KME Chartered Accountants

May 30,2019

The Ministry of Finance is already devising the third Startup Visa scheme that will be in place for a two-year period from 2021 until 2023, this time with a state funding of €500.000, following a decision of the Cabinet.

The decision of the Government to fund the scheme for the first time with half a million euro through the budget of the Research Promotion Foundation, aims to render it more attractive to investors from third countries, since so far it has not yielded the expected results, as CNA has been told.

The scheme was launched on a pilot basis from February 2017 until February 2019 and figures from the Ministry of Finance showed that only 14 applications had been submitted of which five were approved and six residence permits were granted. Four of the applications that were approved had been submitted by individuals of Russian origin, while was from the US. The applications concerned startups in the fields of information and communications technology, marketing, real estate, tourism and energy (batteries).

“The effectiveness of the scheme is less than expected given the fact that only 14 applications had been submitted within two years and six permits were approved, while we could issue 150 visas”, a source from the Ministry of Finance told the CNA.

The Government extended the application period for the scheme by two years following its completion last February. The revised scheme will be valid for the period March 2019 to March 2021, during which up to 150 visas can be issued.

The “Cyprus Startup Visa” scheme allows entrepreneurs from third countries, individuals or in a team, to enter, reside and work in Cyprus in order to establish/operate/develop a startup with a high growth potential. The scheme’s goal is the creation of new jobs, the promotion of innovation and research, the development of the business ecosystem and consequently the economic development of Cyprus.

Along with the renewal of the scheme the Government made amendments to it in an attempt to improve its effectiveness. For example, the amount of capital that the applicants must have access to has been reduced to €20.000 from €50.000, which may include venture capital funding, crowdfunding or other sources of funding.

Moreover, for persons eligible to participate in the scheme there is no maximum period of residence in Cyprus as long as they are under this scheme. As a result, these persons have the prospect of long-term residence in the Republic and directly acquire the possibility of family reunification in the case of paid employment and when the family members are already in the Republic. In the case of self-employment, immigration law allows family reunification after two years and while family members are abroad.

As CNA has learned, “some interest has been shown but no applications have been submitted under the new invitation yet”.

Along with their application, the applicants must submit a business plan that must provide that the enterprise’s head offices and tax domicile be established in Cyprus. The business plan evaluation is based on five criteria, which are scored from 0-3 and a score of at least 11/15 is required for approval. The evaluation process is completed within five weeks.

Lithuania, Estonia, Latvia, Denmark, Sweden, Ireland, Italy, France and Spain implement similar schemes.

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