Cyprus: Working in Cyprus

Overview

As Cyprus is now a member of the EU, work permits aren’t required for any EU citizen who wants to work or start a business on the island (although certain formalities must be observed – see EU Citizens below). As a result, increasing numbers of young EU citizens are looking at the possibility of living and working in Cyprus and bringing up their families there. The Mediterranean climate, the slower pace of life and the low crime rate are all very attractive. Yet, before you make any decisions about moving to Cyprus to work, you should ensure that it will be possible for you or any family members to work in Cyprus and dispassionately examine your motives and credentials. What kind of work can you realistically expect to do there? Don’t forget that you will be competing with well qualified Cypriots for jobs.

Although English is widely spoken on the island (by around 90 per cent of the population), you may find that some employment areas are closed to you unless you speak fluent Greek. This naturally depends on which area of employment you choose. Even if your qualifications are acceptable in theory, if you want to practise a profession such as the law, engineering or accountancy, you must pass specialist exams in Greek. Those expatriates who come to work in Cyprus usually find jobs or start businesses in tourism, information technology or the construction industry, where foreign qualifications are more readily accepted.

EU Citizens

Since Cyprus joined the EU in 2004, citizens of the European Economic Area (EEA), which includes all EU countries, are guaranteed freedom to work in Cyprus exactly as they are in all EU countries. As an EU citizen you may enter Cyprus simply with your passport or national identity card and look for work for a period of up to 90 days. However, if your intention is to remain in the country, either to work or start a business (or study or retire), you should begin the application process for a temporary residence permit (see Permits & Visas, Cyprus Fact Sheet) as soon as possible. If you’re working for a fixed period in Cyprus for a foreign company, your employer should arrange your application for you.

If you will be working in Cyprus for less than 90 days (e.g. in seasonal employment), you must declare the fact to the Immigration Department within eight days of your arrival on form 2DECL.

Non-EU Citizens

Non-EU citizens intending to work in Cyprus require a work permit (as well as a visa – see Permits & Visas, Cyprus Fact Sheet) before arriving in the country. In order to issue a work permit, the Ministry of Labour must be satisfied that a Cypriot or an EU citizen isn’t available to do the job.

There are two categories of permit: Executive and Non-executive. Executive refers to those who are directors or partners of companies registered with the Registrar of Companies in Cyprus, as well as departmental managers of international companies with offices in Cyprus. Non-executive refers to other managerial, professional, administrative, technical and clerical staff. A work permit, when granted, is usually valid for three months or a year.

Recognition of Qualifications

Cyprus’s membership of the EU means that, in theory at least, EU citizens cannot be denied access to a profession in Cyprus if you’ve been awarded the necessary qualifications in your home country. In addition, if your qualifications are from a UK university they will automatically be recognised in Cyprus, as many Cypriots obtain their professional qualifications from UK universities. If you want to use your professional qualifications in Cyprus, you must apply for recognition to the competent body which regulates your profession. They will examine your application and qualifications and issue a licence so that you may practise your profession in Cyprus. They must inform you of their decision within four months and provide you will a full statement of the reasons for their decision. If there’s any doubt or concern about the recognition of your qualifications, the competent body can ask the opinion of the Cyprus Council for the Recognition of Higher Education Qualifications (KYSATS).

The Department of Labour of the Ministry of Labour and Social Insurance is the national reference body which provides information to EU nationals who want to practise a regulated profession in Cyprus. Full information about regulated professions and details of the District Labour Offices are available from the Ministry of Labour and Social Insurance (22-401 600, www.mlsi.gov.cy/dol).

Social Insurance

If you’re planning to work in Cyprus, you must apply to your local District Labour Office to register for social insurance. The locations of all the District Labour Offices can be found on the website of the Ministry of Labour and Social Insurance (www.mlsi.gov.cy/dol – go to the English version and search for ‘District Labour Offices’).

STARTING A BUSINESS

Many people turn to self-employment or start their own business when they start a new life abroad, although this can be very risky indeed in a foreign country. If you’re thinking of doing this in Cyprus, you must do plenty of research into the country and its history, people, culture and of course business environment. In theory, now that Cyprus has joined the EU, other EU citizens can work as a self-employed person or start a business in Cyprus without restriction. For example, EU citizens are now able to start a business without needing a local Cypriot partner and there’s no minimum investment required. The exception to this relaxation of regulations is businesses related to financial services, which are subject to strict criteria.

The majority of businesses established by foreigners in Cyprus are linked to the leisure and catering industries, followed by property investment and development. The most common include holiday accommodation, e.g. bed & breakfast, villas, apartments and cottages, catering, e.g. bars, cafés and restaurants, shops, property agencies, translation bureaux, language schools, and holiday and sports centres, e.g. tennis, golf and water sports).

Whichever kind of business plans you have, establish the infrastructure first, including a bank account, accountant and lawyer. The advice of a good local lawyer, who understands the business climate in Cyprus and is experienced in company incorporation, is vital. That way you can always ensure that you’re operating within the law and the lawyer will take you through the preparation of a brief financial report so that you can present your proposal to a financial institution. He will also help you apply for a company name and complete all the necessary paperwork for incorporation, for which he will charge between CY£700 and CY£1,000. It’s worth paying a lawyer to complete the application on your behalf. There are severe penalties for anyone who ignores the regulations and legal requirements.

You can obtain help, advice and business information from a number of organisations in Cyprus, such as the Central Bank of Cyprus (www.central bank.gov.cy), the Cyprus Chamber of Commerce (www.cci.org.cy) and the Employers’ and Industrialists’ Federation (www.oeb-eif.org).

As with starting a business in any country, it’s important to keep your plans small and manageable and work well within your budget, especially in the early days, rather than undertaking some grandiose scheme that’s impossible to see through. You should have a contingency plan and sufficient funds to last until you’re established (this also applies to employees). As in many countries, most people are self-employed for the lifestyle and freedom it affords (no clocks or bosses!) rather than for the financial rewards (which can be non-existent). Generally speaking, you shouldn’t consider running a business in Cyprus in a field in which you don’t have previous experience, and it’s often wise to work for someone else in the same line of business in order to gain experience, rather than jump in at the deep end.

Most people are far too optimistic about the prospects for a new business and over-estimate income levels (it often takes years to make a profit) and under-estimate costs. You must be realistic or even pessimistic when calculating your income and over-estimate the costs and under-estimate the revenue (then reduce it by 50 per cent!). New projects are rarely, if ever, completed within budget, and you need to ensure that you have sufficient working capital and can survive until a business takes off. Cypriot banks are very conservative and extremely wary of lending to new businesses, especially businesses run by foreigners. If you wish to borrow money to buy property or for a business venture, you should also carefully consider where and in what currency to raise the necessary finance. The majority of businesses established by foreigners in Cyprus are linked to the leisure and catering industries, followed by property investment and development. In Cyprus certain businesses are termed ‘saturated activities’ and applications for investment in such businesses are rejected outright. Check with the Central Bank of Cyprus (see above) for up to date information.

Buying an Existing Business

It’s sometimes easier to buy an established business than to start a new one, and it’s less of a risk. The paperwork for taking over an existing business is also simpler, although still complex. If you plan to buy a business, always obtain an independent valuation (or two) and employ an accountant to audit the books. Never sign anything you don’t understand completely even if you think you understand it.

Offshore Companies

Since Cyprus’ EU accession in May 2004, there have been no offshore companies in Cyprus. Previously there were some 40,000 registered offshore companies, taking advantage of the tax benefits. All companies must now pay 10 per cent corporation tax on their profits, but this is still the lowest rate in the EU.

© Survival Books Limited 2005

“Buying a Home in Cyprus” 3rd Edition, Anne Hall.

Reproduced with the permission of Survival Books Limited.

Further information on this topic can be found in “Buying a Home in Cyprus” 3rd edition, by Anne Hall.

For extensive information about buying a property in Cyprus, you can purchase this book at www.survivalbooks.net