Headquarters for repairing the wounds of the Ukrainian war

The services sector in Cyprus is betting on tax incentives to attract talent and promote headquarters to counter the effects of the war in Ukraine and sanctions on Russian funds and businesses.

Immediately after Russia’s invasion of Ukraine, the first sanctions against Russia were imposed, and Cyprus lawyers, auditors and accountants said they had been hit directly, estimating that profits fell by 15% in the aftermath of the conflict. I am.

Costas Markides, Head of International Tax Services at KPMG Cyprus, told news site Stockwatch that encouraging the establishment of headquarters is an important factor in preventing the effects of the war in Europe.

Mr. Markides said the bill submitted by the government, which provides tax incentives to attract talent and promote headquarters, is important to encourage new businesses and business relocations.

“Tax incentives recently approved by the Council of Ministers give businesses Moved to Cyprus While upgrading the island profile as an ideal destination to live and work. “

In addition to tax incentives, he said the government’s decision to promote the settlement of these individuals and give their families access to the Cyprus labor market is of paramount importance.

Tony Hadjiloucas, a partner at PwC Cyprus and head of headquarters and private wealth services, said approval of a new bill to promote headquarters will be key.

“If the bill is passed, it will help alleviate the negative effects of the war in Ukraine and the relevant sanctions that affect the professional services sector and the Cyprus economy in general,” said Hadjiloucas.

He said the companies that chose to move to Cyprus are primarily working on technologies such as fintech, games, forex, brokerage firms, EMI, cryptocurrencies and blockchain.

“In addition, Cyprus is at the top of the list of mutual funds, private equity firms and family businesses.

“This country is rapidly becoming the center of attraction for such companies. If we can protect and reinforce this perspective, the consequences will be long-term and catalytic in economic transformation. prize.”

More incentives

Hadjiloucas said further incentives could make the country more attractive and make the move to Cyprus even smoother.

“Such incentives may include financial reforms in certain industry practices, such as more flexible residence permit procedures and incentives for taxing dividends.

“If the banking system could be more flexible for companies in the above sectors, it would be better not to take undue risk.

“It is important to mention that states and supervisors need to be vigilant, especially in high-risk areas.”

Hadjiloucas added that incentives for relocation could have a positive impact on the real estate sector and could offset some of the losses from the abolition of the Citizenship for Investment scheme.

New tax incentives will reduce the minimum amount Required salary From € 100,000 to € 55,000 per year.

For existing employees, the bill provides a 50% tax deduction for compensation from employment income of € 55,000 by individuals already resident in Cyprus. However, this is limited to cases where you have been abroad for 12 consecutive years before employment.

The bill also provides a six-month grace period for benefits, but the exemption continues for 17 years from the start of employment.

For new employees, the bill provides a 50% tax credit on compensation exercised by foreign individuals in Cyprus for the 12th consecutive year, but eligible individuals must earn € 55,000.

For new employees, the grace period is two years.

The exemption is provided for 17 years from the start of employment.

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