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Cyprus: Favorable conditions for the development of a startup

June 28, 2022

Recently, Cyprus has seen rapid growth in the number of startups. This increase is due to tax incentives and favourable conditions for intellectual property and innovative companies offered by Cyprus, making it a pleasant country for the development of startups.

We propose to review in more detail the main reasons for choosing Cyprus as a place for relocation or setting up a startup.

Human resources

By opening a startup in Cyprus, you can access local, European and international qualified specialists.

Some facts that testify to the qualifications of the local labour population:

• Since 2000, the number of students in Cypriot universities has grown faster than in any EU country.

• 54% of the country's working population has completed higher education, one of the highest rates in the EU.

• Cypriots study at foreign universities more often than citizens of other countries.

• Cyprus provides an opportunity to become a participant in business incubators and accelerators aimed at promoting the creation of innovative startups.

Suppose you have decided to set up a startup in Cyprus. In that case, you can also attract qualified employees from other countries of the European Union since all of them are eligible to work in the state under EU law. If the necessary specialist could not be found in the European labour market, you can easily hire employees from other countries. They need to get a work visa, which will not be a big deal.

If entrepreneurs from non-EU countries intend to create a startup in Cyprus, there is also a favourable visa regime.

Business language

Since English was the state's official language until 1960, about 80% of Cypriots are fluent in it. In this regard, various business and banking transactions and government services can be carried out and provided in English.

The quality of life

Thanks to a safe, clean and healthy environment, the level and quality of people's life in Cyprus are enviable.

In many reports, the quality of life in Cyprus is highly rated in terms of infrastructure, education, healthcare and the environment:

• Cyprus ranks second in the list of the best countries in the world regarding climate (average annual temperature - 25 ° C).

• Cyprus is the 2nd country in the EU regarding the number of young people.

• Cyprus is ranked 21 out of 169 on Bloomberg's list of the most healthy countries.

• Cyprus is the safest country for young people.

• Cyprus has a large number of blue flag beaches.

• The economy of Cyprus is recognised as the best among other island countries' economies regarding lifestyle and human resources.

Low cost of doing business

Having a business in Cyprus reduces the cost of launching and developing a startup:

• Labor costs are significantly lower compared to other European countries.

• The average hourly rate is approximately 15.8 euros, which is much lower than in the UK and Germany (26.7 and 33 euros respectively).

• Non-wage costs are also low at 17% of total wage costs (EU average of 26%).

• The lowest office rental rates in Europe.

• Availability of business support, legal and accounting services.

Attractive tax system

Tax rates in Cyprus are among the lowest in the EU. The state also offers a relatively large number of benefits for companies and individuals.

Corporate taxes

• The standard corporate tax rate is 12.5% (the lowest in the EU).

• Technology companies that create intellectual property can apply for an 80% reduction in their tax burden, thereby reducing the actual tax rate to 2.5%.

Tax incentives

• Tax rates for individuals are the lowest in the EU. Income tax is not levied on the first 19,500 euros of personal income.

• Persons who are tax residents in Cyprus but do not have permanent residence status do not pay tax on dividends, interest or rental income received abroad.

• Investments in innovative companies and startups can be deductible from taxable income (they can be up to 150,000 euros per year).

• Minimisation of the tax burden is also possible due to the exemption of dividend payments from taxation.

• Cyprus has signed over 60 double taxation treaties.

Excellent regulation system

The regulatory legal framework of Cyprus is optimal for starting and running a business and providing reliable protection of intellectual property.

Company registration and reporting

• Simple and fast company registration procedure.

• Reliable protection of intellectual property thanks to legislation relating to this area and a network of European and international agreements.

• The reporting requirements for companies are straightforward, and documents can be submitted online.

• The Cyprus legal system is closely related to the English common law system, so English judiciary law is used in most cases.

Gaining access to funding

Technology companies can apply for several national grants and incentives:

• Research Promotion Fund (RPF).

• Cyprus Business Angels Network (CyBAN).

• Opportunity to apply for grants of up to 2.5 million euros for research projects under the EU's Horizon 2020 programme.

• Financing options provided by banks and other organisations.

Market access

Since Cyprus is a member of the EU, Cyprus companies automatically have access to the European market and are subject to the trade agreements of the European Union.

• As part of the Single European Market, Cyprus companies can take advantage of the free movement of goods, services and capital between other EU member         states and the European Free Trade Association, bypassing bureaucratic issues, paying duties, etc.

• Benefit from more than 40 EU trade agreements that make doing business with countries outside the European Union easier.

• Since 2008, Cyprus has been a member of the Eurozone, which also simplifies the development of trade relations in Europe.

If you have any questions regarding the registration of a startup in Cyprus or its relocation, obtaining a visa or moving to Cyprus, our specialists will be happy to help and advise on all the points that interest you. We are waiting for your requests!

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