Digital nomads and employment

We need not here expand upon the excellence of Cyprus, the EU’s outpost in the Middle East where so many of Europe’s, Asia’s and Africa’s remote workers and international professionals have settled and where they thrive and prosper. The sun shines, the quality of life is superb, the infrastructure is good and, with its favourable climate and a business-friendly environment, Cyprus offers an alluring combination of lifestyle and economic incentives to attract even the most cynical and world-weary international businessperson.

A Pro-Business Framework for Relocation

The Business Facilitation Unit (BFU) streamlines the setup and relocation process for foreign-interest companies. These companies must be majority-owned by non-EU nationals and demonstrate an initial investment of at least €200,000 in Cyprus. Registration with the BFU allows such businesses to bypass bureaucratic hurdles. A company registered with the BFU has no cap on the number of third-country nationals employed in highly skilled positions and enjoys simplified and accelerated application processing. Furthermore, its employees can receive permits valid for up to 3 years, access to the national health system (GESY) for themselves and their families and are eligible for naturalisation under shorter residency timelines. By 2027, these companies must ensure that at least 30% of their staff are Cypriot or EU nationals. This is part of the effort to integrate local talent while maintaining international competitiveness.

Employee Incentives: A Pathway to Prosperity

Foreign nationals applying for employment-based residence are expected to have applicable qualifications or two years of relevant professional experience as well as a gross minimum salary of €2,500 per month. Employees who come to Cyprus to work can have their family join them; their spouses or legal partners can work for a third party, enjoy free access to the national health service (GESY) for themselves and their dependents and access permanent residence and naturalisation, including the EU Blue Card scheme for highly qualified professionals. Cyprus ensures compatibility with broader European mobility goals, including intra-EU movement and long-term residence status.

Incentives for Digital Nomads

Third-country nationals working remotely for foreign employers can live in Cyprus under specific income and health coverage criteria. The Category F Residence Permit is designed for financially independent third-country nationals, allowing those with an annual income of at least €50,000 (plus €15,000 for a spouse and €10,000 per child) to live in Cyprus without engaging in local economic activity. The Cyprus Digital Nomad Visa Scheme attracts non-EU/EEA nationals who can perform their work remotely using readily available communications technology. To qualify for the Digital Nomad Visa, applicants must be non-EU/EEA nationals, work remotely for an employer registered outside Cyprus, or be self-employed with clients abroad, demonstrate a stable monthly net income of at least €3,500, increased by 20% for a spouse and 15% for each minor child, have suitable accommodation in Cyprus and possess valid health insurance and a clean criminal record.

Application Process

Applicants must submit their applications within three months of arrival in Cyprus. Required documents include a valid passport, proof of income, employment contracts, health insurance and a letter of intent outlining their activities in Cyprus. Holders of the Digital Nomad Visa enjoy several advantages, including the right to reside in Cyprus for one year, with the possibility of renewal for an additional two years while family members can reside in Cyprus for the same duration, although they are not permitted to engage in employment or economic activities within the country. They also have the potential to become tax residents under the “60-day rule,” provided they meet specific criteria, including not residing in any other country for more than 183 days and having other defined ties to Cyprus.

Investment-Based Migration:

Permanent Residency and Beyond

For entrepreneurs and investors, Cyprus provides a stable and welcoming environment. Under the Immigration Permit (Regulation 6(2)), applicants can gain permanent residency through investments in real estate, business shares or collective investment organisations. The minimum investment required is €300,000, and applicants must employ at least five individuals in Cyprus. Other categories of self-employment and business ownership (e.g., agriculture, mining, and professional trades) are also recognised, offering permanent residency for those contributing economically and socially to the economy. Those approved benefit from no need for permit renewals, family reunification without employment rights for dependents and access to GESY and Cypriot residency benefits.

EU Blue Card

The recently updated framework (as of August 2024) aligns with Directive 2021/1883, enabling third-country nationals with high professional qualifications – especially in ICT – to obtain an EU Blue Card. Key features include intra-EU mobility, including short-term (up to 90 days) and long-term residence in other EU countries, retention of rights during temporary unemployment (up to 3 or 6 months depending on card tenure) and a pathway to long-term residence status, even with cumulative stays across Member States.

Integration and Long-Term Stability

Cyprus also supports long-term integration through its national residency schemes. Long-term residency status is available to those residing legally for five years, subject to integration conditions like Greek language proficiency (A2 level), knowledge of Cypriot sociopolitical context and demonstrated economic self-sufficiency. Those eligible enjoy free movement within the Schengen area, access to employment, and family reunification – making Cyprus not just a workplace but a long-term home.

Tax Incentives for Foreign Employees

Beyond the Digital Nomad Visa, Cyprus offers attractive tax incentives to foreign employees, particularly high earners. These incentives are part of the Government’s strategy to enhance the country’s appeal as a business and talent hub. Employees earning €55,000 or more annually may be eligible for a 50% tax exemption on their income for up to 17 years. This incentive applies to individuals who were not tax residents of Cyprus before commencing employment in the country. Existing beneficiaries of the previous 50% tax exemption can now extend their benefit period from 10 to 17 years. Cyprus’ “non-domicile” regime offers additional tax benefits. Non-domiciled individuals are exempt from taxation on dividends and interest income for 17 years. This status is particularly advantageous for High Net Worth Individuals seeking tax-efficient residency options.

• By Constantinos Messios, Managing Director, C.D. Messios LLC

This article was first published in the special publication Doing Business in Cyprus. To view it, click here. To read the entire publication, click here.