Deoffshorisation will boost Cyprus employment sector
The new foreign company legislation for the ‘deoffshorisation’ that was approved in November 2014 and came into effect from January 1, 2015, has already had a positive impact on the business services sector, as well as the employment sector in general.
According to a leading expert in the recruitment industry, the new legislation affected countless offshore company structures established in Cyprus, forcing them to make adjustments to their offshore entities in order to fully comply with the new law.
“The new legislation affirms that any individual or company with a 25% or more ownership in a foreign company or organisation must now be categorised as a ‘controlling entity,’ meaning that changes to their legal form will need to be made,” said Donna Stephenson, co-founder of GRS Recruitment that maintains offices in Limassol, Nicosia and Malta.
“These changes primarily focus on the greater need for substance within an offshore organisation, meaning a Cyprus offshore structure now needs to directly appoint physical persons to their structure – rather than outsourcing the role to an accounting service provider, for example,” she said.
“Today, substance has become an extremely important issue. A growing number of countries are looking deeper into the ‘substance over form’ doctrine as international developments and legislative changes are also pushing in that direction,” Stephenson added.
As an established international business and financial centre there are countless advantages to creating substance in Cyprus, including a business-friendly and stable tax environment, low operational costs, an excellent infrastructure, access to EU directives and modern legislation.
Since the legislation came into effect, countless offshore structures have made changes to their operations and GRS Recruitment has seen a notable increase in activity from these clients, especially from Russian clients and intermediaries. As a result, these clients and intermediaries are building up substance in their structures by having an operational office in Cyprus – rather than a brass plate company with no substance.
Testament to this is one of many examples where GRS recently assisted a Russian-owned company with hiring a team of 15 accounting employees. This followed a decision by the Russian owners to establish substance in Cyprus and relocate operations and personnel to the island. The recruitment firm has helped countless other businesses to hire the right candidates and ensure their structures are fully operational in line with applicable law.
GRS, co-founded by Donna Stephenson and Steve Slocombe in 2005, is Cyprus’ leading recruitment agency. The company possesses more than a decade of experience as well as highly specific, in-depth industry knowledge. Furthermore, the agency has built up a large database of skilled individuals from Cyprus and overseas and as such, is able to fill available positions in a timely, professional and confidential manner.
The new legislation has thus far proven highly advantageous to Cyprus, enabling the island to create more jobs, attract more talent, increase employment and boost the economy.
Offshore company structures are now renting office space, purchasing and renting properties for their employees and directors, using GRS’ professional services to source and hire new employees to ultimately enhance their presence in Cyprus.
Cyprus is a highly attractive jurisdiction for creating substance due to the many advantages offered by the country that are encouraging businesses to transfer their activities to Cyprus and create substance.
“It’s not just the new law that has positively impacted investments and employment in Cyprus. The government’s Cyprus citizenship schemes have also resulted in investment in Cyprus of more than 2 billion euros over the past two years, which has also led to employment opportunities with these investors establishing businesses in Cyprus,” Donna Stephenson said.
Various regulations enforced across the fiduciary, funds, banking, legal and finance sectors have also created employment opportunities such as for hires in compliance, regulation and anti-money laundering (AML). As a result, the sector associations are continually improving access to learning and developing methods to upskill the talent available in Cyprus, as was seen recently at the Cyprus Investment Funds Association (CIFA) Summit.
Running a one-day seminar, the summit was aimed at the investment fund industry in Cyprus which included asset management companies, fund managers, investment managers and consultants, legal advisors specialised in the funds industry, accounting, audit and tax firms, banks, investment banks, private banks and other financial institutions, custodians and family offices.