There is no denying that Cyprus today is a country on the mend. Since the shock of the never before tested bail-in of March 2013, the country has been fully committed to implementing a series of ambitious structural reforms aimed at re-engineering the economy, encouraging growth and creating an effective and business-friendly environment. In fact, by opting to build on Cyprus’ unique cluster of expertise in the various areas of the economy, the public and private sectors are today working hard together to turn the island’s challenges into opportunities to enhance further its long established reputation as a centre of excellence for international business and investment.
Cyprus has traditionally been an attractive investment destination. Services oriented and ideally positioned at the heart of the Eastern Mediterranean region, it has always catered, at the highest standard, the needs of multinational enterprises wishing to gain preferential access to the key markets of Europe, Russia, the Middle East, Asia, India, and Africa.
With important sectors of the economy, such as tourism, proving to be as resilient as ever, it is extremely important that at the heart of the country’s recovery efforts is the pursuance of Foreign Direct Investment (FDI). Conducive to this is the fact that despite all the changes and restructuring of the past two years, the island retains still its many competitive advantages with regards to doing business and investing. EU and Eurozone membership mean that third countries can reap the benefits by accessing European markets via Cypriot companies, whilst at the same time being serviced by a modern infrastructure and a highly qualified and experienced workforce specializing in the fields of law, accounting, auditing, tax, business administration and investment and funds management.
Moreover, Cyprus has almost 50 tax treaties in effect, one of the lowest corporate tax rates in Europe at 12,5% and a simplified, effective and transparent tax regime, fully compliant with EU laws and regulations. Most international transactions are exempt from VAT and dividend income, profits from overseas permanent establishments and profits from the sale of securities are exempt from tax. Also, there is no withholding tax on dividend, interest and royalties paid from Cyprus.
The predictability and security of FDI in Cyprus, both crucial elements for potential and existing investors, are further guaranteed by the country’s efficient and pro-business legal framework, based on the UK Common Law principles and aligned with the EU laws and regulations. The transparent legal system used allows, for example, for the formation of conventions that encourage investments via Cypriot companies, whereas the process of registration of legal entities is very simple and inexpensive, with the registered legal entity being able to start activities within 15 days. Furthermore, the identities of shareholders in Cypriot legal entities engaged in international activities may remain secret and are only declared to the Central Bank of Cyprus, which handles the relevant information with the utmost confidentiality. Secrecy is also maintained for the participation in trust funds, as well as for all relevant activities and transactions.
Adding value to all these, are the measures being taken by Cypriot authorities to improve the FDI framework even further, related to the expediting of licensing procedures and cutting through the red tape. Among the incentives offered are, of course, the permanent residency and citizenship for investment programs that have also been recently updated. According to these, non EU residents have the opportunity to acquire a permanent residency permit with the purchase of a private home of at least €300,000 and deposits of minimum €30,000 in a local bank for three years. In addition, non EU residents can acquire the Cypriot nationality with: investment of minimum €2 million in a state company and €500,000 investment in the Research and Technology fund; direct investments of €5 million; bank deposits of €5 million in a local bank for five years; payments of income tax or VAT of more than €500,000.
Presently, opportunities for investment in fact exist across a range of key sectors of the Cyprus economy, including shipping, real estate, construction, renewable energy, innovation and technology and professional and financial services. Given the recent discovery of natural gas reserves within Cyprus’ Exclusive Economic Zone, prevalent among these opportunities are the large scale infrastructure projects of the emerging oil and gas industry, as well as its auxiliary services that can cater to the needs of not only the local hydrocarbon activities but also the entire Eastern Mediterranean region.
Attractive prospects for investment in Cyprus also exist because of the implementation of the strategy to diversify the tourism product by upgrading its infrastructure and services. The Government will, in fact, be launching soon the licensing procedure for the development of an integrated casino resort, whilst a number of large scale development projects, such as marinas and golf courses, are currently available for investors.
Finally, additional investment opportunities result from the Government’s efforts to privatize a number of state entities, including the telecommunications, ports and electricity sector, as well as from its plans to establish on the island a large scale Science Technology Park.
Overall, it has to be said that Cyprus today is open for business as usual, offering potential investors a wide choice of projects and, more importantly, greatly facilitating their realization. As the country’s public finances and economic outlook continue to improve, foreign investor confidence is undoubtedly also increased, as amply evidenced by both the existing investors’ commitment and the significant inflow of FDI over recent months.