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CYPRUS STARTUP VISA SCHEME

CATEGORY: IMMIGRATION

CYPRUS STARTUP VISA SCHEME

By virtue of the Decision of the Council of Ministers dated 15/02/2017 it is now permitted to founders, managers and employees of innovative startup businesses from third countries to enter, reside and work in the Republic of Cyprus without the need to follow the process of a temporary residence and employment permit as it is required under the provisions of the Aliens and Immigration Law (Cap. 105).

More specifically, the Startup Visa Scheme for Foreign Nationals of Non-EU Countries (hereinafter “the Scheme”), aims to attract and facilitate foreign investments to the sector of research and innovation by providing benefits such as the right to exercise economic activity and reside in the Republic of Cyprus for 1 year, with the possibility of renewal for at least another year and the right to self-employment or right to paid employment in the startup business within the Republic. In general, the Scheme grants permission to entrepreneurs (non-EU nationals and non-EEA nationals), to enter, reside and work in Cyprus in order to establish or operate or develop a startup with a high growth potential.

The benefits and the rights conferred upon the investors are related with the operating performance of the business and therefore upon successful performance of the business operations the founders, managers and employers are conferred the right of residence in the Republic without any maximum time restrictions as well as the right of enjoyment of family reunification.

The application period for the Scheme has been extended for two years. The revised Scheme is valid as from March 2019 to March 2021 and during this period, a maximum of 150 visas can be issued.

The procedural requirements that need to be followed and the criteria that need to be met by both businesses, founders and employees, who can apply either as individuals (Individual Scheme) or as a group (Team Scheme) are set below in details.

(A) REQUIREMENTS FOR THE BUSINESS

The Startup Visa Scheme is designed in order to facilitate investment in the sector of research and innovation. Therefore, the core requirement for the Scheme to be applied is for the business to be classified as innovative. A business will be considered as innovative if at least 10% of its operating costs, as certified by an external auditor, in at least one of the three years preceding the submission of the scheme application, is contributed towards research and development. In cases where the application concerns a newly founded business without any financial history, the evaluation will be made based on its Business Plan as submitted by the applicant;

The business’s head offices and tax domicile must be established in the Republic of Cyprus or its Business Plan must provide them to be established in the Republic of

Cyprus. The head offices may be common co-working spaces (e.g. business accelerators, incubators, digital hubs etc) or a co-location with other enterprises.

(B) INDIVIDUAL STARTUP SCHEME - REQUIREMENTS FOR FOUNDERS

The applicant must be a Non-EU or Non-EEA national and the only founder of the business with access to a capital fund of at least €20.000, including venture capital funding crowdfunding or any other source of funding;

He must be a holder of an undergraduate degree or an equivalent professional qualification and he must have a good knowledge of the Greek and/or English language.

(C) TEAM STARTUP SCHEME – REQUIREMENTS FOR FOUNDERS

The team of applicants must consist of the founders of the business which can be of a maximum number of five (5) individuals OR of at least one founder and other senior executive(s), the number of which can be of a maximum of five (5) individuals. In the second case, the senior executive must be either a manager or a C-level employee and must have the right to a stock option in the business;

The aforesaid applicants must possess in total more than 50% of the company’s shares;

The founder must have access to a capital of €10.000 and in case of two or more founders the total capital must be €20.000, which may include venture capital funding, crowd funding or other sources of financing;

At least one of the team members must hold an undergraduate or an equivalent professional qualification and all team members must have a very good knowledge of Greek and/or English language.

 Application Procedure:

Step 1: Submission

-The application may be submitted either whilst applicant is abroad or while staying legally in the Republic.

-All documents submitted should be in English.

-A business plan must accompany the application, which must include the location/s where the enterprise is planning to operate in Cyprus and the number of employees the enterprise intends to recruit.

-CV

-Proof of knowledge of Greek or English language.

-Copy of valid passport or other travel document of the applicant, with a validity covering at least two (2) years, at the time of submission of the application.

-Bank Account Statements.

-If the application concerns an existing enterprise, recent audited accounts need to be submitted.

Step 2: Evaluation

The evaluation of the business plan is based on five (5) criteria, which are given points from 0-3 and at least 11/15 is required for approval.

-Significant international market with upward trends

-High-growth business with an innovative and expandable business model

-A clear and sustainable competitive advantage

-Management Team

-Intellectual Property Protection

Upon a positive evaluation result, a Notification of Initial Approval is given to the applicant. The Initial Approval grants the applicant with the right of exercising the business activity for two (2) years from the date the Notification is issued.

It is important to be mentioned that the application’s approval does not automatically guarantee a right of entry, residence or employment in the Republic to all applicants.

 Step 3: Application for a Visa or Entry Permit

Within six (6) months from receipt of the Notification of Initial Approval as above, the applicant, if abroad, must submit an application for a visa from the Consular Authorities of Cyprus or at the Migration Department in Cyprus to secure an entry permit or residence permit.

In the case of an entry permit application, the applicant must state if he or she intends to enter and reside in Cyprus for self or paid employment in his or her enterprise in Cyprus. In the case of paid employment, the company must already be registered with the Cyprus Registrar of Companies and an employment contract must be in place, with a monthly gross salary of at least €850.00. If the applicant is self-employed then proof of access to €10.000 per year for living expenses is needed.

If approved, the applicant should arrange the applicant’s entry into Cyprus within the validity period of the permit.

Step 4: Application for a Work and Residence permit

If the applicant is in Cyprus at the time of receiving the Notification of Initial Approval, within one (1) month the applicant must submit an application to the Migration Department to register and obtain a residence permit for the establishment/operation/development of a startup.

In the case of the applicant being a paid employee, the company (employer) must be registered at the Cyprus Registrar of Companies.

At the time of submission of this application and its supporting documents, the biometric data (photograph and fingerprints) as well as the signature of the applicant will be taken.

If approved, a residence permit will be issued, with a validity period of one (1) year commencing from the date of the Notification of Initial Approval.

Step 5: Application for the Renewal of a Residence Permit in Cyprus

The application for renewal should be filed at least one (1) month before the residence permit expires.

The supporting documents for renewal are amongst others proof of settlement of taxes (if any), social insurance contributions. Biometric data will be taken at the Migration Department as well as the signature of the applicant.

If approved the validity period will be for one (1) year.

Recruitment of Foreign Personnel

It is possible to transfer to the Team Scheme, provided that the requirements for that Scheme are met.

If the Team Scheme requirements cannot be met and/or the founder wishes to recruit in the enterprise additional foreign personnel, then the existing procedures for recruiting foreign personnel should be followed by obtaining the approval of the Labour Department. It is clarified that the Labour Department will approve additional recruitment of foreign personnel in the cases where the total number of foreign workers in the enterprise does not exceed 30% of the total staff.

For the purpose of employment at an innovative startup business, third country nationals can enter the Republic of Cyprus by obtaining an entry permit from the Civil Registry and Migration Department or a visa from the Consular Authorities of the Republic abroad. Then, within 7 days from their arrival in the Republic, the third country national must apply to the Civil Registry and Migration Department to be registered in the Aliens’ Registry. Moreover, he must apply within the aforesaid period to the Department for a temporary residence and employment permit. The validity of the permit depends on the duration of the employment contract and can be up to 1 year, with the right of renewal, provided that the business holds a valid Notification of Initial Approval or a Valid Notification of Intermediate Approval or a Notification of Final Approval issued by the Ministry of Finance.

What happens once the renewed residence permit expires?

Two (2) months before the expiration date of the renewed residence permit, the founder must submit a new application to the Competent Authority. The Competent Authority will evaluate whether the startup is successful by presenting sufficient

development (scale up) or has failed or despite not presenting sufficient development, has a positive potential of success.

The Competent Authority during its assessment will take into account the number of jobs created, the taxes paid by the enterprise, the enterprise’s exports, the enterprise’s revenue and any additional investments made within the enterprise.

The Competent Authority will take one of the following decisions:

a) The company is scaling up:

If the evaluation shows that the startup has achieved sufficient development (scale up), then the applicant will receive a relevant Notification of Final Approval, which will state the following:

i. In cases where there is a registered company with tax domicile in the Republic:

The personnel working in the company at the time that the Notification of FinalApproval is issued will be ensured the right of residence and employment in Cyprus, at the relevant company, with no time limit. For paid employees there will be a potential of a two-year issuance/renewal of residence permits and for the self-employed one year, by paying the corresponding fees. These persons will be able to directly exercise the right to family reunification, in accordance to immigration laws.

The company will be able to recruit additional foreign personnel, not exceeding three (3) individuals, without the prior approval of the Labour Department, provided that the latter will receive a gross monthly salary of at least €1,500. Such personnel shall be entitled to reside and be employed in the Republic, in the relevant company, with no maximum duration and if the provisions of the immigration law are met, be able to exercise the right to family reunification.

The company will be able to recruit additional foreign personnel following the established procedures relating to residence and employment of third country nationals, subject to the prior approval of the Labour Department. The General Employment Policy will be applied in the case of this personnel.

ii. In cases where there is no registered company with tax domicile in the Republic:

Self-employed persons in the enterprise at the time of the Notification of Final Approval will be ensured the right of residence and employment in the Republic, in the specific enterprise, with no time limit, with one-year renewal, and by paying the corresponding fees. They will be able to directly exercise the right to family reunification in accordance to the immigration laws.

The enterprise will be able to recruit additional foreign personnel but not exceeding three (3) individuals, without the prior approval of the Labour Department, provided that the latter will receive a monthly gross salary of at least €1,500. Such personnel shall be entitled to reside and be employed in the Republic, in the specific company, with no time limit and if the provisions of the immigration law are met, be able to exercise the right to family reunification.

The business will be able to recruit additional foreign personnel apart from the above, following the established procedures relating to residence and employment of third country nationals, subject to the approval of the Labour Department. For this kind of personnel, the policy governing General Employment will be applied. The self-employed founder with the larger number of shares in the enterprise will be considered as the employer. In the case of a partnership, shareholding is not taken into account. Each partner in a partnership pays social insurance fees as an independent self-employed person.

b) The enterprise has failed:

If the application’s evaluation is negative, the applicant will receive a notice by the Competent Authority, which will be notified also to the Department of Civil Registry and Migration and will state the need for the applicant to arrange to stay under a different migration status or depart from the Republic, as appropriate.

If the applicant was on a self-employed basis and wishes to continue to reside in the Republic for the purpose of paid employment, the applicant must depart from the Republic and follow the existing procedures providing approval from both the prospective employer and the applicant, from the Labour Department.

c) The enterprise, despite not presenting scale up, has a positive outlook for success:

If the assessment of the application by the Competent Authority considers that the startup, despite not presenting sufficient development, has a positive outlook for success, then the applicant will receive a Notification of Intermediate Approval.

Upon receipt of the Notification of Intermediate Approval, the applicant should immediately and before the expiration date of the residence permit held, apply to the Department of Civil Registry and Migration for renewal of his residence permit, by paying the corresponding fee, and submitting the required documents and biometric data.

In case of approval, the residence permit will be valid for one (1) year from the date of the Notification on Intermediate Approval and the applicant is notified accordingly.

Two (2) months before the expiration date of the renewed residence permit, the founder will have to re-apply to the Competent Authority for final evaluation of whether the startup has succeeded or has failed.

 Author: MARIA LAZARIDOU

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