by Andria PapageorgiouA Quick Guide to IP Rights for Fintech Companies in Cyprus
A. IP Protection for Software
Under Cyprus law, software or computer programs are considered literary works protected by copyright, specifically under article 7B of the Law on Copyright and Related Rights of 1976 (Law No. 59/1976). The underlying ideas and principles of any component of a computer program, including the system interfaces, are not covered by intellectual property rights (article 7B(2)).
Copyright protection extends to preparatory design materials (if they can be turned into a computer program), source code, object code, and software architecture. Simply replicating an existing program or draft will not qualify for copyright protection.
Cyprus law does not require a formal registration for copyright, as it is automatically granted. Nevertheless, it is advisable to include the author’s name and creation date within the software’s source code.
Business methods and software programs are not eligible for patent protection, which is reserved for innovative inventions, new processes, and novel ways of operating products. However, this exclusion only applies to software as a standalone entity; inventions incorporating software may still qualify for a patent. Additionally, software code can be safeguarded as confidential information if kept secret, and confidentiality agreements should be used when third parties have access to the code.
B. IP Developed by Employees and Contractors
In Cyprus, intellectual property rights are generally owned by the creator or inventor. However, if an employee develops work as part of their employment contract, ownership typically transfers to the employer unless otherwise agreed. This is outlined in article 11(1)b of the Law on Copyright and Related Rights of 1976 (Law No. 59/1976).
Similarly, if an invention is created under an order or work contract, the patent rights usually belong to the person or entity that commissioned the work or the employer, unless a different arrangement is specified in the contract, as per article 11(1) of the Patents Law of 1998 (Law No. 16(I)/1998).
C. Joint Ownership
Joint owners of intellectual property are not restricted by law from using, licensing, charging, or transferring their rights. However, joint owners generally need to reach an agreement on how to exercise their rights. There may be exceptions depending on the type of intellectual property involved.
D. Trade Secrets
Trade secrets in Cyprus are protected under Law 164(I)/2020, which safeguards confidential business information from unauthorized access, use, or disclosure. To qualify as a trade secret, the information must be confidential, valuable, and protected by reasonable efforts to maintain secrecy. Unlawful actions include unauthorized access, misappropriation, or breaching confidentiality agreements. Trade secret holders can seek court remedies, including provisional measures or compensation for damages. Non-disclosure agreements and internal policies are recommended for protection.
Courts in Cyprus can ensure trade secret confidentiality during proceedings. Under Article 9(4) of Law 164(I)/2020, courts may restrict access to sensitive information and issue confidentiality orders, balancing this with the need for a fair trial.
E. Branding
Brand protection in Cyprus can be achieved through registering a Cypriot trademark or an EU trademark, which provides broader protection across the EU. Trademark registration is done through the Cypriot Intellectual Property Office or the EU Intellectual Property Office (EUIPO). A strong brand reputation can also offer protection against exploitation by third parties.
Logos and slogans that are original may qualify for copyright protection. Additionally, brand designs can be protected as industrial designs if they are new and unique. Fintech businesses should consult public trademark databases to ensure they do not infringe on existing trademarks or designs. A thorough trademark and design search is recommended to identify any potential conflicts.
F. Remedies for IP Infringement
Fintech businesses and individuals in Cyprus whose intellectual property rights have been infringed have several legal remedies at their disposal. These remedies are designed to protect their rights and mitigate the damage caused by the infringement:
- Injunctions: Courts can issue injunctions to immediately halt the infringing activities. This may include preliminary or interim injunctions, which are essential to prevent further damage while the case is being resolved, and permanent injunctions once a judgment is made.
- Damages: The aggrieved party may be entitled to monetary compensation for any financial loss or harm suffered as a result of the infringement. Damages can be calculated based on lost profits, a reasonable royalty, or the infringer’s unjust enrichment, ensuring the affected party is fairly compensated.
- Cease and Desist Orders: Courts may issue orders requiring the infringing party to cease all unauthorized use of the intellectual property. This includes removing or destroying infringing materials, discontinuing the production or sale of infringing goods, and taking measures to prevent future violations.
In addition to these primary remedies, courts may also grant additional relief, such as the seizure or destruction of infringing goods, publication of the judgment to restore reputation, and reimbursement of legal costs incurred by the intellectual property holder.
In case you have any questions or need any assistance, please do not hesitate to contact us for further professional assistance.
Disclaimer: The information contained in this article is provided for informational purposes only, and should not be construed as legal advice on any matter. Andria Papageorgiou Law Firm is not responsible for any actions (or lack thereof) taken as a result of relying on or in any way using information contained in this article and in no event shall be liable for any damages resulting from reliance on or use of this information.
by Andria PapageorgiouNew Rules for Crypto-Asset Service Providers (CASPs) in Cyprus: Key Updates
The Cyprus Securities and Exchange Commission (CySEC) has made an important announcement regarding regulating Crypto-Asset Service Providers (CASPs). Here’s what you need to know:
- Transition to EU’s MiCA Regulation As of 30/12/2024, the European Union’s Markets in Crypto-Assets Regulation (MiCA) will come into full effect for CASPs. This regulation aims to create a clear framework across the EU for the operation of crypto-asset services, enhancing investor protection and market integrity.
- What Happens During the Transitional Period? CySEC has set a transitional period for CASPs already operating under current national rules. Suppose a CASP is registered before 30/12/2024. In that case, it can continue to offer services until 1/7/2026, or until it receives a decision on its application for authorization under MiCA, whichever comes first.
- No New Applications Under National Rules Starting from 17/10/2024, CySEC will no longer accept new applications for CASP registration under the existing national framework. All new applications will need to comply with the MiCA requirements once the regulation is fully in place.
- Preparation for MiCA Applications CySEC is awaiting the finalization of the Regulatory and Implementing Technical Standards (RTS and ITS) by the European Commission. Once these are released, CySEC will publish guidelines on how to apply for authorization under MiCA. In the meantime, interested parties can refer to draft technical standards by the European Securities and Markets Authority (ESMA) to get a head start on their preparations.
- Cross-Border Services For entities that are already providing crypto-asset services across the European Economic Area (EEA), the deadline to submit notifications to CySEC under the current rules is 30/10/2024. After this date, new cross-border service notifications will not be processed until MiCA is fully in effect.
These changes mark a significant shift in how crypto-asset services are regulated, aiming for more consistent rules across Europe. Entities currently offering these services should make sure they understand the new requirements and prepare for the transition to ensure compliance. For more details, you can refer to CySEC’s official announcement.
These updates represent a key step in aligning Cyprus’s crypto regulations with the broader EU framework, ensuring a smooth transition for CASPs and enhanced protection for users across the region.
In case you have any questions or need any assistance, please do not hesitate to contact us for further professional assistance.
Disclaimer: The information contained in this article is provided for informational purposes only, and should not be construed as legal advice on any matter. Andria Papageorgiou Law Firm is not responsible for any actions (or lack thereof) taken as a result of relying on or in any way using information contained in this article and in no event shall be liable for any damages resulting from reliance on or use of this information.
by Andria PapageorgiouThe EU’s Digital Operational Resilience Act 2022/2554 (DORA)
Financial regulators have long faced the challenge of ensuring stability in financial markets, especially given the growing reliance on third-party systems, technology, and platforms. The integration of cloud solutions has heightened these complexities, and the potential risk to financial markets increases if a technology provider experiences a cyber incident.
In today’s interconnected financial ecosystem, long chains of IT subcontractors can make it difficult for institutions to fully understand the vulnerabilities in their systems. This is further complicated when key functions are outsourced to entities without direct contractual ties to the financial institution.
The EU introduced the Digital Operational Resilience Act (DORA) with these issues in mind. DORA mandates that financial institutions identify ICT services supporting critical functions and strengthen their contractual protections. It became effective in January 2023, and affected financial entities and ICT providers have until January 2025 to ensure full compliance. After that, regulators will have the power to impose fines and require firms to remedy security vulnerabilities.
DORA has implications beyond the EU, as it also applies to non-EU companies providing ICT services to EU-based financial institutions.
Key stakeholders in the financial industry must prepare for compliance by aligning their contracts with the new standards, as non-compliance can result in severe penalties, including fines, sanctions for board members, reputational damage, and even criminal liability.
Key Dates:
- January 2023: DORA came into force.
- January 2024: Technical standards to be finalized.
- July 2024: Final set of standards published.
- January 2025: Full compliance required.
Who Will Be Affected?
DORA applies to a broad range of financial entities, such as banks, investment firms, and insurance companies, as well as certain ICT service providers who meet specific criteria outlined in the regulation. Some providers will be classified as critical, subjecting them to oversight by EU regulatory authorities.
ICT Services Defined:
ICT services encompass digital and data services provided via IT systems, including hardware, software, and support services. Critical providers are identified based on their impact on the stability and quality of financial services.
Impact and Compliance:
Financial institutions must ensure robust ICT risk management frameworks, incident reporting protocols, and resilience testing. Contracts with third-party ICT providers must meet DORA’s standards, including pre-contractual due diligence, monitoring service levels, and planning for termination or exit strategies.
While DORA applies to the EU, it has a similar counterpart in the UK, with regulations designed to align with global standards on operational resilience. Firms in both regions should ensure they meet impact tolerances for critical services by March 2025.
With the compliance deadline fast approaching, it is crucial for affected organizations to identify gaps in their processes, update their policies, and negotiate contracts that reflect the new requirements.
In case you have any questions or need any assistance, please do not hesitate to contact us for further professional assistance.
Disclaimer: The information contained in this article is provided for informational purposes only, and should not be construed as legal advice on any matter. Andria Papageorgiou Law Firm is not responsible for any actions (or lack thereof) taken as a result of relying on or in any way using information contained in this article and in no event shall be liable for any damages resulting from reliance on or use of this information.
by Andria PapageorgiouEU Financial Services: Key points to watch for the rest of 2024
Last week, Maria Luís Albuquerque from Portugal was appointed as the new EU Commissioner for Financial Services and the Savings and Investment Union. With her appointment, alongside Mario Draghi’s report on European competitiveness, the EU is set to focus on significant developments in the financial services sector in the coming months.
Key priorities include scaling up sustainable finance, with a focus on transition finance and climate resilience. This aligns with the recommendations from the European Supervisory Authorities (ESAs) and the European Securities and Markets Authority (ESMA) to introduce a product categorization system for financial products with sustainability features. Additionally, digital finance will be a major theme, with a push for an open-access framework and the use of AI in financial services.
Other areas of focus include revitalizing securitization markets and addressing macroprudential concerns with non-bank financial institutions (NBFIs). Upcoming consultations, including one on securitization regulations and another on macroprudential policies for NBFIs, are expected to bring significant regulatory changes.
While work will continue by the Commission and the ESAs to prepare Level 2 and Level 3 measures under key financial services mandates over the coming months (in particular MiCA, DORA, the new AML/CFT package and the EU Banking Package), a number of Level 1 measures (directives and regulations) actioned during the term of the last Commission still need to be finalised.
Several important legislative proposals, such as EMIR 3.0, the ESG Ratings Regulation, and amendments to Solvency II, are expected to be published by the end of 2024. Additionally, trilogue negotiations on key regulations like Payment Services Directive 3 (PSD3) and the retail investment package are set to commence soon.
The move towards a T+1 settlement cycle and developments in short-term funding instruments, such as commercial paper, are also worth monitoring, though immediate changes are not expected.
This period marks a transformative time for EU financial services as the region aims to strengthen its competitive edge and regulatory framework.
In case you have any questions, please do not hesitate to contact us for further professional assistance.
Disclaimer: The information contained in this article is provided for informational purposes only, and should not be construed as legal advice on any matter. Andria Papageorgiou Law Firm is not responsible for any actions (or lack thereof) taken as a result of relying on or in any way using information contained in this article and in no event shall be liable for any damages resulting from reliance on or use of this information.
by Andria PapageorgiouQ&A: due diligence for tech M&A in Cyprus
As the technology sector thrives in Cyprus, mergers and acquisitions (M&A) involving tech companies have become increasingly common. Conducting thorough due diligence is essential to ensure that intellectual property (IP) and technology assets are accurately evaluated, and potential legal or regulatory risks are addressed before completing a transaction. This process requires specialized knowledge in areas such as IP ownership, licensing, data protection, and cybersecurity.
With over a decade of experience in the fintech industry and extensive expertise in GDPR compliance, intellectual property, and regulatory frameworks, our Law Firm is well-equipped to guide clients through the complexities of tech M&A in Cyprus. We understand the unique challenges that tech companies face during the necessary due diligence phase, and our deep sector knowledge ensures that every aspect—from IP rights to data protection—is carefully reviewed to safeguard our client’s interests.
In this article, we present the key areas of tech M&A due diligence in Cyprus, outlining the distinct approaches for share acquisitions versus asset purchases, and highlighting the legal and regulatory considerations specific to the local market. With our expertise, both buyers and sellers can confidently handle these transactions, ensuring a seamless and legally sound process.
1. What are the typical areas of due diligence undertaken in tech M&A in Cyprus?
In Cyprus, due diligence for tech M&A focuses on reviewing the target’s technology and intellectual property (IP) assets. This includes confirming the ownership, licensing, and protection of technology and IP rights, assessing IT infrastructure (e.g., cloud-based or on-premises systems), reviewing data protection compliance (especially with GDPR), and evaluating cybersecurity measures. Due diligence also assesses contractual obligations, key third-party relationships, the handling of open-source software, and any regulatory filings triggered by the transaction.
2. How does due diligence differ between share acquisitions and asset purchases in Cyprus?
In a share acquisition, the buyer acquires the entire company, including all assets and liabilities, which typically means a more extensive due diligence process. This includes verifying IP ownership and identifying potential third-party disputes over rights. In asset purchases, the focus is on ensuring the transferability of the specific IP and technology assets, as well as contracts, with potential restrictions on transfer. Asset purchases may also require separate approvals for data transfers, particularly where customer data is involved.
3. What public searches are typically conducted during tech M&A due diligence in Cyprus?
Public searches typically involve checking Cypriot IP registers for patents, trademarks, and design rights to verify ownership and status. Searches may also include international IP databases, company registers, and records for liens or security interests on intellectual property. Additionally, searches may be made through the Department of Registrar of Companies for annual reports, charges, and encumbrances on the target’s assets.
4. Can liens or security interests be placed on intellectual property or technology assets in Cyprus?
Yes, intellectual property and technology assets can be pledged as security in Cyprus. Due diligence will involve checking the Department of Registrar of Companies for any registered liens, pledges, or security interests on IP assets. Ensuring that proper documentation for the release of such security is in place is crucial as part of closing the transaction.
5. What is the due diligence process for employee-created intellectual property in Cyprus?
In Cyprus, IP rights created by employees during the course of their employment typically belong to the employer, unless agreed otherwise. Due diligence should review employment contracts to ensure that they include clauses transferring IP rights to the company. Similarly, contractor agreements should be reviewed to confirm that the company holds ownership of any IP or technology developed by external third parties.
6. What due diligence is conducted regarding the target’s use of open-source software?
The buyer will assess whether the target uses open-source software in its proprietary technology and confirm compliance with relevant licenses. Open-source licenses, especially those with “copyleft” provisions, may require that modifications or derivative works be made publicly available. Due diligence will also check if the target has policies to manage the use of open-source software, and, if necessary, the buyer may request code scans to identify potential risks.
7. How is software licensing typically reviewed during tech M&A due diligence in Cyprus?
Software due diligence involves reviewing both licensing in (software the target uses) and licensing out (software the target licenses to others). Key issues include confirming that the software licenses cover the necessary users (especially in group structures) and assessing whether there are any restrictions on transferring licenses to the buyer. Agreements with third-party software providers should be reviewed to ensure continued support and maintenance post-acquisition.
8. What are the data protection considerations in tech M&A in Cyprus?
Compliance with data protection laws, including GDPR, is a significant focus in tech M&A. Due diligence will involve reviewing the target’s data processing activities, internal policies, and any potential data breaches. For transactions involving customer data, especially in asset purchases, it is important to assess whether customer consent is required for transferring personal data, as this may complicate the transaction.
9. Are there specific regulatory concerns for tech companies in Cyprus?
Yes, certain sectors may have additional regulatory requirements in Cyprus. For example, tech companies dealing with sensitive data or operating in sectors like telecommunications or financial services must comply with sector-specific regulations. Due diligence will assess whether the target company has made the necessary regulatory filings or received the appropriate approvals, and whether any filings are triggered by the transaction.
10. How are intellectual property rights (IPR) transferred in tech M&A in Cyprus?
The transfer of intellectual property rights is generally straightforward in Cyprus but may require specific agreements, especially in asset purchases. Transfer of licenses, particularly software licenses, often requires the consent of the licensor. Exclusive and non-exclusive licenses may be treated differently, with exclusive licenses requiring more stringent review. It is essential to ensure that all necessary consents and assignments are obtained before closing the transaction.
In case you have any questions, please do not hesitate to contact us for further professional assistance.
Disclaimer: The information contained in this article is provided for informational purposes only, and should not be construed as legal advice on any matter. Andria Papageorgiou Law Firm is not responsible for any actions (or lack thereof) taken as a result of relying on or in any way using information contained in this article and in no event shall be liable for any damages resulting from reliance on or use of this information.
by Andria PapageorgiouAnnouncement by the Registrar of Companies and Intellectual Property for Cases Where the Beneficial Owner Has Deceased
The Department of the Registrar of Companies and Intellectual Property (DRCIP), following an opinion from the Legal Service of the Republic dated 13/06/2024 on the above matter, provides the following guidance/instructions, as seen in the relevant announcement here.
CASES WHERE THE BENEFICIAL OWNER HAS DECEASED
Answers to specific questions:
- Who is registered as the beneficial owner (BO) when there is no will and, consequently, no executor of the estate?
- What happens if there is a will? Can the executor of the estate be registered as the senior management official until the process is completed?
In cases where an administrator has been appointed but the administration of the estate has not been completed, the following may be registered for a period until the process is completed:
i. The estate administrator as the senior management official of the company if they exercise control over the company through other means; or
ii. The legal heir as the beneficial owner or as the senior management official.
When a person dies without a will, the Court authorizes one or more persons as administrators of the deceased’s estate, granting them letters of administration following a petition by these persons, which is called an application for administration without a will attached. Similarly, when a person dies leaving a will, this will is probated (see Article 14 of the Administration of Estates Law (CAP. 189)), following an application by the persons named as executors of the will or by other persons entitled to the grant of probate or the receipt of letters of administration with the will annexed.
With the granting of letters of administration or the issuance of probate, as referred to above, the administrator or executor becomes the deceased’s personal representative and is considered a trustee of the deceased’s movable and immovable property. As such, they constitute the natural person who “has ultimate control” according to the definition of “beneficial owner” in Article 2 of Law 188(I)/2007 (it should be noted that the situation where the ultimate ownership or control of the legal person is held through a trust at a percentage exceeding 25% of the shares or voting rights or ownership rights of the said legal person is different).
Therefore, when there is no will, and an administrator has been appointed, or when there is a will, and an executor of the deceased’s estate has been appointed, they constitute the beneficial owners as the natural persons who have the ultimate control of the company as long as they retain this capacity concerning the specific assets of the company (i.e., the shares).
The above is subject to the provisions of Article 27 of CAP. 189, which provides for the direct inheritance to the heirs, in special cases (even though no letters of administration of the estate have been granted), in which the beneficial owners become the heirs of the deceased who inherit, as the natural persons who have the ultimate ownership status (it should be noted that in practice, the procedure of Article 27 of CAP. 189 is applied only in cases where the value of the estate does not exceed 6000 pounds).
Who is registered as BO when there is no appointed estate administrator and no heirs?
According to Article 47 of CAP. 195, “if there is no person alive who is related to the deceased up to the sixth degree of kinship at the time of death, the deceased is deemed to have died intestate,” and “subject to the share of any surviving spouse, the intestate part of the estate and the undistributed part of the estate become the property of the Republic.”
Nevertheless, in response to the query, the non-filing of an application and non-issuance of letters of administration, and therefore the non-appointment of a personal representative (and non-transfer of the estate to the Republic) imply that “no natural person with ultimate ownership or control of the legal entity” can be identified. Therefore, the beneficial owner in this case is “the natural person holding a position of senior management official,” according to the definition of “beneficial owner” in Article 2 of Law 188(I)/2007, unless Article 27 of CAP. 189 applies (see point 3 above).
Who is registered as BO when no estate administrator has been appointed, there are no heirs, but the deceased has minor children and a spouse?
Without the issuance of letters of administration and the appointment of a personal representative when the deceased left behind heirs (i.e., a spouse and children), the beneficial owner is “the natural person holding a position of senior management official,” according to the definition of “beneficial owner” in Article 2 of Law 188(I)/2007, since no natural person can be identified as a beneficial owner under paragraph (a)(i) of the definition, unless Article 27 of CAP. 189 applies.
Who is registered as BO in an entity when the sole officer (director, secretary) and beneficial owner has died, and there is no will or estate administrator?
In the event of the death of the sole shareholder and officer of a company, and if no letters of administration have been granted, and there is no “natural person holding a position of senior management official” as this can be interpreted under the provisions of Law 188(I)/2007, there is, in fact, no natural person within the meaning of “beneficial owner” in Article 2 of Law 188(I)/2007, and it follows that the company is not conducting business or operating.
Note:
In every case, any relevant provision in the company’s Memorandum and Articles of Association or the application of other legislation depending on the particular facts should be considered.
In case you have any questions, please do not hesitate to contact us for further professional assistance.
Disclaimer: The information contained in this article is provided for informational purposes only, and should not be construed as legal advice on any matter. Andria Papageorgiou Law Firm is not responsible for any actions (or lack thereof) taken as a result of relying on or in any way using information contained in this article and in no event shall be liable for any damages resulting from reliance on or use of this information.
by Andria PapageorgiouCyprus on Netflix: A New Era for the Olivewood Scheme
Stelana Kliris’ latest film, “Find Me Falling,” marks a significant milestone as the first Cypriot movie to stream on Netflix. This achievement brings notable actor Harry Connick Jr. to Cyprus, spotlighting the success of the Cyprus Olivewood Scheme.
“Find Me Falling,” a co-production by Jupiter Peak Productions (USA) and Meraki Films (Cyprus), with support from Cyprus’ Deputy Ministry of Culture and the Cinema Advisory Committee, was entirely filmed across Cyprus, from Peyia to Nicosia. The production team consisted predominantly of local talent, with over 150 crew members from Cyprus, alongside a few from the US and Greece.
Launched in September 2017, the Olivewood Scheme aims to attract international film, documentary, and television productions to Cyprus, enhancing investment and employment while promoting the island as a cultural and tourist hub. This initiative aligns with European Commission Regulation 651/2014, providing a blend of grants and tax incentives to qualifying productions.
A. Incentives Overview
Cash Rebate and Tax Credit: Producers can opt for either a cash rebate or a tax credit, not both, under the scheme. Additional incentives, such as tax allowances for infrastructure and equipment investments, and VAT returns, apply irrespective of this choice.
- Cash Rebate: Up to 45% of eligible expenditures incurred in Cyprus, contingent on the production’s cultural test score. The rebate is granted post-filming, upon submission and review of the audit report by the filming committee.
- Tax Credit: Up to 35% of eligible expenditures, with unused credits carried forward for up to five years, subject to a cap of 50% of the applicant’s taxable income in the production year.
- Tax Allowance for Investments: Small and medium-sized enterprises can deduct up to 20% (small enterprises) or 10% (medium-sized enterprises) of their investment in film infrastructure and equipment from their taxable income. Investments must remain in Cyprus for at least five years.
- VAT Refund: VAT incurred on qualifying production expenditures can be refunded. Cyprus VAT rates are 19%, 9%, and 5%, with refunds processed within six months of the VAT declaration deadline or the VAT return application date.
B. Scheme Extension and Impact
In September 2023, the Cyprus government extended the Olivewood Scheme for another three years, following a favorable cost-benefit analysis. An initial investment of 1 million euros yielded a return of 5.5 million euros, justifying the extension and an increased rebate rate of 45%.
C. Benefits of Filming in Cyprus
The Olivewood Scheme offers filmmakers cost-effective production opportunities against Cyprus’ stunning landscapes, from crystal blue seas and sandy beaches to breathtaking mountains and modern cities. This initiative has elevated Cyprus as a preferred filming location and opened new avenues for investment in the local film industry.
Should you have any further questions, please do not hesitate to contact us at info@apapageorgiou.com.
Disclaimer: The information contained in this article is provided for informational purposes only, and should not be construed as legal advice on any matter. Andria Papageorgiou Law Firm is not responsible for any actions (or lack thereof) taken as a result of relying on or in any way using information contained in this article and in no event shall be liable for any damages resulting from reliance on or use of this information.
by Andria PapageorgiouThe EU’s Regulatory Framework for Artificial Intelligence: A New Era for AI Governance
The European Union (EU) is pioneering a comprehensive approach to artificial intelligence (AI) regulation with the introduction of the AI Act. This landmark legislation, the first of its kind globally, aims to balance innovation and safety, ensuring AI systems are trustworthy, transparent, and respect fundamental rights.
A. Core Objectives of the AI Act
The AI Act establishes a risk-based framework to regulate AI technologies across the EU. It categorizes AI systems into four risk levels:
- Unacceptable Risk: AI systems that pose a significant threat to safety, livelihood, or rights, such as those used for social scoring or cognitive behavioral manipulation, are banned.
- High Risk: These systems, which include applications in critical infrastructure, education, and employment, must meet stringent requirements before they can be marketed. This includes obtaining a CE marking to ensure compliance with EU standards.
- Limited Risk: AI systems in this category are subject to specific transparency obligations, such as informing users they are interacting with an AI system.
- Minimal or No Risk: These are largely exempt from additional regulatory burdens.
The Regulatory Framework defines 4 levels of risk for AI systems:
B. How does it all work in practice for providers of high-risk AI systems?
Once an AI system is on the market, authorities are in charge of market surveillance, deployers ensure human oversight and monitoring, and providers have a post-market monitoring system in place. Providers and deployers will also report serious incidents and malfunctioning.
C. Ensuring Trustworthy AI
To foster trust and transparency, the AI Act mandates several key measures:
- Pre-Market Conformity Assessments: High-risk AI systems must undergo thorough evaluations to ensure they meet EU standards for safety, security, and ethical considerations.
- CE Marking: Similar to other products within the European Economic Area, AI systems will require CE marking to indicate conformity with health, safety, and environmental protection standards.
- Transparency and Accountability: Developers must provide clear information on the AI system’s capabilities and limitations, ensuring users are well-informed.
D. Supporting Innovation
The EU aims to promote innovation without compromising safety through mechanisms such as:
- AI Regulatory Sandboxes: These allow developers to test AI systems in a controlled environment, facilitating innovation while ensuring regulatory compliance.
- Proportional Penalties: Fines for non-compliance are scaled based on the company’s size and revenue, ensuring that penalties are fair and encourage adherence to the regulations.
E. Governance and Enforcement
A robust governance structure will oversee the implementation of the AI Act:
- European Artificial Intelligence Board (EAIB): This new body will ensure consistent application of the rules across the EU.
- National Supervisory Authorities: These bodies will work alongside the EAIB to monitor compliance at the member state level.
F. Impact and Future Outlook
The AI Act is set to transform the AI landscape in Europe, creating a unified legal framework that not only protects consumers and citizens but also encourages technological advancement and market growth. By setting high standards for AI development and deployment, the EU aims to lead the world in ethical and innovative AI practices.
This pioneering regulation underscores the EU’s commitment to harnessing the benefits of AI while safeguarding its citizens’ rights and promoting a thriving digital economy.
Should you have any further questions, please do not hesitate to contact us at info@apapageorgiou.com.
Disclaimer: The information contained in this article is provided for informational purposes only, and should not be construed as legal advice on any matter. Andria Papageorgiou Law Firm is not responsible for any actions (or lack thereof) taken as a result of relying on or in any way using information contained in this article and in no event shall be liable for any damages resulting from reliance on or use of this information.
by Andria PapageorgiouUK Non-Dom Regime Facing Uncertainty: Exploring the Cyprus Alternative
The future of the widely utilized UK non-domicile (“non-dom”) regime is currently uncertain. There is a strong possibility that this regime may soon be abolished or undergo significant modifications, particularly concerning the duration for which it will remain applicable. Much hinges on the outcome of the upcoming UK elections, with the Labour and Conservative parties offering little clarity in their manifestos, thereby increasing the unpredictability surrounding this issue.
As a result, current UK non-doms and other international individuals looking to relocate their tax residency are actively seeking alternatives that can satisfy their personal, business, and financial needs efficiently. This is where Cyprus presents a compelling alternative.
The Cyprus Non-Dom Regime: A Prime Alternative
Cyprus has emerged as a preferred destination for individuals from both EU and non-EU countries, whether for long-term relocation or short-term solutions. This is largely due to its attractive non-dom tax regime, which automatically applies to foreign persons who become tax residents in Cyprus. This regime offers significant benefits for up to 17 years.
There has been a notable increase in the number of foreigners opting to become Cyprus non-dom tax residents, leveraging the island’s favorable conditions to manage their international and local business affairs. Cyprus offers a balanced mix of tax and non-tax advantages, making it an appealing option.
Key Benefits of Cyprus Non-Dom Status
Non-dom residents in Cyprus enjoy specific exemptions from Cyprus taxation on dividends and interest, regardless of the source country or whether the funds are remitted to Cyprus. Additionally, there is a complete tax exemption on gains from the sale of shares and other qualifying titles, as well as from capital gains unrelated to immovable property situated in Cyprus.
These exemptions are particularly advantageous for high-net-worth individuals, whose income often primarily comes from dividends, interest, and capital gains.
Foreign individuals can become Cyprus tax residents through the standard 183-day rule or the recently introduced 60-day rule, subject to certain conditions.
Comprehensive Benefits Beyond Taxation
Apart from tax benefits, Cyprus offers a wide array of attractive elements for both individuals and companies. The island excels in providing a high quality of life, featuring a convenient geographical location, a pleasant Mediterranean climate, numerous blue flag beaches, a low crime rate, modern infrastructure, and high-end properties. The availability of international schools, advanced medical care facilities, and a vibrant cosmopolitan lifestyle further enhance Cyprus’s appeal as an ideal place to work, live, and raise a family.
How our Law Firm Can Assist
Our Law Firm offers a comprehensive range of services to facilitate your transition to Cyprus, including:
- All aspects of Corporate procedures
- Assistance with Immigration matters
- Registration with Cyprus tax authorities
- Establishment and administration of Cyprus companies
- Provision of professional director services
- Company domiciliation
- Assistance with Permanent Residency Permits and Work Permits
- Opening of bank accounts
- Accounting and bookkeeping services
- Handling property and real estate matters
- Provision of Family Office services
Cyprus stands as a viable and attractive alternative for those considering relocating from the UK non-dom regime, offering robust benefits and a high quality of life. Contact us today to learn how we can support your transition to Cyprus.
For any professional assisstance, please do not hesitate to contact us at info@apapageorgiou.com.
Disclaimer: The information contained in this article is provided for informational purposes only, and should not be construed as legal advice on any matter. Andria Papageorgiou Law Firm is not responsible for any actions (or lack thereof) taken as a result of relying on or in any way using information contained in this article and in no event shall be liable for any damages resulting from reliance on or use of this information.
by Andria PapageorgiouCyprus Company Formation
A. Cyprus main Company Types
1. Limited Company (LTD)
- no minimum share capital requirement
- number of shareholders can be between one to fifty
- the company must have at least one director and a secretary
- annual accounts must be audited and filled either in Greek or English language
2. Branch
- foreign company responsible for all liabilities of a Cypriot branch
- branch required to register with Registrar of Companies and CY Tax department
- accounts to be filed annually, in Greek or English
3. Partnership
- general partnership: between two to twenty members
- limited partnership: at least one partner with unlimited liability
- required to register with Registrar of Companies and Cyprus tax department
B. Uses of Cyprus Companies
A Cyprus registered company can be used in various ways supporting the needs of the company’s operations. Cyprus registered companies can have activities related to:
- Imports/exports
- Services providers
- Online shops
- Tech Start-Ups
- Finance companies
- Shipping companies (Merchant Shipping)
- Property Holdings
- Investment Companies
- Holding companies
- Intellectual Property Holding
C. Registration Timeframe
The formation of a Cyprus company usually takes 8 working days. More specifically:
- Day 1: Application to the Registrar of Companies for the company name approval.
- Day 3: Name approval for the authorities; completion of memorandum and submit online to the Registrar of companies for approval.
- Day 7: Issue of company’s official documentation. (Certificates of registration, certificate of board of directors and secretary, certificate of shareholders and office address, Authentication of company memorandum and Articles of association)
- Finally, the application to the Tax department for Tax Identification Number is submitted. Also, the application for Bank account opening in Cyprus.
After the registration of the company, it takes approximately 3 to 5 working days to open a bank account, given that all required information and documents are available to the Bank.
D. Registration Process
- You will need a registered address in order to setup a company in Cyprus. Our firm has the capacity to help you find an office space, without the need for you to look around.
- You don’t need to visit Cyprus in order to register your company. Everything can be arranged from your country and we can take care of it. Our experts will communicate and advice you via email or a teleconference and then sent you the paperwork to be signed.
- There is no minimum requirement of shares capital to start your Cyprus company.
- The documentation needed to register your company are:
- A certified copy of Passport or ID
- A certified copy or an original utility bill, as a proof of address.
- A reference letter from a bank institution, lawyer or accountant for the good standing of the beneficial owners.
- A questionnaire provided from AP Law Firm.
- A recent CV
- Last year’s tax return
E. Fees and Obligations
The annual fee to keep a company active is 350 Euro and is paid to Cyprus company registrar via the online portal or via your services provider.
Annual Reports and Audited financial Statements have to be submitted online to the Cyprus company Registrar department in 28 days after the end of the fiscal year.
Cyprus companies have to convene at least one Directors meeting per year. This meeting is mandatory. The first annual directors meeting of the company has to take place in 18 months after the registration date of the company.
A Cyprus company has to be registered to the Tax department and issue a Tax Identification number within 60 days after the registration date.
The annual Tax return form has to be submitted 15 months following the year end.
The yearly tax has to be paid in three instalments on the 31st of July, the 31st of December and the last one on the 30th of June of next year. All Cyprus companies have to calculate and submit their own tax payments within the tax year.
Every Cyprus registered company is obliged to keep accounting records and prepare audited financial statements.
F. Taxation
- The corporate tax rate is 12.5%.
- No there are no any extra taxes.
- Given that your company employes only yourself, the tax rate will depend on the paid salary you will receive from your company. If you earn less than €19.500
You have no tax obligation. - How you will be taxed on your income in any of the below cases?
(a) Cyprus Tax resident, director and employee of the company.
Taxed on worldwide income if is over €19.500
(b) Non-Cyprus Tax resident, director and employee of the company.
Taxed only on Cyprus income if is over €19.500
(c) Cyprus Tax resident, director, employee and a shareholder of the company.
Taxed on worldwide income if is over €19.500
Dividends are exempted from income tax and Cy withholding tax, but will pay National Health Insurance Scheme on 2.65% from 01/03/2020
(d) Non-Cyprus Tax resident, director and shareholder of the company.
Taxed only on Cyprus income if is over €19.500
Dividends are totally exempted from Cyprus.
G. Banking
For account opening, it usually takes approximately 3-5 working days from the day the signed documents from beneficial owners are delivered to the bank.
The paperwork needed to open up a company bank account are the below:
- Company certificates (Shareholder’s certificate, registered office, Incorporation certificate, Directors and secretary certificate)
- Memorandum and Articles of association
- Identification documents of the beneficiary person (Id, Passport and proof of permanent address)
In case you are not a resident, you can still open a corporate bank account.
You can also get a connected card to the company’s bank account, when this is opened successfully.
The annual fees for the card depend on the cart type (i.e. Mastercard, Visa etc.).
You can also open a personal account, as well, given that all relevant required information is provided.
The fees when receiving payment in your company’s account depend on each bank’s fees policy.
In general, the fees of the company towards the bank depend on the each bank’s policies. Usually banks charge from €500 – €800 per year. A company is obliged to provide all requested information to the bank such as activities, owners, clients and customers.
H. Board of Directors
A Cyprus registered company has to have Director(s) , Shareholder(s) and a Secretary stated.
- At least one director has to be tax resident and annual meetings have to be held in Cyprus.
- You can have a single director for a Cyprus company.
- Anyone can act as a secretary.
- Anyone from Cyprus or abroad can act as a director, given that he/she has no criminal record.
I. Employment
It’s easy to employee staff in Cyprus. Cyprus has one of the most educated labor force in Europe.
Our firm can assist you and advice on the recruiting process.
- You can hire a non-Cypriot resident to work for your company. In the case of an EU citizen he has to visit Cyprus and obtain the yellow slip permit. If is a third country national (outside of CY/EU) then the application of visa is required and different employment criteria according to the Cyprus Department of Labour.
- The minimum wage in Cyprus is 870 Euro gross and after the continuous employment from the same company goes to 924 Euro. The hourly rate varies depending on the job profile starting from 4,55.
- The total insurance fee is 20.3%. The fee of 12% is employer’s responsibility and the rest of 8.3% is paid by the employee. Employer’s contributions include the Social Insurance Fee (8.3%), Redundancy Fund (1.2%), HR Development Authority Fund (0.5%) and lastly the Social Cohesion Fund (2%). Please note that these numbers may change year after year according to the Social Insurance Department.
J. AP Law Firm
Andria Papageorgiou Law Firm can assist you with the incorporation of you company, providing you the following services:
- Advice as to the most efficient Cyprus company structure.
- Preparation and submission of company documents.
- Opening of bank accounts (both personal and corporate).
- Maintenance and Management of the Company:
- Registered office address
- Company secretary
- Directors
- Alternate directors
- Nominee shareholders
- Legal advice and assistance/trustee services
Should you have any further questions, please do not hesitate to contact us at info@apapageorgiou.com.
Disclaimer: The information contained in this article is provided for informational purposes only, and should not be construed as legal advice on any matter. Andria Papageorgiou Law Firm is not responsible for any actions (or lack thereof) taken as a result of relying on or in any way using information contained in this article and in no event shall be liable for any damages resulting from reliance on or use of this information.