Cyprus Is Becoming A High-Growth International Business Center

By Petros Petrou

The first signs of civilization in Cyprus， the third largest island in the Mediterranean Sea， are traced back to the 9th millennium B.C. According to tradition， Aphrodite， the ancient goddess of love and beauty， was born from the foam of the sea on the southwestern coast of Cyprus， near the ancient city of Paphos.

Cyprus shares a maritime border with： Egypt 300 km to the south， Lebanon 108 km to the east and Turkey 71 km to the north， while inland Greece lies 800 km to the north-west. This small， modern European state has developed its own unique character， harmoniously blending various cultural influences through its multifaceted interaction with neighboring countries， but maintaining its Greek character.

The important hub in the eastern Mediterranean

Cyprus has total area of Cyprus is 9，251 km2 and population of 947，000 （2016） out of which 82% are Cypriots and 18% Non-Cypriots， the population density is 128.7 persons per km2， the main religion is Greek Orthodox with 89.1%， the island of Cyprus enjoys a 340 days sunshine.

The rich cultural landscape is reflected in the hundreds of archaeological sites and monuments located throughout the island， representing the numerous different historical periods in the island’s evolution. A large number of museums in the towns and villages of Cyprus showcase abroad array of archaeological collections and cultural treasures from different time periods.

Cyprus has a pleasant Mediterranean climate， enjoying year-round sunshine of total 340 days， with mild winters （5°C - 13°C） and sunny， dry summers （21°C - 36°C）. The island boasts great natural beauty with rare flora and fauna， a stunning coastline with golden sandy beaches， clear blue waters and year-round sunny weather， making it a popular tourist destination.

Cypriots are known worldwide for their genuine and sincere hospitality and friendliness. Like Cypriot culture， Cypriot cuisine is an amalgamation of different influences from Greece， the Mediterranean region and the island’s previous conquerors.

The Republic of Cyprus is a Presidential Democratic State. The Executive authority is vested in the President who is elected for a five-year term by universal vote， and exercised by a Council of Ministers appointed by the President.

The Legislative authority of the Republic is exercised by the House of Representatives， whose Members are elected by universal vote every Five years.

The administration of Justice is exercised by the Judiciary， which is a separate and independent body. The Members of the Cyprus Supreme Court are appointed by the President.

The Republic of Cyprus became a full member of the European Union on May 1， 2004. Accession to the EU was a natural choice for Cyprus， driven by its culture， civilization and history， as well as its unwavering commitment to the values of democracy， freedom and justice.

With the dawn of 2008， Cyprus joined the European Monetary Union leveraging a robust economic performance marked by banner key indicators， thus adopting the Euro as its national currency.

With a constantly evolving system of advanced and modern infrastructure， Cyprus offers sophisticated road， air and sea transport solutions and services， which are widely recognized as an important competitive advantage in attracting foreign direct investment.

Cyprus has two multi-purpose deep sea ports， handling both passenger and freight cargo while offering logistics solutions through advanced facilities for cost-effective transport and processing. In addition， Cyprus is a popular “stopover” for international cruise ships.

Two modern international airports in Larnaca and Paphos， offer their services to approximately 10 million visitors per year， connecting the island to the most popular transit hubs throughout the world.

With its advanced technical infrastructure and skilled human talent， Cyprus has become a regional quality business and financial center， as well as a major communications and transport center， and is also fast developing into an energy hub in the Eastern Mediterranean.

Considerable investment has also been made to transform the island into a major telecommunications hub in the region， connecting Cyprus via submarine fibre optic cable and satellite to other networks in the Eastern Mediterranean basin and beyond.

Excellent business environment

Cyprus has long established itself as a thriving business hub， with a vast array of investment opportunities in key growth sectors of the economy. The island’s ideal strategic location， advanced infrastructure and high quality of life do not only represent key reasons to relocate and live on the island， but are also at the heart of an investor’s choice to invest in Cyprus.

The island is an ideal investment gateway to the European Union， as well as a portal for investment outside the EU， particularly into the Middle East， India and China. As a member of the wider EU and Eurozone community， Cyprus ensures safety and stability for investors， while also offering them market access to more than 500 million EU citizens.

The local infrastructure is ideally suited for business people who need to get things done. Thanks to its modern road network， extensive port facilities and two new international airports， travel and transport in and beyond Cyprus is fast， efficient and cost-effective.

Human talent constitutes Cyprus’ most compelling advantage， complemented by a broad range of high-quality professional services. As a dynamic business center， Cyprus offers an abundance of highly educated and skilled individuals， multilingual in their majority， ready to serve the needs of any business.

Cyprus， indeed， has all the right ingredients to maintain a strong and resilient economy， due to its small size， productive labor force， business friendly and flexible government.

Cyprus’s competitive advantages are significantly enriched by a robust and transparent legal and regulatory framework and an attractive tax regime， which offers a wide range of incentives and advantages both for legal and natural persons.

Cyprus’ legal system， based on English Common Law principles， is widely recognized as a business-friendly and effective system that ensures transparency and reliability in business practices. 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.

Moreover， Cyprus offers an attractive and transparent tax regime， fully compliant with the EU， the OECD and international laws and regulations. Providing access to an extensive network of more than 60 Double Tax Treaties， and maintaining a corporate tax rate of 12.5%， one of the lowest in the EU， Cyprus offers international investors and domestic businesses confidence to invest， grow and prosper.

Some of the main features of the Cyprus tax system include： Dividend participation exemption； Exemption on disposal of securities （e.g.， shares， bonds， debentures）； No withholding taxes； No succession taxes； No capital gains tax （except for disposal of real estate in Cyprus or shares of company holding real estate in Cyprus to the extent gains are attributable to the real estate holding）； Attractive IP regime； Tonnage tax for shipping companies.

Significant exemptions are also in place for non-domiciled individuals and non-resident persons who take up residence in Cyprus： No tax on dividends and interest for non-domiciled individuals； 50% exemption on income from employment in Cyprus of a person who was not previously resident in Cyprus. The exemption applies for ten years， provided that the income from employment in Cyprus exceeds€100，000 per annum.

Cyprus total GDP is 21.9 billion Euros， the growth in 2019 was 3.2% and it is analyzed by sector below： Taxes & subsidies - 13.1%； Services - 71.9%； Construction - 6.1%； Mining， manufacturing， Electricity & Water - 6.9%； Agriculture， forestry & fishing - 2%.

Cyprus ranks high on various international business environment rankings. Cyprus is the safest country in the world for young people out of 184 countries across the globe with crime rate 0.9%， ranking 1st by World Health Organization WHO 2017； 29th out of 131 countries in Global Innovation Index 2020 by INSEAD and the World Intellectual Property Organization； 37th out of 186 countries in Economic Freedom Index 2020 by Heritage Foundation； 45th out of 153 countries in World Happiness Report 2020； and 54th out of 190 economies in Overall Doing Business ranking.

NEW ERA： Series Measures to Attract International Investment

The Council of Ministers approved on October 15th？2021， the “Strategy for Attracting Businesses for Activities or/and Expansion of their Activities in Cyprus”.

The Strategy is a very important initiative towards attracting both international investments and talent. It includes a series of actions and re- forms in several areas of intervention， aiming to enhance Cyprus position as an international highgrowth business center.

The careful and thorough planning ensures that the benefits derived from the successful implementation of the Strategy will significantly contribute to redefining the Cyprus growth model.

Transform the existing Fast-Track Business Activation Mechanism into a Business Facilitation Unit for companies operating or wishing to operate in Cyprus， within Q1 2022.

Promotion of a complete and right branding， within Q1 2022

The new rules on employment licenses for staff from third countries employed by foreign companies are as follows： Review of the existing policy for employment of staff from third countries， employed by companies/enterprises of foreign interests （concerns companies/enterprises that will join the Business Facilitation Unit）， by January 2022. Right for Family reunification of thirdcountry nationals working for companies joining the Business Facilitation Unit， by January 2022. Simplification and speeding up of the procedure for granting work permits （Category E）， within Q1 2022. Digital Nomad Visa （With a maximum initial ceiling of 100 beneficiaries）， by January 2022.

During the same time， many preferential policies have also been introduced in taxation， such as the extension and expansion of tax exemption （50%） for investment in innovative companies， within Q1 2022； expand the existing tax exemption of 50% for 10 years from the year of employment， to cover new entrance in the Republic who are non-domicile employees with income from employment of €55，000 and above， within Q1 2022； incremental （compared to the actual） tax deduction for research and development expenditure， within Q1 2022.

New regulations for naturalization in 2022 are as follows： Right to submit an application for naturalization after 5 years of residence and work in the Republic or after 4 years if they fulfill the criteria for holding a recognized certificate of Success in very good knowledge of Greek language， within Q1 2022； Securing the right to social security， within Q1 2022； Awareness campaign for attracting qualified Cypriots working abroad and a targeted campaign for qualified work force employed in countries with political instability， within Q1 2022.