Τhe Republic of Cyprus became a full member of the EU on May 1, 2004. EU accession has launched a new era of opportunities and responsibilities for Cyprus. Cyprus encourages Foreign Direct Investment (FDI) opportunities in the priority economic growth sectors, highlighted in the country’s Strategic Development Plan.
Lowest EU corporate tax rate
Lowest Corporate Tax rate in the EU of 10%
Exemption from Tax:
Profits from overseas permanent establishments
No withholding Tax on:
Interest and royalties paid from Cyprus
Double Taxation Agreements
Cyprus has developed a wide network of Double Tax agreements with 45 countries, ensuring that the same income is not taxed in more than one country. Cyprus is in the stage of negotiating the conclusion or awaiting ratification of Double Taxation Agreements with several more countries.
Highly qualified, well-educated multilingual labour force
Cyprus has a young, well-educated talent pool. The country is committed to education and is focusing on reforms to achieve sustainable growth. Since 2004 Cyprus has consistently allocated over 6% of GDP of public expenditure on Education.
Great value for money
An average annual starting salary for a young graduate with a Bachelor Degree is €22,800. The employee will contribute €1,500 for social security, will pay €4,560 income tax. The employer will contribute €1500 to social security, for an average total labor cost, for such talent, of €24,300 per year.
The educational system of Cyprus is fully harmonized with the European standards & guidelines. Cypriot educational institutes actively participate in EU programs, like the Eurydice Network and the ERASMUS program.
Of all secondary students 88% speak English, 38% speak French. In 2010, 32.3% of the population of Cyprus between the ages of 25-64 held a Bachelor, Masters, or PhD degree. The EU27 average equivalent for the same year was 22.7%. Also, 38% of Cypriot tertiary students studied abroad in 2010. In Lefkosia alone, there are over 1300 researchers, providing ample opportunity for growth in research, knowledge and innovation.
Cyprus International Trusts are widely used as a vehicle for international tax planning, offering the following tax advantages:
Income and gains of a Cyprus International Trust, derived from sources outside Cyprus are exempt from any tax imposed in Cyprus under certain conditions.
Dividends, interest or other income received by a Trust from a Cyprus international business company are not subject to tax nor are they subject to withholding tax.
No capital gains tax is charged on the disposal of assets of an international Trust.
Exemption from taxation in the case of an alien who creates an International Trust in Cyprus and retires in Cyprus under certain conditions.
FDI track record
Cyprus is one of the most attractive locations for foreign investments, indicating both high FDI performance as well as high FDI potential, based on the data of the Central Bank of Cyprus. Cyprus attracted several billions per annum in Foreign Direct Investment (FDI).
Cyprus has a modern, free-market, serviced-based economy with a long record of successful economic performance and positive growth.
Cyprus enjoys macroeconomic stability which is reflected through various indicators including Real GDP Growth, Inflation and Unemployment.
Efficient legal, accounting and banking services
Acknowledging that information and knowledge would be the drivers of sustainable growth in the global economy of the future, Cyprus has undertaken a major role in facilitating the exchange of ideas, services and support among professionals worldwide. In fact, in 2011, more than 80% of the country’s economy is based on the provision of services.
Cyprus inherited a legal system based on Common Law. The legal profession is long established and consists of many independent law practices. Highly qualified and well trained professionals can provide expert and reliable advice on all aspects of business and commercial law, both local and international.
The accounting profession is very well represented, with many international companies operating on the island, as well as a number of private individuals providing accounting, auditing and consulting services. Most accountants are British trained and members of either the Institute of Chartered Accountants or the Chartered Association of Certified Accountants.
Banking and financial services
The banking sector is well developed and caters for a wide variety of financial needs of both businesses and individuals. The commercial banks and specialised financial institutions offer full and varied local, national and international services on personal and corporate level. They offer a wide range of services including insurance, leasing, hire purchase finance, factoring, mutual fund management, investment and consulting as well as custody and asset management services. Cypriots and foreigners residing on the island enjoy the benefits of a well developed insurance industry with all types of risk accepted mainly through agents and intermediaries.
Local business and financial consultants have typically trained at European or US universities and many have worked overseas before setting up in Cyprus. They offer advice on the whole spectrum of modern business and investment. Overall, the professional services sector plays a significant and rapidly expanding role in the Cyprus business landscape.
Cyprus’s strategic location at the crossroads of three continents has been a major factor in shaping its history throughout the centuries and its development into not only a major eastern Mediterranean trading post but also a reputable international business and services centre.
Upon membership into the European Union, Cyprus is being transformed into a key outpost in the Eastern Mediterranean, facilitating partnerships and serving as the springboard for investments among Europe, Africa, and Asia. Providing the perfect gateway for businesses to penetrate new markets, Cyprus is a heaven for modern business.
Cyprus has become the EU’s key trading post in the eastern Mediterranean, providing a point of exchange between Europe, Africa, and Asia. Τhe island’s location also makes it an ideal transhipment centre, with Cypriot companies operating independently and with foreign partners to ship goods into and out of the EU via Cyprus.
Advanced telecommunications network and infrastructure
Two international airports, a modern road network and multipurpose port facilities have long established Cyprus as a commercial, financial and business center in the region. More than 35 Airlines operate scheduled fl ights from and to Larnaca International Airport (5 km from Larnaca town centre) and Pafos International Airport (15 km east of Pafos town).
A new airport in Paphos was inaugurated in November 2008 increasing arrival capacity up to 1.8 million passengers in 2011. The new airport in Larnaca began its operations in late 2009, increasing arrival capacity up to 5.5 million passengers in 2011. One can be in London, Moscow or Dubai in about four hours from Cyprus. With shipping accounting to 5% of the GDP of Cyprus, ports and shipping terminals are critical components of this contribution.
Considerable investment has been made into transforming the island into a telecommunications hub for the region. Cyprus is connected to a number of advanced technology submarine cables which provide excellent connectivity to Europe, the Middle East and Asia. In addition, seven satellite earth stations provide further satellite telecommunications connectivity making it easy for companies to locate here and be connected globally through an advanced and reliable communications network.
Reputable International Shipping Centre
Cyprus is a highly reputable international shipping centre, ranking among the 10 leading maritime nations in the world. More than 1,000 registered vessels with 21 million gross tonnage under the Cyprus flag. More than 130 ship owning and ship management related companies maintain offices in and conduct international activities from Cyprus collectively controlling a fleet of 2,300 ships with 46 million gross tonnage
Cyprus constitutes one of the largest ship management centres in the world; around 50 ship management companies and marine-related foreign enterprises are conducting their international activities in the country while the majority of the largest ship management companies in the world have established fully fledged offices on the island.
The accession of Cyprus to the European Union has undoubtedly had a considerable impact, both in terms of quality and quantity on the structure of the community fleet. In terms of tonnage, Cyprus accounts for 16% of the EU fleet, thus enhancing considerably the market share of the European fleet in international sea transport.
Cyprus has long developed into a transhipment centre for Asia Pacific trade with Europe as well as with shipping markets situated along the coasts of the Levant and Black Sea, or the North Adriatic. These markets can be easily accessed from Cyprus with minimum diversion from main arterial routes. This development is attributed to the key position of the island, the efficient customs formalities and the reliable handling and delivery system.
Likewise, Cyprus is a natural hub for other main-line deep sea trades traversing the Mediterranean, to North Africa and the Middle East. The main products re-exported from Cyprus are tobacco, processed foodstuffs, beverages, textiles and textile articles, minerals and chemicals. Cyprus could be used as a base for exporting to the Middle East, North Africa and Asia.
Led by its geostrategic position, the island has been a pioneer in the development of purpose-built container terminals in the Eastern Mediterranean, and was one of the first countries in the region to use specialised container gantry cranes.
Notably, Cyprus is classified as a low tax jurisdiction; meanwhile, its fiscal and regulatory regimes as well as its legislation are fully aligned with the EU’s acquis communautaire.
Cyprus is an attractive location for the establishment of shipmanagement companies and companies with shipping related activities. The geographical position of the island, its accession to the main international maritime conventions, as well as the generous tax incentives and the extensive network of bilateral agreements in merchant shipping, have enabled Cyprus to become an ideal shipping centre.
New Shipping Tonnage Tax System
The European Union´s approval of a fully revised and upgraded Cyprus Shipping Taxation System in March of 2010 is a turning point for Cyprus and European Shipping. The new Shipping Taxation System covers the three basic Shipping activities in International Shipping, namely Shipowning, Shipmanagement (including Crew Management) and the Chartering of vessels. The benefits of the new system may soon render Cyprus, the “Shipping Metropolis” of Europe. Shipowners are exempted from Income Tax and are automatically taxed under the Tonnage Tax System. Shipmanagers and Charterers can exercise their option to be taxed under the Tonnage Tax System.
Living and working on the island for all seasons
Cyprus ranks as the 31st highest in the world, with a score of 0.840. Cyprus offers a wonderful environment for a very comfortable standard of living.
Indicatively, according to the latest publication of the Human Development Index (HDI) which is a measure of the standard of living of a country, published by the UN Development Program (UNDP) in 2011, Cyprus ranks as the 31st highest in the world, with a score of 0.840.
Arts and culture have a long tradition in Cyprus with historical monuments dating back to 10,000 BC. In the capital of Lefkosia there are over seventeen museums showcasing a broad array of archaeological collections, byzantine icons, coinage, paintings, and other cultural treasures. Cyprus boasts several artists and painters and the gallery community has grown steadily in the last few years. The Performing Arts are flourishing. Throughout the year, local and international festivals, concerts of renowned performers and events take place in ancient open air amphitheaters, including international independent fi lm festivals, annual classical music festivals and an opera festival at the end of summer.
In the recent years a burgeoning fashion milieu has grown from numerous young, creative and entrepreneurial fashion designers, many of whom have trained in the world’s renowned art and design institutions and fashion capitals.
Gastronomy and wine have a long tradition in Cyprus. Local cuisine based on the Mediterranean diet provides several culinary treasures ranging from healthy salads, the famous halloumi cheese and vegetable appetizers, to main courses which include goat meat on the spit, pork reduced in wine, and scrumptious honey dipped deserts and fruits preserved with recipes dating back hundreds years.
Stress levels are low and business is still largely done with a personal touch and slower pace of life. Crime rates are very low and the sense of safety and security is quite high across the country.
Commutes are minimal. The island has a developed network of four lane highways linking all main destinations. One can drive from the capital, Lefkosia, to the beach in Larnaca, in about 30 minutes.
With a pleasant weather throughout the year, sports aficionados can ski in February, swim and kite surf until October, bike and play tennis and golf all year!
Simplified administrative procedures for acquiring necessary permits
Low set up and operating costs
Double tax treaties with more than 40 countries
Freedom of movement of foreign currency
European standard of living
Open market economy