As a business owner, you can make money from any corner of our expansive planet; all you need is an opportunity and the knowledge, willingness and resources to develop it. Luckily, setting up business operations abroad is easier than ever, with the movement of goods, services and people across an ever-shrinking globe contributing heavily to foreign investments.
However, the success of such a venture will depend largely on your choice of location. It should be one that offers a conducive environment for your business to thrive – and investing in Cyprus offers such an opportunity. This small but dynamic island nation offers not just a plethora of investment opportunities, but also a favorable business environment.
To illustrate this point, here are ten reasons why you should invest in Cyprus:
1. A Strategic Location
Cyprus is geographically located between the three continents of Africa, Europe, and Asia, thereby strengthening its position as a major Eastern Mediterranean trading post – as well as a renowned international business and services center. Indeed, this vintage location allows Cyprus to act as a point of exchange between these three continents, offering businesses easier access to new markets.
This positioning also makes the island an active transshipment center that facilitates the shipment of goods into and out of the European Union, effectively qualifying it as a business hub.
2. Beneficial Tax Systems
Cyprus boasts an efficient, transparent and attractive tax structure which fully adheres to EU, OECD, and international regulations; the island’s tax resident companies also benefit from extensive double taxation treaties with over 60 countries worldwide.
In particular, Cyprus’ tax regime features the following highlights:
- Profits of Cypriot tax resident companies are taxed at a flat rate of 12.5%, which is one of the lowest corporate income tax rates in the EU (only Hungary and Bulgaria are lower).
- Foreign sourced dividends are generally exempt from tax when received by Cypriot tax resident companies.
- Disposals of shares and other qualifying securities (such as corporate bonds) are exempt from tax, provided the disposed company does not hold any immovable property in Cyprus.
- Generally, there are no withholding taxes on payments from the island.
- Profits of a foreign Permanent Establishment (PE) are exempt from taxation, under easily met conditions.
- Low individual income-tax rates (individuals earning less than €19,500 per annum pay no income tax, while those earning more than €60,000 pay a tax of 35%).
This tax regime favours holding companies, financial institutions, investment funds, IP companies, and value chain transformation companies. In addition, these tax incentives reduce the cost of doing business. For an entrepreneur in Cyprus, this allows for competitive pricing as well as decent profits.
3. Efficient Banking and Professional Services
Cyprus has a large number of highly-educated and skilled certified public accountants and registered advocates ready to offer their services. Their competence is boosted by their multilingualism, too; most speak English, Greek, Turkish, and Russian. Therefore, you can easily get access to high-quality legal, accounting, management consultancy, and financial advisory services.
Additionally, Cyprus has a well-organised banking system that takes care of the diverse needs of individuals and companies. Many of these banks offer services including asset management, syndicated loans, retail banking, custodian services, private banking, and investment banking.
4. A Robust Legal and Regulatory Framework
Cyprus has a comprehensive legal structure which traces its origins to English common law practices. This structure is conducive to business because it promotes transparency and efficiency in dealings.
It also gives foreign firms a familiar platform within which they can carry out their activities. Cypriot legislation that is relevant to foreign investments include, but is not limited to:
- The Business of Credit Institutions Law (1997)
- The Investment Services and the Activities of Regulated Markets Law (2017)
- International Trust (Amending) Law (2012)
- The Cyprus Stock Exchange Law
- Cyprus Companies Law (Chapter 113)
- The Prevention and Suppression of Money Laundering Activities Law
- The Insurance and Reinsurance Services and Other Related Issues Law (2016)
- The Merchant Shipping Law (2012)
5. Hydrocarbon Opportunities
Cyprus – and, indeed, the EU at large – is highly dependent on energy imports. As an illustration, the EU produces 48% of its energy needs (primarily nuclear energy), and imports the remaining 52% (generally oil and natural gases) from Russia, Algeria and Norway.
The island’s substantial oil and gas reserves could change this narrative; according to US Geological Surveys, the level of untapped oil and gas reserves in the region is immense. As a result, the government is on course to construct an energy centre that will boast storage facilities and transit equipment, as well as exploitation mechanisms.
Hydrocarbon exploitation will not only solve the country’s energy deficits, but also attract business investment from all over the world, thereby boosting Cyprus’ economy.
6. A Beautiful Working and Living Environment
When compared to other global centres of business, Cyprus has a considerably lower cost of living. Yet, at the same time, it was ranked 27th in the Economist Intelligence Unit’s 2019 Quality of Life index. Where else in the world would you be able to find such a high quality of life at such a low cost?
The country also boasts low crime rates, and regularly places in the top 30 of rankings of safest countries worldwide. It experiences 300 days of sunshine throughout the year and is a highly desirable place to live while doing business, while the island’s strong inclination to art and culture adds to this enviable lifestyle.
7. Attractive Legislation for Citizenship
Foreign investors in Cyprus are given a unique opportunity to obtain permanent residency or EU/Cypriot citizenship which, in some cases, can be secured within as little as three to four months. Before being granted a residency permit or citizenship, the government carries out rigorous procedural due diligence.
The upside of both arrangements is that as an investor, you need not necessarily reside in Cyprus; neither would you become a tax resident.
8. Strong Shipping Credentials
Cyprus is an internationally acclaimed shipping centre, with more than 140 shipping related firms. Indeed, it has one of the largest shipping registries in the EU and is the biggest third-party ship management centre in the bloc.
This diverse and robust maritime sector accounts for more than 7% of the country’s Gross Domestic Product (GDP), and can be attributed to its strategic location on active trade sea routes, as well as having the latest shipping infrastructure and shipping-favourable legislation in place.
To this end, shipping companies may opt to pay tonnage tax rather than income tax on profit derived from ship management or chartering activities (under easily met conditions). This tonnage tax system makes Cyprus a desirable destination for such businesses, with other shipping-friendly regulations including:
- Favorable ship registration fees and costs
- Cyprus’ position as a signatory to maritime conventions on pollution reduction, safety, and security
- A lack of nationality restrictions on ship crews
Therefore, a shipping-related investment is one which can potentially offer excellent returns. Besides, Cyprus’ shipping success guarantees an efficient flow of goods, which is important if your business relies on importing and exporting.
9. European Union and Eurozone Membership
Cyprus gained full membership of the EU in May 2004 and officially adopted the use of the Euro as its single currency in 2008. This, in itself, is a vote of confidence that guarantees relative stability and safety for investors. Moreover, businesses in Cyprus have complete access to the EU Single Market, as well as all the associated benefits that come with this.
10. Advanced Infrastructure
As touched upon, Cyprus has invested heavily in telecommunications, shipping and transport infrastructure. It is home to a sophisticated internal road system that enables faster and more efficient movement between towns and cities, while there are two world-class international airports in Larnaca and Paphos which accommodate approximately 10 million visitors to the island each year. These airports also play a pivotal role in linking Cyprus with numerous global destinations, with direct flights to key business destinations all over the globe.
The country also has two deep seaports located in Larnaca and Limassol, with Limassol, in particular, proving a popular pause point for international cruise liners. These ports handle significant freight cargo, and utilise advanced logistics solutions that have reduced costs and increased efficiency.
Cyprus, too, is considered a telecommunications centre, as it has satellite and submarine fibre-optic cables that connect it to the rest of Europe, Africa, and the Middle East. It boasts fast internet speeds through several ISPs, including PrimeTel, Cablenet, and state-owned Cyta.
Furthermore, an English-based system of education, reliable and affordable health services, a booming tourism industry, as well as macroeconomic stability boosts the island’s credentials as a desirable investment destination.
Having established some of the key benefits of investing in Cyprus, it is advisable that you explore some of the key industries within the country. As a starting point, there are exciting opportunities in the following sectors:
- Insurance brokerage
- Web design and web hosting
- Auto mechanic services
- Travels and tours
- Clearing and forwarding
- Real estate
- Educational consultancy services
Many established global businesses and market leaders also have a presence on the island, meaning that you will certainly be in good company.
In the meantime, if you’re already convinced – or you wish to discuss any of the points above in more detail – then don’t hesitate to get in touch with the Starting Business team, who can advise on all legal matters, as well as directly assist in a limited company formation or the opening of a Cypriot bank account. What do you have to lose?
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