Why Cyprus? A general overview for international investors.

From spectacular mountain peaks and beautiful beaches to an advanced economy, Cyprus has it all.

Cyprus is a sunny island in the Mediterranean, where residents enjoy a high quality of life, a safe environment to raise a family and a modern lifestyle. Along with that, Cyprus offers various investment opportunities and excellent conditions for establishing a business.

Location and Population

Since 1974, following the Turkish invasion, Cyprus has been divided de facto into the Greek-Cypriot Government controlled two-thirds of the island and the remaining one-third of the island, which is administered by the Turkish Cypriots.

Cyprus is the third largest island in the Mediterranean, with an area of 9,251 km² and a population estimated 854,800 people in 2016. The strategic location of Cyprus, situated at the crossroads of the busy shipping and air routes of three continents – Europe, Asia and Africa, has indeed contributed significantly to its economic growth.

EU Membership and Currency

Cyprus has been a member state of the European Union since 2004 and a member of the Eurozone since 2008. Thus, its currency is the Euro since 1 January 2008.

Due to the country’s membership in the European Union since 2004 and the European Monetary Union since 2008, foreign investors received the opportunity to freely access the EU market, while they are also benefiting from lower costs and fewer risks across the eurozone.


Cyprus offers a range of distinguished public and private schools, all providing excellent levels of education. While Greek is the primary language used in public schools, English is taught everywhere throughout the primary and secondary level. The local Colleges and Universities are recognized internationally and as such, they attract a significant number of international students each year. For those wishing to continue their education abroad, schools following the British Education System, or preparing candidates for entry into Universities in Europe or the United States, are also available.


Cyprus is indeed the sunniest country in Europe, with over 320 days of sunshine annually. No matter what the season, the sun shines throughout the year, particularly from April to September. Except the sunny beaches, Cyprus is also home to the Troodos Mountain, which can be seen covered with snow in the winter months. Not only that, but the advantage of short distances means that enthusiasts can ski in the morning and enjoy a swim in the sea in the afternoon.


Moreover, Cyprus is well known for the high quality of life offering an ideal place to raise a family; the education and healthcare systems improve rapidly and it possesses one of the lowest crime rates within the European Union. It is important to be noted that a General Healthcare System has been recently introduced and has been implemented on 1 June 2019.


Overcoming the challenges of recent years, Cyprus is now one of the fastest-growing Eurozone economies. The island offers capacity in both traditional and emerging economic growths sectors. On the one hand, the traditional sectors are those such as shipping, tourism, services, banking, which have been the main ones that advanced and developed the island’s economy for a very long period. On the other hand, there are the newly established sectors such as, energy, oil and gas, investment funds, research which respectively offer a more modern perspective promoting Cyprus’s growth. The small EU country has indeed exceeded international expectations and maintained a balanced pace in improving efficiency, implementing reforms and boosting investor confidence.

Business Perspective

Although small in size, Cyprus offers a variety of business opportunities to both foreigners and locals. Setting up a business in the Republic of Cyprus is beneficial as it has a modern, free-market, service-based economy giving both international investors and domestic businesses the confidence to invest, grow and prosper.

EU and Non-EU citizens opportunities

Cyprus is an ideal investment gateway to the European Union, as well as a portal for investment outside of the EU, particularly into the Middle East, India and China. As a member of the EU and the Eurozone, Cyprus ensures safety and stability for its foreign investors. On the one hand, EU citizens are now able to start a business without needing a local Cypriot partner and there is no minimum capital required.

On the other hand, the “Cyprus Startup Visa” scheme allows entrepreneurs from third countries, individuals or in a team, to enter, reside and work in Cyprus in order to establish/operate/develop a startup with high growth potential. The scheme’s goal is the creation of new jobs, the promotion of innovation and research, the development of the business ecosystem and consequently the economic development of Cyprus.

Your top reasons

  • The strategic location of Cyprus, situated at the crossroads of the busy shipping and air routes of three continents – Europe, Asia and Africa.
  • Due to the country’s membership in the European Union since 2004 and the European Monetary Union since 2008, foreign investors received the opportunity to freely access the EU market, while they are also benefiting from lower costs and fewer risks across the eurozone.
  • The process of establishing a company in Cyprus is a simple one, as the Government of the Republic of Cyprus assists foreign investors, both EU and Non-EU citizens, in its attempt to attract even more foreign capital mainly by using a beneficial tax system and low red tape. For instance, a company could be registered for no longer than 10 days and at the same time, a bank account could be opened within a period of 2 weeks.
  • The island offers one of the most attractive tax regimes in Europe, as it has one of the lowest EU corporate tax rates at 12.5%. Additionally, with a few exceptions, holding companies do not have to pay withholding taxes on dividends. Cyprus has a modern, transparent and efficient tax system that is fully aligned with EU and international regulations, encouraging more and more entrepreneurs to set up their companies in Cyprus.
  • Transparency in business practices is additionally ensured by Cyprus’ prosperous legislative and regulatory framework, which is based on English Common Law principles. Thus, the effective, reliable and business-friendly legal system of Cyprus is also entirely compliant with the EU, Regulations, EU AML Directives and the Financial Action Task Force on Money Laundering (FATF). Not only that, but Cyprus actively participates in a plethora of EU programmes, encouraging Foreign Direct Investment (FDI) opportunities and focusing on its economic, innovation and entrepreneurship growth.
  • Tax losses incurred in any one year and which cannot be set off against other profits of the same year can be carried forward and set off against future profits of the next five years.
  • There is absolute freedom of movement of foreign currency which allows the maintenance of a bank account in foreign currency anywhere in the world.
  • Non-domiciled individuals are not taxed on their income from dividends and interest. Basically, dividends paid to either non-Cyprus tax resident or non-Cyprus domiciled shareholders are exempt from withholding tax in Cyprus.
  • The dividends of the Shareholders are excluded from the Tax Authorities as long as they are not tax residents of the Republic of Cyprus.
  • Foreign investors in Cyprus are given a unique opportunity to obtain a Permanent Residence Permit or EU/Cyprus citizenship

Tax Treaties

Although the Cypriot tax system is very advantageous for companies, Cyprus has established Tax Treaties with other countries. Cyprus has double tax treaties with more than 50 countries and is presently negotiating with other countries in order to extend its double taxation network. The main purpose of Double Taxation Avoidance Agreements – also called Tax Treaties – is the avoidance of double taxation of income earned in any of these jurisdictions.

The Republic of Cyprus has agreements that promote and protect investments with more than 20 countries, as well. These agreements are meant to protect companies against discrimination, to protect the capital and profits that need to be sent back to the country in cases of expropriation or any negative outcome from doing business in Cyprus.

Non-domiciled tax residents do not pay tax on dividends, interest or rental income earned abroad.

Finally, it is important to be mentioned that Technology companies producing Intellectual Property can apply for an 80% tax exemption, reducing the corporate tax rate to an effective 2.5%.

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

How can we help?

As the information contained is generic, we encourage you to contact our office to obtain detailed and up-to-date advice specific to your own circumstances.

Our law firm can assist you from A to Z to establish your presence in Cyprus.

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