Please note that every effort has been made to provide an overview that is both accurate and up to date. However, regulations can change and individual circumstances vary, so independent professional advice must be taken and not simply based upon the following guidelines. Should there be any significant change from the details provided in this section, please bring it to our attention by contacting us.
Introduction - Categories of Permits & Visas:
Permission to be in the TRNC is granted subject to having of one of the following:
- Visitor Visa –UK citizens are normally given 90 days. IT IS ILLEGAL TO WORK.
- Temporary or Permanent Residency Permits – available for foreigners who live in the TRNC. IT IS ILLEGAL TO WORK.
- Student Permit – for those studying at recognised educational establishments. IT IS ILLEGAL TO WORK
- Work Permits – For people working for TRNC companies, they do not own.
- Business Permits – For owners or part owners of TRNC businesses.
It is only legal to work if someone holds a valid work or business permit. To enquire about the latest regulations for your particular proposed business or occupation, first visit the Local District Labour Department’s office.
Work permits are initially for either six months or one year. Once a year has been completed, then 2 year permits are available. Permits, as at 1st February 2016 cost either 160TL for 6 months or 346TL/year or 692TL for 2 years. Work permits are issued for working at a specific company and location. Only one permit is allowed.
Before a permit can be issued, all taxes have to have been paid by the company to the Sosyal Sigorta (Health Insurance Dept) and Ihtiyat Sandigi (Pensions/Provident Fund) and not merely deducted from the employee. The rates, based upon gross monthly income, currently are: Ihtiyat Sandigi-11% paid by employer, 9% paid by employee. Sosyal Sigorta-5% paid by employee.
The first thing the employee needs to do is obtain,from the Police’s immigration department, a copy of their ‘ins & outs’. The form they issue requires a post office stamp (approx. 20TL).
If a foreigner has a kocan in their name, no bond is required, otherwise a bond of 750 Euros is required. This is usually arranged by the company. The money remains in the company’s bank account but is ‘blocked’ by the bank. It does not have to be in a special account, but merely one in Euros. It can earn interest for the company. Annually, a letter, from the bank to the ‘Social Security Department’, confirming that they have blocked the money is needed. This letter will be sent to the company’s accountants. The company can negotiate how much the bank charges, but it can be up to 700TL. If an employee leaves their employment within a year, the money still remains blocked until the year has finished.
The company’s accountants deal with the government. They will supply the employee with a form for obtaining a blood test and x-ray. The hospital will issue a pink booklet, which they must stamp; it also confirms that the employee is entitled to free medical care. The health check costs 135TL. The pink hospital booklet needs to be given to the accountants along with the employee’s passport. Both will be returned, along with a work permit stamped into the passport.
It is not possible to have both a work permit and temporary resident status. If you have already been issued with one or the other, the one not required must be cancelled. Temporary residency payments are not refundable, if a work permit is subsequently applied for. If someone has been a resident for a number of years, then obtains a work permit, the years they had previously built up become void. The Government is currently reconsidering this situation. Other points to bear in mind:
- A spouse’s residency permit must be dated the same as her married partner’s work permit.
- If you have a work permit, then become "not employed", a residency permit must be obtained. There are a limited number of days allowed to obtain this and our advice is to action this within 14 days. The cost of a residency permit as of 1st February 2016 is 477TL
- A work permit is still required for people over 65 years old. No Sigorta payments are needed, instead private medical insurance is compulsory. Some banks offer this as part of a discounted package along with the Euro bond.
- If a company is caught employing someone without a work permit, the employee faces potential deportation. Furthermoreboth the employee and the employer face a fine of 5 x the legal minimum wage.(Currently 6,500TL each).
We have been advised that, in respect of, skilled tradesmen, the Government has recently authorised agencies to form companies, specialising in individual trades (electricians, plumbers, tilers etc). These companies will then employ the foreign worker, obtain their work permit and deal with issues like tax and insurance. To be employed by the agency company , the tradesman will need to present a current certificate confirming they are members of an internationally recognised professional body. Any tradesman, whose certificate has expired, will be required to attend a one day training course in Lefkosa to be re-certified as competent. They are also forbidden to undertake work, unless they are accompanied by a company representative, until such time as they have proved their competence and obtained the appropriate certificate.
Typical Annual Costs (TL) for this service are as follows:
- Work permit 260
- Medical 135
- Accounting fees 252
- Bank bond letter 300 to 700 (this can usually be negotiated)
Additional fees that registered tradesman would need to pay are 10% + KDV (VAT) = 11.6% of the work’s price, after deducting the material costs.Currently KDV (VAT) is 16%. It is a legal requirement that tax and insurance will be deducted by the company.
Groups of workers, such as entertainers will require work permits for each individual.
Currently only one registered agency exists,which must be joined in order to obtain a work permit. It is ASAP in Alsancak
In respect of TRNC registered charities only:
- Permanent, regular, unpaid volunteer workers require a work permit.
- Occasional, non permanent, unpaid volunteer workers. e.g. manning a stall, permission is required from the local District Office. There is no fee charged.
- Each permission is given, only for a particular activity. The number of days it can be undertaken is also limited.
- Occasional volunteer workers do not normally require a permit or permission. However, written notification to the Local District Labour Department is suggested.
- Voluntary work with unregistered charities or organisations - A work permit is required.
- Companies owned by foreigners must have limited liability.
- Companies can be 100% foreign owned, except for certain types of businesses. This is where the rules of the ‘Union’ (this is the business federation and not a trade union) prohibit or restrict such ownership. The company’s accountants need to check the rules before forming the company.
- A maximum of 49% foreign share holding is allowed for such companies as: Estate agents, property owning companies (regardless of their main activity)
- Foreigners are not allowed to have any ownership of companies involved in businesses like Hospitals, Transport, Banks.
The company’s or individual’s bank needs to hold a bond for 15,000TL per foreign shareholder, to be held against unpaid tax. The money remains in the company’s bank account but is ‘blocked’ by the bank. It does not have to be a special account, but merely a deposit account in TL. It can earn interest for the company. Annually, a letter from the bank confirming that they have blocked the money is sent to the company’s accountants. This letter will be charged for, but the amount is negotiable.
Initially the business permit is for 1 year. However, after that year’s business has successfully been completed, a 2 year permit is available. Before business permits can be renewed, confirmation from the tax authorities is required, that the following have been paid: company tax, personal tax, employee tax and accounts have been filed. It is advisable to use an accountant who is close to the tax authorities. Rates as at 1st February 2016 are as follows:
- 946TL for 6 months
- 1,905TL for one year
- 3,796TL for 2 years
Off-Shore non-TRNC trading Companies
It is possible to own an off-shore company. The rules aren’t complicated, but need to be followed and can vary according to the nature of the enterprise. An accountant is required and will give specific advice. However, it must be remembered that the company only trades overseas, with no transactions involving the TRNC, beyond the statutory requirements of:
- Employing a Turkish Cypriot resident for a few hours/week paying at least the legal minimum hourly rate.
- Filing accounts monthly, these can be undertaken by any competent person.
- Filing annual accounts via the company’s accountants, in the same way as any other company.
- The shareholders are paid through dividend income, which has a 2% tax liability.
- No work or business permit is needed.
Ministry of Labour: Tel: 0392 227 3643
Labour Department, local district office: Tel: 0392 815 2112