Cyprus General Information

Business and Economic Landscape

Cyprus boasts a strong, service-oriented, contemporary economy that is driven by the market. It is backed by a stable democracy and is powered by a well-educated and highly skilled workforce. Cyprus’ transparent regulatory framework instils confidence in both local and international investors.

Over the past two decades, the country has implemented various reforms to modernize its economy, with a focus on bolstering its global competitiveness in financial and professional services. Cyprus has successfully navigated its membership in the EU and Eurozone while forging strong connections with countries like the USA, Canada, Russia, Israel, the Middle East, China and India.

With its small size, skilled workforce, supportive government and robust trade relations, Cyprus is well-positioned to maintain its resilient economy.

Additionally, it offers excellent telecommunications and infrastructure, it has an appealing tax and legal framework, year-round sunshine, and a rich history of art and culture, making it a highly desirable investment location in the European Union.

The Cyprus economy made an impressive recovery from the 2013 recession that was earlier than anticipated due to the government’s dedication to implementing progressive reforms, making Cyprus a success story in the EU. This success has been further recognized through consistent credit rating upgrades from agencies like Standard & Poor’s, Fitch, and Moody’s.

Compelling Reasons Foreign Investors Choose Cyprus

Cyprus has long established itself as a modern, thriving, cosmopolitan business destination that offers attractive opportunities for investment across a wide range of business sectors. There is increasing evidence that Cyprus will continue to enjoy a significant influx of foreign investment.

There are a number of reasons to be optimistic about investing in Cyprus. The island’s competitive advantages are significantly enhanced by an attractive and transparent tax regime, a robust and transparent legal and regulatory framework, excellent business support services coupled with the low cost for doing business, an ideal geostrategic location, an advanced modern infrastructure, an abundance of investment opportunities in key growth sectors coupled with a high quality of life. All these combined make the outlook for foreign investment in Cyprus over other jurisdictions extremely favourable going forward.

Foreign investors will keep investing in Cyprus as they enjoy significant advantages over other jurisdictions for the main reasons (explained in more detail) below:

Attractive and Transparent Tax Regime

Cyprus has a simple and transparent tax regime with one of the lowest corporate tax rates in Europe together with a wide range of incentives and advantages as well as multiple exemptions for companies and foreign investors. Cyprus is fully compliant with EU, OECD and international laws and regulations.

Some features of the Cyprus tax system that make Cyprus an appealing destination for investors from all areas of the globe:

• One of the lowest corporate income tax rates in the EU at 12.5%;
• Extensive double tax treaty network with many countries;
• Favourable IP regime as low as 2.5%;
• Exemption from tax on gains from the disposal of securities;
• Dividend participation exemption;
• Zero withholding taxes on interest, dividends and royalty payments abroad;
• Zero taxation of capital gains (except for disposal of real estate in Cyprus or shares of company holding real estate in Cyprus);
• Zero succession taxes;
• Notional interest deduction for investments into Cyprus companies;
• Personal tax exemptions for new residents and non-domiciled individuals;

Robust and Transparent Legal and Regulatory Framework

Cyprus’ competitive advantage is significantly increased by a robust and transparent legal and regulatory structure that offers a wide range of incentives and advantages for legal and natural persons.

As a former British colony, Cyprus’ legal system is closely aligned to the English Common Law legal system and is widely recognised as a business-friendly and effective system with transparency and reliability, offering foreign businesses a familiar and reliable framework within which to operate.

Cyprus’ legal system is also fully compliant with the EU, the Financial Action Task Force on Money Laundering (FATF), OECD, FATCA, the Financial Stability Forum laws and regulations and EU AML directives. All industries are strongly regulated making Cyprus a safe country in which to do business.

The Companies Law, as all other legislation in Cyprus, is fully compliant with EU Directives and Regulations. As such, any physical person from the EU or a third country registering a company in Cyprus, can conduct business activities without restrictions.

There are numerous Cyprus investment treaties to protect investors. Moreover, Cyprus has signed the most significant Multilateral Treaties (MIT) for foreign investment and many Bilateral Investment Treaties (BIT).

Oil and Gas

Cyprus is strategically positioned in the East Mediterranean, at the southeastern edge of the European Union and near the Suez Canal. This makes it well-suited for serving as a significant headquarters location and an energy connection point, linking the power grids of the Eastern Mediterranean and North Africa with those of Europe.

Cyprus’ Exclusive Economic Zone (EEZ) contains world-class deep-water natural gas reserves that have attracted global attention and substantial investments from leading independent energy companies and international oil and gas service providers. The Government of Cyprus is exploring various options to supply natural gas to the local market. In November 2014, VTTI Energy Partners LP completed a €300m oil storage terminal in Cyprus, strategically positioned as the region’s first terminal linking Europe, the Black Sea, the Middle East, and Asia. This project was a significant move towards Cyprus’ goal of becoming an energy hub in the Eastern Mediterranean.

The year 2023 marked significant advancements in Cyprus’ hydrocarbon exploration efforts, supporting its aspirations to emerge as a key player in the East Mediterranean region.

Low Cost of Doing Business and Excellent Business Support

Starting a business in Cyprus is cost and time efficient and the cost of setting up a business in Cyprus is lower compared with other European countries. Moreover, Cyprus offers solutions to assist foreign investors set up their companies, such as the Fast-track mechanism for licensing and immigration for non-EU nationals.

Access to tech-savvy and a highly educated, highly skilled, multilingual human talent to serve the needs of businesses is one of Cyprus’ most compelling advantages. Cyprus has lower labour costs for technical and professional talents than other major EU countries.

This is complemented by a wide range of high quality and highly affordable business support services. Cyprus has the lowest office rental rates for high quality and modern serviced offices and co-working spaces in Europe.

Access to Markets / Geostrategic Location

Cyprus lies at the crossroads of three continents (Europe, Asia and Africa) providing investors with easy access to major markets as it is located at the core of the busy shipping and air routes that link these three continents. As Cyprus has been a full EU member since 2004 and a member of the euro zone since 2008, all foreign investors can take advantage of full access to European markets and EU trade agreements. Cyprus is also a portal for investment outside the EU, especially the Middle East, China and India.

Advanced, Modern Infrastructure

Cyprus has a modern, sophisticated and constantly evolving road, air and sea transport infrastructure which is widely recognized as an important competitive advantage in attracting foreign direct investment. Commutes are minimal in Cyprus making travel around the island and between towns with the modern road network, easy, cost-effective and efficient.

Cyprus’ has two multi-purpose deep sea ports as well as two modern international airports servicing over 10 million travelers a year, connecting Cyprus efficiently to the most popular transit hubs in the world.

Cyprus is a major telecommunications hub in the region, connecting the island via fibre optic cable and satellite to other networks in the Eastern Mediterranean region and beyond.

Investment Opportunities in Key Growth Sectors

Cyprus offers a vast array of attractive investment opportunities in key growth sectors of the economy.

Energy

The discovery of hydrocarbons in Cyprus’ EEZ has attracted worldwide interest and offers new, exciting prospects as Cyprus develops into a first-class regional fuel hub. Cyprus has attracted significant investment from global energy giants as well as leading international providers operating in the oil and gas auxiliary services sector.

Real Estate

Being a historically key pillar of the Cyprus economy, the real estate and construction sector have experienced remarkable growth in the past years, manifested in increased demand and activity levels, prestigious large-scale projects, incentives and an influx of foreign investment. Investors from EU and non-EU countries have found Cyprus to be a great location for real estate investments.

Shipping

Cyprus has developed a world-class, diversified and robust maritime industry, offering exciting competitive advantages. Cyprus is considered one of the most reliable and competitive shipping hubs in the world for the provision of high quality, varied shipping-related services as well as taxes and competitive registration fees.

Financial Services, Banking Sectors and Investment Funds

Cyprus is a competitive financial centre and many international corporations have chosen Cyprus to provide financial and banking services. Cyprus’ consolidated, recapitalised and modernised banking sector ensures efficiency, security and transparency and has attracted significant amounts of FDI in recent years.

Determined to remain at the forefront of industry developments and continuously upgrading its legislative and regulatory regime, Cyprus is becoming a key investment fund centre in Europe, offering access to high-growth markets.

Tourism

Tourism is one of the island’s most resilient business sectors. With its natural beauty and stunning coastlines, Cyprus is a highly competitive, premium destination for tourists and has been attracting a vast amount of foreign investment in the hospitality industry for many years. Cyprus is the country with the most blue flag beaches per capita in Europe. Many recent large-scale projects such as marinas in all the main seafront towns, casino resorts, and luxury hotels and resorts will continue to stimulate this booming industry.

The island is also becoming increasingly popular as a medical tourism destination with numerous foreign investors in this sector.

Innovation and Startup Companies

Innovative research, a fast growing startup network, access to highly educated and experienced human talent and a range of incentives make Cyprus a great choice to set up and operate companies. Applied research is encouraged via EU or local funding and an attractive Intellectual Property (IP) box. Many well-known tech companies have relocated to or expanded their operations in Cyprus, using Cyprus as a base and connection to and from the EU.

Filming

Apart from boasting an enchanting, natural, unique beauty, making it an ideal filming location, Cyprus offers attractive incentives for film. Production companies filming in Cyprus are able to select a cash rebate or tax credit and can also enjoy tax discounts on investments on equipment and infrastructure, plus VAT returns on expenditure in scope.

Education

Cyprus is a world-class educational and research centre with well-known and high quality academic institutions, offering a wide variety of advanced and fully accredited undergraduate and postgraduate programmes and at affordable costs. Cyprus attracts thousands of international students every year.

High Quality of Life

People choosing to make Cyprus their home can enjoy an enviable, safe lifestyle with high living standards. Cyprus has one of the best climates in the world with year-round sunshine and mild winters and is one of the top 4 best retirement destinations in the world.

Despite enduring a challenging economic climate not so long ago and despite tackling the devastating effects of the coronavirus, the island continues to move ahead with many incentives and opportunities that will continue to entice foreign investors.

Cyprus Double Tax Treaties (DTT)

AA constructive use of the Cyprus Treaties’ Network has rendered considerable advantages to businesses and individuals who have chosen to establish legal entities in Cyprus.

Tax Treaties legally supersede local tax legislation and for this reason they are a useful tax-planning tool to protect businesses and individuals against double taxation of income earned in other countries.

Cyprus has signed Double Taxation Treaties with various countries to eliminate the taxation of income or gains in one region that also occurs in another region.

Follow this link for more details on the double tax treaties that Cyprus has with the following countries:

Cyprus has concluded double tax treaties with the following countries:

Notes:

1. The main purpose of these treaties is the avoidance of double taxation of income earned in any of these countries. Under these agreements, a credit is usually allowed against the tax levied by the country in which the tax payer resides for taxes levied in the other treaty country, and as a result the tax payer pays no more than the higher of the two rates (a number of the treaties also contain very beneficial “tax-sparing credits”).
2. Refer to section “Tax Law – Tax Facts” for the treaty withholding tax rates for payments of dividends, interest and royalties.
3. The EU Parent Subsidiary and the Interest & Royalties Directives can be used to eliminate withholding taxes on payments of dividends, interest and royalties from or to EU Group Companies and the EU Merger Directive to eliminate the tax effects of EU Group reorganizations

The full text of Cyprus’s Tax Treaties can be downloaded here:

If you have difficulty in downloading the Tax Treaties, please contact us. We will send them to you.

International Names Established in Cyprus

International giants such as NCR, Wargaming, Kardex, 3CX, TSYS, Bolt, Amdocs, Exness, Melsoft Games, Viber, Kyndryl, Logicom and Nexters are just some international businesses with operational and/or corporate management operations in Cyprus.

Professional Services

Professional Services are of a very high standard in Cyprus, with a considerable English influence. Many Cypriot lawyers are members of the United Kingdom Inns of Court or graduates of British Universities and are well versed in the developments of international commercial law.

The standards of the accountancy profession are extremely high, since the majority of its members are qualified Chartered or Certified Accountants of the UK or Certified Public Accountants of the USA. International Accounting Standards and International Standards on Auditing are strictly adhered to.

Banking System

The banking system in Cyprus, which is modelled on the British System, is well developed, highly organized and capable of providing a fast and efficient service worldwide.

The system is structured around the Central Bank, which monitors the operations of the commercial banks and other financial institutions.

In their effort to satisfy the diverse needs of the business community, the commercial banks are full members of the Society for Worldwide Interbank Financial Telecommunications (SWIFT) and provide a wide range of facilities.

Exchange Control

There are no exchange control regulations.  Accordingly, the island is an ideal location for the maintenance, transfer and conversion of funds, which is facilitated by excellent telecommunication and efficient international banking services.

Telecommunications

Cyprus boasts a modern and well-developed telecommunications infrastructure that supports its digitally active population. The country has achieved near-universal coverage of mobile networks, with 4G and 5G services available in most areas. This has been made possible by continuous network upgrades and expansion projects by telecom operators, including the rollout of fiber optic networks.

The government of Cyprus recognizes the great importance of this industry for the country’s economic and social progress. It facilitates and supports the industry and creates policies to encourage investment in new technologies. Furthermore, Cyprus’ telecommunications industry enjoys a favorable regulatory environment that is compliant with European Union standards.
These efforts have made a vast difference in helping Cyprus become a leader in digital connections.

Cyta, the number one provider of integrated electronic communication services in Cyprus, was recognized as the Fastest Mobile Network by Ookla®, an independent company renowned for internet testing and analysis. The award was achieved through numerous real-world measurements conducted via the Speedtest® app by European users in the 2nd and 3rd quarters of 2022*. Cyta’s Speed Score™ surpassed that of all other mobile networks throughout Europe.

International Transport

Cyprus is well-served by two international airports situated in Larnaca and Paphos. Air connections from and to Western and Eastern Europe, Africa, Middle East and the Arab Gulf are excellent.

Due to its geographical location and the most up-to-date facilities offered by its seaports, Cyprus is also a major shipping centre in the region.

The major ports are those of Limassol and Larnaca situated on the south coast of the island.

They are multi-purpose ports, serving both containerized and break bulk cargo.

Some History | Pre-EU Accession

In 1975, Cyprus introduced a tax legislation aiming to attract international business companies to set up in Cyprus. This policy was extremely successful as it was founded on an attractive tax system and a wide and continuously expanding network of favourable tax treaties.

Cyprus became one of the most successful business and financial centres in Europe, particularly attractive to investors wishing to invest in Russia, the CIS and Central and Eastern Europe; and The Middle East.
Its importance increased dramatically with the collapse of communism in Central and Eastern Europe, and Russia. The conversion of these countries into free economies attracted significant incoming foreign investment.

Cyprus, traditionally, had good political and economic relations with all these countries, an attractive tax system and most beneficial bilateral double tax treaties. As a result, most of the investments into Central and Eastern Europe, and Russia occurred through Cyprus Companies.

The EU Post Accession Era

Cyprus acceded to the EU on 1 May 2004, along with the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia. The Accession to the European Union further enhanced Cyprus’ political and economic stability. Cyprus became a prime business and financial business centre within the EU.

Cyprus was now not only the prime vehicle of investment in and out of Central and Eastern Europe, Russia and the Middle East, but it was also a prime vehicle of investment in and out of the EU.

Indicatively, the Cyprus Government’s decision to lift incoming direct investment restrictions for EU residents as of January 2000 gave a boost to foreign investment from the EU, which jumped from $225.2 million in 1999 to $374.7 million in 2000 (67% increase in a year)! The inflow of foreign direct investment from all countries reached $1.0 billion in 2003, 58.1% of which came from the EU.

Cyprus had the infrastructure, the know-how, the legal system, the professional services and the expertise to successfully fulfil its new strategic role as one of the EU’s prime International Business and Financial Centres.

The Complete Liberalization – 1 October, 2004

On 1 October 2004 the Government of Cyprus (GOC) lifted all restrictions on foreign direct investment from non-EU countries in order to attract more foreign direct investment and further promote Cyprus as an International Financial Business Centre. All restrictions concerning maximum allowable percentage participation, as well as minimum monetary level of foreign investment in any enterprise (entity) in Cyprus, were lifted from 1 October 2004 for all non-EU citizens (and from January 2000 for EU citizens) for most sectors of the economy.

The State Investment Policy now allowed 100% foreign participation in Cyprus Entities in most sectors of the economy, not only for EU citizens, but also for investors from third countries.

Thus, entities and individuals from all over the world could establish Cyprus Companies or other legal entities to invest and do business in or out of Cyprus without any restrictions whatsoever.

A further significant boost to foreign investment was expected in view of this latest development.

Cyprus Tax Incentives

In July 2002 (with effect from 1 January 2003), the House of Parliament passed a tax reform legislation abolishing tax discrimination afforded to offshore companies by the end of 2005, in line with Cyprus’ commitments to the EU and OECD. Under the new regime, corporate tax on profits was set at 10% – the same as for local companies.

Having amended its tax legislation in anticipation to EU Accession, Cyprus had set up a tax system that was ideally suited both to inbound and outbound EU investors.

The new tax climate offered to investors:

• Low taxation
• Non offshore – EU – status
• Possibilities for tax planning in order to legally lower taxes even further (in some cases to 0%)
• Extensive double tax treaty network
• Exemption from tax on dividends received
• Exemption from tax of profit generated from transactions in securities
• Exemption from withholding tax on the repatriation of income either of dividends, interest and royalties.
• Access to EU directives

Economy – Facts

GDP (2023)	$32.23 billion
Annual Real Growth Rate (2023)	2.46%
Per Capita GDP Income (2023)	$30,769
Agriculture & Natural Resources	2% of GDP Products Citrus, vegetables, barley, grapes, olives, vegetables, poultry, pork, lamb, dairy, cheese and others. Resources Pyrites, copper, asbestos, gypsum, lumber, salt, marble, clay, and earth pigment and others
Industry & Construction	12.5% of GDP Types Mining, cement, construction, utilities, manufacturing, chemicals, non-electric machinery, textiles, footwear, food, beverages, tobacco and others.
Services & Tourism a) Trade, Restaurants & Hotels b) Transport c) Real State & Business d) Finance, Government, Education & Health e) Community & Other Services	85.5% of GDP
Trade (2022)	Exports $4.411 billion Citrus, grapes, wine, potatoes, clothing, footwear and others. Imports $11.889 billion Consumer goods, raw materials for industry, petroleum and lubricants, food and feed grains and others.

Cyprus has an open, free-market, serviced-based economy with some light manufacturing. Cyprus’ accession as a full member of the European Union as of 1 May 2004, has been an important milestone in the course of its economic development. The Cypriots are among the most prosperous people in the Mediterranean region.

In the past 30 years, the economy has shifted from agriculture to light manufacturing and services. The services sector, including tourism, contributes over 85% to the GDP and employs over 70% of the labour force. Industry and construction contribute about 12.5% of GDP and about one fifth of labour. Agriculture is responsible for about 2% of GDP and 8.5% of the labour force. Potatoes and citrus are the principal export crops.

Trade plays a crucial role in the Cypriot economy as the island relies on imports due to the lack of self-sufficiency in food and limited natural resources. The trade deficit is on the rise, with Cyprus importing fuels, raw materials, machinery, and transportation equipment. Over half of its trade occurs within the European Union, primarily with Greece and the United Kingdom, while the Middle East accounts for 20% of its exports.

Export Opportunities

On 1 January 1996, Cyprus began full implementation of the Uruguay Round Agreement. Under this agreement, the Government of Cyprus eliminated quantitative restrictions and other non-tariff barriers to trade, allowing improved access to the Cypriot Market. After that, Cyprus has become a full member of the World Trade Organization.

Additionally, the accession to the EU on 1 May 2004 liberalized the island’s trade regime further, allowing all goods to be traded between Cyprus and the EU with a zero tariff rate. Under the same agreement, Cyprus has adopted fully the EU’s Common Customs Tariff (CCT) for products from third (non – EU) countries.

Best prospects generally lie in services and high technology sectors, such as computer equipment and data processing services, financial services, environmental protection technology, medical and telecommunications equipment, and tourism development projects.

Moreover, alternative energy sources and the energy sector in general are attracting an increasing amount of attention, while the possible existence of natural gas and petroleum reserves off the southern and eastern coast of Cyprus opens up new prospects. Finally, the island’s private sector has a growing appetite for office machines, computer software and data processing equipment.

General – Facts

EU	9EU Member State 01.05.2004 Eurozone 01.01.2008
Memberships in other International Organisations	The World Trade Organisation – 1995 The International Monetary Fund (IMF) – 1962 The World Bank – 1962 The Commonwealth – 1961 The Council of Europe – 1961 The United Nations – 1960

Geography – Facts

Area	9,251 sq. km. (3,572 sq. mi.)
Cities	Capital: Nicosia Other Cities: Limassol, Larnaca, Paphos
Terrain	Central plain with mountain ranges to the north and south
Climate	Mediterranean climate, characterized by extended dry summers lasting from May to the end of October and mild winters from December to February, with brief autumn and spring periods in between.
Location	35N and 33E
Time Zone:	GMT+2

People – Facts

Nationality	Noun & Adjective Cypriot(s)
Population (2024)	1.27M
Annual Growth Rate	2.46%
Ethnic Groups in the Republic of Cyprus	Cypriot Greek 98.8% Other (including Maronite, Lebanese, Armenian, Turkish Cypriot) 1% Unspecified 0.2%
Religions	Greek Orthodox Muslim Maronite Roman Catholi Armenian Orthodox Other
Languages	Greek Turkish English (dominant commercial language)
Education	Cyprus has a well-developed system of primary and secondary education. The majority of Cypriots earn their higher education at Greek, British, or American universities. Literacy about 97.6%
Health	Infant Mortality 3.1/1,000 Life Expectancy 82 yrs

Government – Facts

Cyprus is an Independent Presidential Republic. The Executive power is exercised by the Council of Ministers whose members are directly appointed by the President.

The highest legislative body is the House of Representatives, consisting of fifty-six members elected for a five-year term of office.

Type	Republic
Independence	August 16, 1960
Constitution	August 16, 1960
Political System	Presidential Democratic Republic
Branches	Executive President elected to 5-yr. term Legislative Unicameral House of Representatives members elected to 5-yr. terms Judicial Supreme Court; six district courts
Administrative Subdivisions	Six
Political Parties	Greek Cypriot Community Democratic Rally (DISY) Progressive Party of Working People (AKEL) Democratic Party (DIKO) National Popular Front (ELAM) Movement for Social Democracy (EDEK) Democratic Front (DEPA) Movement of Ecologists – Citizens’ Cooperation (KOSP) Volt Cyprus (VOLT0 Turkish Cypriot Community National Unity Party (UBP) Republican Turkish Party (CTP) Democratic Party (DP) People’s Party (HP) Rebirth Party (YDP)
Suffrage	Universal at age 18

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Principal Government Officials
President of the Republic	Nikos Christodoulides
Minister of Foreign Affairs	Dr. Constantinos Kombos
Minister of Finance	Makis Keravnos
Minister of Commerce, Industry & Tourism	Giorgos Papanastasiou
Minister of Communications & Works	Alexis Vafeades
Minister of Justice & Public Order	Marios Hartsiotis
Ambassador to the United States	Evangelos Savva
Permanent Representative to the UN	Maria Michail

Judiciary & Law

The Cypriot Legal System is based upon The British Common Law (Cyprus was a British colony until 1960 when it gained its independence). The British Case Law is closely followed and all statutes regulating business matters and procedures are based on The British Law.

As provided in The Courts’ Law, the Country’s Courts apply:

• The Constitution which established the Republic in 1960
• The Statutes until then in force (1883 – 1960) and those enacted since 1960 by the Parliament
• The Common Law – Case Precedents
• The Principles of Equity
• The European Law since 1 May 2004 (EU Accession)

English is widely used in the Cypriot Courts.

The Cyprus Companies Law is governed by The Companies Law Chapter 113, as amended. This Law was based on the UK’s Companies Act 1948 and since then remains intact apart from various amendments. The Cyprus Companies Law consists of various detailed sections that oversee the operations of a Private Company from its establishment to its termination. It is mandatory and dictates the content of the Memorandum and Articles of Association.