa Scheme. The changes, effective from 01January 2025, aim to attract start-up founders and senior executives from non-EU countries by offering enhanced flexibility and new incentives.

These updates are part of the government’s strategy to strengthen the local innovation ecosystem and diversify the economy.

Key Updates to the Start-Up Visa Scheme

1. Extended Residence Permits

  • Start-up visa holders can now secure residence permits valid for 3 years, instead of the previous 2, with renewal periods extended to 2 years as opposed to the original 1, offering long-term stability.

2. Reduced Equity Ownership Requirements

  • Founders need only hold 25% of the company’s share capital, down from the previous 50%, making it easier for diverse teams to qualify.

3. Increased Workforce Flexibility

  • Start-ups can employ up to 50% of their workforce from abroad, an increase from the prior 30% limit.
  • Companies investing €150,000 or more in Cyprus can hire additional foreign staff beyond this threshold.

4. Renewal Criteria

To renew their visa after the initial 3 years, start-ups must meet one of the following:

  • Demonstrate a 15% revenue increase, or
  • Secure at least €150,000 in investments.

Moreover, they must demonstrate that they either created in Cyprus at least 3 new jobs, or launched at least one product of service, or participated in a local innovation support scheme.

5. Focus on High-Growth Start-Ups

  • Start-ups generating over €1 million in annual revenue and allocating 10% of operational costs to research and development (R&D) for 1 of the past 3 years will receive favorable evaluation.


Why Choose Cyprus?

Cyprus offers a strategic location bridging Europe, Asia, and Africa, a robust legal framework, and a business-friendly environment. With the enhanced Start-Up Visa Scheme, it provides an ideal launchpad for innovative ventures looking to scale globally.

1. Low cost for businesses

Establishing and running a start-up in Cyprus is substantially less expensive than in other large European nation. The average hourly labour rates, the cost of hiring technical and professional staff, office rental prices, and essential business support services like accounting and legal are all included in these expenses.

2. Tax Benefits

  • Competitive Corporate Tax Rate of 12.5% (one of the lowest rates in the EU).
  • Generous Tax Exemptions for Companies:
  • Foreign Dividend Income is exempt from tax under easily met conditions;
  • Profits from Foreign Permanent Establishments (“PEs”) and transactions from stocks, bonds and other financial instruments are tax-exempt;
  • Qualifying Intellectual Property Profits (“IP Nexus”) taxed at an effective tax rate of as low as 2.5% in Cyprus, making it ideal for IP-holding companies;
  • Notional Interest Deduction (“NID”) can significantly reduce the taxable base of Companies in Cyprus, by allowing a notional tax-deduction on assets financed via new equity, offering substantial savings;
  • No Withholding Tax on Repatriation of dividends;
  • No Capital Gains Tax (“CGT”), unless Cyprus situated property is directly/indirectly disposed;
  • Extensive Double Tax Treaty Network.
  • Personal Income Tax Exemptions for Non-Domiciled Residents:
  • No Tax on Dividend, Interest, and Rental Income for up to 17 years;
  • Acquiring Tax Residency using the “60-day rule” or “183-day rule”;
  • Personal income tax exemptions/incentives.


3. Benefits for Entrepreneurs and Cyprus

  • For Entrepreneurs:

The revised scheme provides a streamlined path for innovative companies to establish or expand their operations in Cyprus. With lowered barriers, extended permits, and expanded workforce options, it caters to the needs of both early-stage and established businesses.

  • For Cyprus:

By enhancing the Start-Up Visa Scheme, the government aims to:

- Create a thriving entrepreneurial ecosystem;

- Generate high-quality jobs in cutting-edge industries, and

- Drive sustainable economic growth by fostering innovation.


How can we assist:

At Consulco Law, we understand the complexities of establishing or relocating a business in a new country. Our dedicated team offers comprehensive guidance on navigating the migration process as well as the set up of your company with everything that comes with it, ensuring your venture’s success in Cyprus. Whether you are launching a new company, expanding an existing one, or exploring opportunities under the revised scheme, we are here to help.

Let us assist you in turning your entrepreneurial vision into reality in Cyprus.