Cyprus BCS Permits Explained: A Real-Life Case Study on Immigration and Business Structuring

In this article, we examine the case of a client, let’s call him Mr. X,  residing in Cyprus under the BCS/BFU framework.

The BCS/BFU (Business Facilitation Unit / foreign-interest company) framework applies to non-EU nationals employed by eligible Cyprus companies in Cyprus.

Background

Mr. X relocated to Cyprus in 2018 under a BCS employment permit. His wife, who we’ll call Mrs. X, relocated with him as his dependant spouse.

Over the years, Mr. X changed employers twice, while continuously remaining employed by BCS/BFU companies.

At a later stage, the couple decided to establish their own Cyprus company (“CC”). At the time, someone advised* them that the shares should not be held directly by the BCS permit holder and were therefore placed under Mrs. X. This was half right, as Mrs. X’s immigration status also created restrictions in relation to holding the shares.

*As immigration matters are highly dependent on the exact permit category and personal circumstances of each applicant, this point should always be reviewed with an immigration specialist before any structure is implemented.

The Situation

The couple approached us seeking guidance because Mr. X wished to terminate his current employment.

Their intention was:

• for Mrs. X to obtain a work-related residence status through the Cyprus company; and
• for Mr. X to subsequently become her dependant.

At the same time, Mr. X intended to apply for Cyprus citizenship through the accelerated naturalisation route available to qualifying employees of foreign-interest companies.

Initial Considerations

During the review of the case, concerns were raised regarding Mrs. X’s existing immigration status, as spouse visas do not generally permit active involvement in Cyprus companies, including shareholding and employment.

Examined Scenarios

Different structures were examined in order to determine the most suitable route for the couple.

Scenario 1

The Cyprus Company (“CC”) becomes a BCS/BFU company and employs Mr. X

This would likely be the most straightforward and practical solution.

However, at the time, the couple was not in a position to support the investment requirements generally associated with qualifying a company under the BFU/foreign-interest company framework (commonly €200,000).

As a result, this option was not considered commercially feasible.

Scenario 2

CC employs Mr. X under the general employment route

This option would involve several procedural steps and an estimated transition period of approximately 3-4 months.

Indicatively:

1. The company would first need to apply through the Department of Labour process.
2. The vacancy would need to be advertised and approved.
3. Mr. X would apply for the position.
4. The application would require approval from the relevant authorities.
5. Mr. X would terminate his existing BCS employment.
6. During the applicable grace period (approximately one month), the transition to the new permit category would need to be completed.
7. Mr. X would then obtain a general employment permit (“Gen visa”).

In practice, Cyprus companies employing third-country nationals outside the BFU framework are expected to employ EU nationals as well, commonly following a ratio of 3 EU employees for every 1 non-EU employee, subject to the nature of the business and approval by the authorities.

In addition, general employment permits do not typically provide the same dependant and family reunification benefits available under the BCS/BFU framework, which could create practical limitations for the family structure proposed in this case.

Implications

As a result, Mrs. X might have needed to leave Cyprus and return under a different immigration category, potentially a visitor visa, depending on the structure ultimately selected.

Visitor visas are generally issued for one year with the possibility of renewal and are usually subject to the following conditions:

• Adequate annual income from abroad (€10,000 for the main applicant plus approximately €2,000 for each dependant);
• Clean criminal record; and
• Recent medical examinations.

Holders of visitor visas are generally not permitted to undertake active business or employment activities in Cyprus. However, they may typically act as shareholders and/or directors of Cyprus companies, provided that they are not employed by the company and are not registered as employees for social insurance purposes.

Citizenship Considerations

One of the most important aspects of this case related to eligibility for Cyprus citizenship.

Third-country nationals employed by qualifying foreign-interest companies may benefit from the accelerated naturalisation process, provided that all residency, language, and examination requirements are met.

At the time of writing, this route may allow eligibility after 5 years of legal residence with A2 Greek language certification, provided that the applicant has also been employed by a qualifying BCS/BFU company during the relevant qualifying period prior to the application (2 years), subject to the applicable legal requirements and government examination procedures.

Transitioning to a general employment permit could affect eligibility under the accelerated naturalisation route and instead require the applicant to proceed under the ordinary Cyprus citizenship process, which is significantly slower.

Proposed Structure

Based on the above considerations, the proposed structure was the following:

• Mrs. X to amend her immigration status to a spouse employee permit.

This procedure is generally straightforward and does not require the applicant to leave Cyprus. This type of permit would allow Mrs. X to retain CC shares and become employed by the company through standard social insurance registration procedures, without requiring approval from the Department of Labour in the same manner as a general third-country national employment application.

• Mr. X to maintain his current BCS/BFU employment status until his Cyprus citizenship application is submitted and examined.

This structure aims to preserve Mr. X’s eligibility under the accelerated citizenship framework while simultaneously allowing the couple to gradually transition the operational structure of their company.

Important 

Immigration, employment, and citizenship matters are highly fact-specific and remain subject to frequent legislative and policy changes.

Accordingly, all immigration strategies and corporate structures should always be reviewed and confirmed with a qualified immigration specialist prior to implementation.

Disclaimer: The information provided in this article is for general informational purposes only and should not be construed as legal or tax advice. Please consult with a professional tax advisor for advice on your specific situation.

About Us

CYAUSE Audit Services Ltd is assisting corporations and HNWIs with navigating the practical and legal considerations surrounding BCS/BFU permits, immigration-related company structuring, Cyprus company incorporations, and corporate compliance throughout the relocation process. This is performed under its capacity as a top 30 tier local Audit & Assurance firm regulated by the Institute of Chartered Accountants in England and Wales (ICAEW). Our firm has offices in Cyprus and the UAE and during 2015 the firm has been awarded by I.C.P.A.C and the A.C.C.A (local and international association of Chartered Certified Accountants) for the Quality of our Audit Services and our Office's Procedures.

Being a Truly International Audit & Assurance firm, we have associates from all over the world and we are constantly looking for new associates to expand our network further. At present, CYAUSE Audit Services operates internationally as Accace Circle, a co-created business community of like-minded BPO providers and advisors who deliver outstanding services with elevated customer experience. Our network covers almost 40 jurisdictions with over 2,000 professionals, it supports more than 10,000 customers, mostly mid-size and international Fortune 500 companies from various sectors, and processes at least 170,000 payslips globally.

CYAUSE Audit Services Ltd is also a member of BKR International one of the biggest US Accounting Associations of the word and the 3E Accounting Network, an international accounting network which originates from Hong Kong and has more than 80 members from all over the world.

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