Establishing a Foreign Interest Company in Cyprus under the Business Facilitation Unit (BFU) Framework

A Strategic Pathway for Non-EU Nationals to Establish and Operate Businesses in Cyprus

The Business Facilitation Unit (BFU), administered by the Ministry of Energy, Commerce and Industry in Cyprus, provides a robust and streamlined framework designed to attract foreign direct investment from non-EU/EEA/Swiss nationals. The BFU regime facilitates the establishment of Foreign Interest Companies in Cyprus, enabling them to operate efficiently while employing third-country nationals through an expedited immigration process.

This framework is tailored to enhance Cyprus’s position as a global business hub by fostering genuine economic contributions through substance, employment, and investment. At Chambers & Co., we specialise in guiding clients through every stage of establishing and maintaining a Foreign Interest Company, ensuring full compliance with regulatory and immigration requirements.

1. Overview of a Foreign Interest Company

A Foreign Interest Company is a Cyprus-registered entity primarily owned by non-EU/EEA/Swiss nationals, conducting legitimate commercial activities within the Republic of Cyprus. Upon successful registration with the BFU, these companies gain access to simplified procedures for employing third-country nationals, bypassing restrictive national labour market tests and quotas. This makes the BFU framework an attractive option for investors and entrepreneurs seeking to establish a foothold in the European Union.

2. Eligibility Criteria for BFU Registration

To qualify for BFU registration, a company must meet the following stringent criteria, ensuring operational substance and economic contribution:

a. Ownership Structure

  • At least 50% of the company’s beneficial ownership must be held by non-EU/EEA/Swiss nationals, either directly as individuals or through a legal entity under their control.
  • A clear ownership structure must be provided, tracing ultimate beneficial ownership (UBO) to the non-EU national(s).

b. Physical Presence

  • The company must maintain dedicated, independent office premises in Cyprus.
  • Virtual offices, co-working spaces, or shared facilities are not permitted, as the BFU emphasises physical substance.

c. Initial Capital Investment

  • A minimum capital injection of €200,000 is required, which must:
    • Originate from the UBO’s personal or controlled corporate account abroad.
    • Be transferred to the company’s Cyprus-based corporate bank account.
    • Be supported by an official SWIFT confirmation or equivalent documentation verifying foreign direct investment.
    • Be accompanied by invoices or receipts in the company’s name if funds are used for operational expenses (e.g., equipment, office setup).

d. Genuine Economic Activity

  • The company must demonstrate active commercial operations in Cyprus, supported by:
    • A detailed business plan outlining objectives and operational scope.
    • Evidence of commercial intent, such as signed service agreements, contracts, or recruitment activities.

3. Key Benefits of BFU Registration

Registering as a Foreign Interest Company under the BFU framework unlocks significant advantages, including:

  • Expedited Immigration Process: Simplified and fast-tracked work and residence permits for third-country nationals in specialist or managerial roles.
  • Family Reunification: Eligible employees can secure residence permits for their dependants (spouse and minor children).
  • No Employment Quotas: Companies can employ an unlimited number of third-country nationals, provided operational needs are justified and minimum salary requirements are met.
  • Enhanced Credibility: BFU registration establishes the company as a legitimate employer of skilled foreign talent, streamlining administrative processes.
  • EU Market Access: Cyprus’s strategic location and EU membership provide a gateway to European markets, supported by a favourable tax regime.

4. Documentation Requirements for BFU Registration

To successfully register with the BFU, the following documentation is required:

  • Corporate Documents:
    • Full set of corporate certificates (e.g., Certificate of Incorporation, Certificate of Directors and Secretary).
    • Memorandum and Articles of Association.
  • UBO Information:
    • Identification documents (passport copies) and proof of residency for the ultimate beneficial owner(s).
    • A detailed structure chart tracing ownership to the UBO.
  • Proof of Physical Presence:
    • A signed lease agreement for dedicated office premises in Cyprus.
  • Evidence of Economic Activity:
    • A comprehensive business plan outlining the company’s objectives and operations.
    • Supporting documents, such as contracts, service agreements, or evidence of recruitment.
  • Capital Injection Documentation:
    • Proof of €200,000 capital transfer via SWIFT confirmation or equivalent.
    • Invoices or receipts in the company’s name for any expenditure of the injected funds.
  • Authorisation Letter:
    • If Chambers & Co. is acting as the authorised representative, a signed letter granting authority to handle the application process.

5. Comprehensive Services by Chambers & Co.

At Chambers & Co., we offer end-to-end support to ensure a seamless experience for clients establishing a Foreign Interest Company under the BFU framework. Our services include:

a. Company Formation

  • Advising on optimal corporate structuring to meet BFU and regulatory requirements.
  • Drafting and filing incorporation documents with the Cyprus Registrar of Companies.
  • Registering the company with the Tax Department and obtaining necessary tax identification numbers.

b. BFU Application Support

  • Preparing and compiling all required documentation for BFU registration.
  • Ensuring compliance with ownership, capital, and operational criteria.
  • Liaising with the BFU on behalf of the client to expedite the registration process.

c. Banking and Financial Setup

  • Assisting with the opening of a Cyprus corporate bank account or coordinating with Electronic Money Institutions (EMIs).
  • Advising on documentation to verify the €200,000 capital injection.

d. Immigration and Employment Services

  • Managing work and residence permit applications for third-country employees and their dependants.
  • Advising on compliance with immigration and employment regulations.

e. Ongoing Compliance and Advisory

  • Providing guidance on statutory obligations, including corporate governance, payroll, and employment law.
  • Offering tax advisory services to optimise the company’s fiscal position within Cyprus’s favourable tax regime.

6. Why Choose Cyprus for Your Business?

Cyprus is a premier destination for non-EU investors seeking to establish a business within the European Union. Key advantages include:

  • Strategic Location: A bridge between Europe, the Middle East, and Africa.
  • Favourable Tax Regime: A corporate tax rate of 12.5%, one of the lowest in the EU, with extensive double-tax treaties.
  • Business-Friendly Environment: A robust legal framework, English-speaking workforce, and EU membership.
  • BFU Advantages: Simplified processes for employing skilled third-country nationals and attracting foreign investment.

7. Contact Chambers & Co.

For foreign entrepreneurs, investors, and technology professionals seeking a stable and strategic EU base, the BFU framework offers a compelling opportunity to establish and grow a business in Cyprus. Chambers & Co. is your trusted partner, providing expert legal and corporate services to navigate the complexities of company formation, BFU registration, and ongoing compliance.

Let us help you unlock the full potential of your business in Cyprus.