The secondment of employees from non-EU jurisdictions to Cyprus is increasingly common, often to support specific projects or provide specialised expertise for a defined period. While commercially practical, such arrangements raise legal and regulatory considerations that should be addressed early.
A key starting point is the relationship between the entities involved, as intra-group secondments generally benefit from a more streamlined process. In all cases, an intercompany services agreement and a secondment agreement between the sending entity (the “employer”), the receiving entity (the “host”), and the employee (the “secondee”) must be executed, clearly defining scope, duration, and responsibilities.
For non-EU nationals, work authorisation must be obtained from the relevant authorities in Cyprus prior to the start of any secondment exceeding 90 days. The maximum permitted duration is typically three years. Without appropriate permits, the arrangement cannot proceed lawfully and the secondee may be required to leave the jurisdiction.
Another key consideration is whether a bilateral treaty exists between Cyprus and the employer’s jurisdiction, as this may determine the applicable social security regime and applicable legal framework during secondment. In some cases, secondees may remain subject to their home legal and social insurance system for a limited period, avoiding dual contributions. In the absence of a treaty, Cypriot social insurance contributions may apply from the outset, with cost implications for all parties involved. Social insurance, tax, and residency obligations depend on the duration of the secondment, and treaty applicability. Without such arrangements, local registration and possible tax residency may arise.
It is important to note that a host entity must be designated locally, either through a branch or an existing Cyprus company, despite the employer retaining the primary employment relationship. Secondees should perform only agreed duties, and must not be fully integrated into the host’s daily operations. Failure to maintain this distinction may result in employment rights arising against the host.
Supervision and disciplinary authority remain with the employer, while the host oversees project delivery and reports any serious misconduct. Health and safety obligations are shared, and appropriate insurance must be secured by the host. The host must comply with local procedures and notify the employer of any incident without delay. The host may also incur liability for acts affecting secondees and must ensure fair treatment. Confidentiality and data protection obligations must also be addressed.
While secondments offer flexibility, they require careful structuring, including securing permits, determining the legal framework, and clearly allocating responsibilities. Failure to do so may expose both parties to employment claims, regulatory liabilities, and immigration risks.