By Senior Associate Kleonike Achilleos and Associate Sevastiana Nicolaou
On 27 October 2026, the Council of Ministers of the Republic of Cyprus approved a revised framework governing the registration and continued eligibility of Companies of Foreign Interests in Cyprus, following a proposal submitted by the Ministry of Energy, Commerce and Industry.
The revised framework forms part of the Government’s broader Strategy for Attracting Businesses and Talent and aims to strengthen regulatory oversight, promote compliance and ensure that companies benefiting from the relevant framework maintain a genuine economic presence and contribute to the Cypriot economy.
The announced changes introduce important developments concerning employment requirements, ongoing reporting obligations, compliance monitoring and the circumstances under which companies may retain or lose their registration.
1. Revision of the 70/30 Employment Ratio Compliance Period
One of the most significant developments concerns the employment ratio applicable to Companies of Foreign Interests.
Under the existing framework, qualifying companies may employ third-country nationals in highly skilled positions, subject to certain conditions, including the obligation to ensure that at least 30% of their workforce consists of Cypriot or other EU citizens within a prescribed period.
Previously, a five-year transitional period had been introduced, commencing in 2021, during which the application of the 70/30 rule was deferred. Under the previous guidelines, the 70/30 rule was expected to become applicable to all companies as of 2 January 2027, with compliance being assessed upon the submission of new employment permit applications.
Under the newly announced framework, compliance with the 70/30 employment ratio will be assessed seven years following a company’s registration, effectively extending the period available to qualifying companies to meet the relevant employment requirements.
Further official guidance will be important in clarifying the application of the revised period to companies already registered under the existing framework, particularly those approaching the end of their original five-year compliance period.
2. Introduction of Mandatory Annual Employment Reporting
With effect from 1 January 2027, companies registered under the framework will be required to submit an annual employment report.
This new obligation is intended to facilitate systematic monitoring of companies’ compliance with the applicable employment requirements and to enhance transparency and accountability.
Although the precise content, format and submission procedures of the annual report have not yet been fully clarified, the new reporting obligation is expected to require companies to maintain accurate and up-to-date information regarding their workforce.
Businesses should therefore review their internal HR and compliance procedures to ensure that relevant employment records are properly maintained and readily available.
3. Enhanced Compliance Monitoring and Introduction of a Deregistration Mechanism
The revised framework places greater emphasis on the continuous monitoring of companies’ compliance with the conditions governing their registration.
In this context, the Government has announced the introduction of a clearer mechanism for removing companies from the relevant register where they fail to fulfil their prescribed obligations.
This represents an important development, as registration under the framework provides qualifying companies with access to immigration and employment procedures designed to facilitate the recruitment and employment of highly skilled third-country nationals.
Consequently, the loss of registration may have significant practical implications for a company’s ability to continue benefiting from these procedures.
The specific grounds for deregistration, applicable procedural safeguards and potential consequences for existing employees and residence permits will require further clarification through the relevant implementing provisions and administrative guidance.
4. Greater Emphasis on Genuine Economic Activity
A central objective of the revised framework is to ensure that companies registered under the scheme demonstrate genuine economic activity and maintain a substantial business presence in the Republic.
The Government has emphasised that the assessment of companies should focus on their actual economic contribution, irrespective of the origin of their capital.
In this context, the revised framework envisages strengthened compliance monitoring and a clearer mechanism for removing companies that fail to fulfil their obligations under the scheme.
While these changes have been approved in principle, the detailed procedures and criteria governing their practical implementation have not yet been publicly clarified. Further guidance is therefore anticipated regarding how compliance will be assessed and how the revised monitoring and deregistration mechanisms will operate in practice.
The revised approach reflects the Government’s intention to encourage businesses that generate economic value, create employment opportunities and contribute to the long-term development of the Cypriot economy.
5. Clarification of Registration Requirements Following Changes in Beneficial Ownership or Citizenship
The revised framework also addresses the circumstances under which companies may retain their registration where their ultimate beneficial owners acquire Cypriot citizenship or citizenship of another EU Member State.
This is particularly relevant for companies whose eligibility under the existing framework is connected to the nationality or status of their shareholders or ultimate beneficial owners.
The Government has announced that the conditions for retaining registration in such circumstances will be clarified.
Further details are awaited concerning the applicable eligibility criteria and the extent to which changes in ownership or citizenship may affect a company’s continued participation in the scheme.
6. Renaming of the Register
As part of the announced changes, the existing Register of Companies of Foreign Interests will be renamed the Business Service Centre Register.
This change reflects the broader administrative approach to supporting businesses operating in Cyprus, while introducing enhanced monitoring and compliance mechanisms.
7. Practical Implications for Businesses
The revised framework offers greater flexibility for Companies with Foreign Interests, particularly in relation to workforce planning and the recruitment of third-country nationals. However, businesses should consider the following practical implications:
- Companies planning to recruit additional third-country nationals should take into account their current workforce composition and the time remaining until their seven-year compliance deadline, particularly where they rely predominantly on non-EU employees.
- Companies approaching the previous five-year compliance deadline should seek clarification on how the revised period will apply to them, particularly before submitting new employment applications.
- Companies should prepare to provide annual employment information from 1 January 2027, ensuring that their workforce records are accurate and up to date.
- Companies whose ultimate beneficial owners acquire Cypriot or EU citizenship should assess whether they qualify to retain their BFU registration under the revised criteria.
- Companies should remain attentive to compliance requirements, as failure to satisfy the applicable criteria may affect their registration and consequently their ability to recruit third-country nationals under the scheme.
As further implementation guidance is expected, businesses should monitor official developments before making decisions that depend on the revised arrangements.
How We Can Assist
Dr. K. Chrysostomides & Co LLC and its strategic partner, C Business Advisors, provide holistic advice to international businesses on corporate establishment, registration under the Companies with Foreign Interests framework, employment and immigration compliance, and the recruitment and employment of third-country nationals in Cyprus.
Both firms have participated in the stakeholder consultation workshop organised by the Ministry of Energy, Commerce and Industry and the Business Facilitation Unit (BFU) on 26 October 2026, contributing to discussions concerning the revision of the Strategy for Attracting Businesses and Talent in Cyprus.
Through our active involvement in these discussions and our regular engagement with the BFU, we remain closely informed of developments affecting the framework and are well positioned to provide practical legal guidance to businesses navigating the revised requirements and their implementation.
