Cyprus is ideally situated to help your business flourish, whether you are looking to make an investment, launch a new business or relocate an existing one, while also expanding into Europe, Africa or the Middle East. As such, overseas investors are flocking to Cyprus in search of new opportunities.
The purpose of this article is to investigate the factors that contribute to Cyprus’s appeal as a possible investment destination.
What can Cyprus offer?
- A Bright Future for the Economy
- Robust Regulation
- Market Entry into the European Union
- Reliable Professional Services and Infrastructure
- A Pool of Talent from Around the World
- High Quality of Living
- Appealing and Transparent Tax System
A Bright Future for the Economy
The Cypriot economy has expanded rapidly in recent years due to a conscious effort to reform and grow. Cyprus has developed its image as an attractive destination for foreign direct investment by continually developing important economic sectors, achieving substantial cost-saving in government waste and optimizing the business ecosystem via government-led initiatives and incentives.
Among others, the Cypriot government has taken measures to reduce time allocated for granting planning permissions to 1-3 months, increase building co-efficients by up to 30% in residential and commercial projects and facilitate residence and work permit legislation.
The sectors prioritized by government schemes are tourism and hospitality, medical, higher education, technology and renewable energy.
Cyprus has noted an increase of 26% in its GDP since 2015. This constitutes one of the healthiest in the EU and, as such, Cyprus frequently receives upgrades from credit rating agencies, including, as recently as March 2023, when Cyprus received a one-notch upgrade in its credit rating by Fitch.
Robust Regulation
The Cypriot legal system has some minor impacts from Continental Europe, however, its foundations are deeply rooted in the English Common law, one of the world’s oldest and most secure legal systems. The justice system is based on the adversarial model.
Service providers in Cyprus must comply with stringent legal requirements affording companies increased security, while Cyprus itself incorporates an extensive network of multilateral and bilateral investment treaties, as well as encompassing extensive legal mechanisms to ensure investor protection. It is self-evident that Cyprus is characterised by a secure and transparent legal ecosystem that provides businesses with peace of mind in the event of a legal issue arising.
Additionally, the government, with the assistance of the Supreme Court, under the auspices of the EU, has achieved profound reforms in the judiciary in order to accelerate the judicial procedure and shorten trial length, as well as laying the foundations to promote alternative dispute resolution methods.
In addition to providing international businesses with a familiar and trustworthy operating environment, the legal system in Cyprus is also completely EU-compliant, harmonizing cross-border business.
Market Entry into the European Union
Cyprus joined the EU on May 1, 2004 and adopted the Euro on January 1, 2008. European institutions offer funding and grants to Cypriot companies for a diverse range of projects.
The EU passporting scheme for banking and financial services companies allows corporations to trade freely in any EU country with minimal further approval or need for adjustment. As a result, Cyprus is eligible for EU investments and Cypriot companies can easily access EU opportunities.
Cyprus EU membership has afforded huge benefits to firms in the single market who make use of Cyprus’s tax-friendly environment, which is one of the most competitive of the Union.
Reliable Professional Services and Infrastructure
Cyprus is renowned for its skilled workforce and professional services in numerous industries, while its modern infrastructure provides a competitive advantage in attracting foreign investment.
Entrepreneurs opening or relocating to Cyprus benefit from excellent legal, accounting, audit and money management services, while the country’s workforce is fluent in English.
High-end telecommunications and efficient transportation make Cyprus appealing to investors. With two deep-water ports in Limassol and Larnaca and two airports in Larnaca and Paphos, Cyprus provides compelling and effective options for transit.
The Limassol port handles passenger and freight cargo and is known for its logistical solutions and cost-effective transit and processing. Cyprus is in the top-10 worldwide of flag states by registered tonnage.
Eleven million passengers pass through Cyprus’s airports every year (6 million by July 2022) The airports are conveniently positioned, making it possible to reach the island’s beautiful beaches and other tourist hotspots in under half an hour.
The island has also been developed as a telecommunications centre. Cyprus is the first EU member state to have 100% 5G connectivity, including remote areas.
A Pool of Talent from Around the World
The labour force in Cyprus has an extraordinarily high level of education and training. 40% of Cypriots aged 25 to 64 and nearly 60% of Cypriots aged 25 to 34 have completed tertiary level of education, ranking Cyprus the third highest in the European Union in this regard.
Cypriots are accessible in all economic areas, but the nation also draws young professionals from other EU countries. The Cypriot workforce is one of the most English-proficient in Europe, due to the large number of migrant workers and the country’s economic and historic ties with the United Kingdom. Most foreigners moving to Cyprus are aged 21 to 35. This presents Cypriot companies with a highly-skilled, young and relatively cheap workforce to draw from.
Companies often have both year-round and temporary roles available, with the latter being more popular in the seasonal-employment industries of tourism and agriculture.
High Quality of Living
Cyprus is a popular expat destination. The country’s year-round sunlight, distinctive natural landscapes, rich culture and history provide a plethora of stylistic options for everyone. Furthermore, those who move to Cyprus find a safe and vibrant setting, integrating traditional and modern aspects for a fantastic work-life balance.
A well-established education sector promotes excellence in learning via multilingual, internationally recognized programmes from kindergarten through to university.
Residents of Cyprus benefit from a lower cost of living, compared to Western Europe and competitive residential property prices to choose from.
Appealing and Transparent Tax System
The tax system in Cyprus has been updated to meet the demands of contemporary businesses, both domestic and foreign. It is efficient, clear and aligned with EU directives.
Cyprus’s corporate tax rate is 12.5%, making it one of the lowest in Europe and the world.
Meanwhile, expenditures spent for the creation of taxable income are deductible against the company’s taxable income.
In parallel, the country’s extensive tax exemptions are extremely appealing to foreign investors. Profits from securities or foreign permanent establishments are tax-free and there is no capital gains tax, except for real estate transactions within Cyprus. Cyprus does not withhold tax on profits, interest or royalties and global transactions are mostly VAT-free. There is a competitive IP regime with an effective tax rate as low as 2.5%, while dividend tax is set at 0% provided certain requirements are met.
Additionally, approximately 65 nations have signed double tax treaties with Cyprus.
Due to the abovementioned factors, Cyprus has become a desirable location for investors from all over the globe.
How we can help you achieve (y)our goals:
- Establish a Company or Office in Cyprus
- Liaise with Local and Government Authorities
- Monitor All Applications and Processes
- Strategize Business Growth – Sourcing Opportunities
- Selection of a Site
- Relocation and Migration of Employees and their Families
- Follow-up Services
- Formidable Legal and/or Litigation Support