Cyprus updates regulatory framework for foreign interest companies

The Cyprus Council of Ministers approved a proposal by the Ministry of Energy, Commerce and Industry on October 27, 2026, to overhaul the framework governing foreign interest companies. Minister Michalis Damianou announced that the existing registry has been officially renamed the Business Facilitation Unit Registry. The primary objective of this reform is to bolster compliance and accountability, ensuring that only businesses with substantial physical and economic presence in Cyprus, capable of generating genuine added value for the national economy, are granted favorable status.

Under the new regulations, authorities will conduct systematic compliance audits, with a specific focus on the 70%-30% employment ratio rule seven years post-registration. Furthermore, a clear mechanism for the deregistration of non-compliant companies is being established. Starting January 1, 2027, all relevant entities will be required to submit annual employment reports to ensure greater transparency and operational integrity. These measures aim to shift the focus from the origin of capital to the actual economic activities performed by the firms within the country.