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Why Cyprus

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Why Cyprus

The Cyprus Advantages

Cyprus is a relatively small country that punches well above its weight. Situated in the far-eastern Mediterranean, Cyprus takes full advantage of its strategic location between the emerging Far-Eastern and African markets and the mature Western European economies.

Having grown rapidly over the past three decades, Cyprus has established itself as a prominent hub for trading businesses, holding and investment companies, shipping companies, tourism companies, information technology and fintech companies and a multitude of other enterprises. Cyprus is a perfect gateway for investment both into the European single market and outwards. Cyprus is also a great tourism destination and has became a place of residence for many affluent foreigners.

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Cyprus clearly has the right recipe for doing business and attracting investment. Its success can be attributed to progressive laws, mild taxation, reasonable regulation, heavy investment in education and a capable network of financial and professional service providers.

Key advantages at a glance:

Legal system and professional services

As Cyprus is a former British territory (having gained independence in 1960), its legal system is based on the principles of English Common Law, and is therefore comfortable to most international investors and financiers. Prior to its EU accession in 2004, the legislation of Cyprus was aligned with the EU norms in respect to trade, competition and legal protection of business interests. The business legislation of Cyprus is also quite similar to that of the UK – in particular the Cyprus Companies Law is largely based on the UK Companies Law. Cyprus has a well established rule of law, its legal system is widely recognised as fair, reliable and transparent.

Historically, Cyprus has maintained an excellent national system of education. It is quite commonplace for many Cypriots to further their studies in British and American universities. Over the years, this has resulted in a deep pool of well-educated multi-lingual professionals, working in the area of finance, accounting, law information technology and also public administration. Most of the tier-one global accounting and consulting firms have a strong presence in Cyprus. Legal services are widely represented by both domestic and international names, being able to reliably support just about any legal contingency.

Incorporation of a private company in Cyprus is a fairly straightforward process which typically takes up to two weeks. When purchasing a shelf company, the timing can be further reduced. The simplicity of setting up a business in conjunction with one of the lowest corporate tax rates in Europe, an extensive double-tax-avoidance treaty network and many special taxation incentives are all significant advantages for choosing Cyprus for international business.

Access to Markets

Being a full member of the European Union, Republic of Cyprus benefits greatly from the “four freedoms” that the European Single Market represents – the free movement of goods, people, services and capital. It enjoys the advantages provided by the EU Parent/Subsidiary Directive, Mergers Directive and the multitude of the EU trade agreements.

Cyprus is also part of the Eurozone, having adopted Euro as its national currency in 2007. Thus there are no exchange controls in Cyprus and no restrictions on foreign repatriation of profits earned in Cyprus.

On top of all the benefits that come from being part of the largest single market in the world, Cyprus has signed more than 60 double-tax-avoidance treaties, including ones with the UK, the US, China, Russia, India, Germany, France, Switzerland, South Africa, Singapore and just about any other significant economic player on the planet. Full list is here.

With its advantageous location in the Eastern Mediterranean, in the maritime crossroads between Europe, Asia, Middle East and Africa, and in direct proximity to the Suez canal, Cyprus is also a significant shipping hub, with two multi-purpose deep sea ports in Larnaca and Limassol. Majority of the largest ship management companies in the world operate full ground offices in Cyprus. Cyprus ranks #11 in the world by the tonnage of its registered shipping fleet. It also operates two international airports, in Larnaca and Paphos.

Tax Advantages

Cyprus supports local entrepreneurs and attracts foreign business through a mix of low tax, generous exemptions, attractive incentives and reasonable regulation.

The most obvious benefit is the uniform 12.5% corporate income tax rate – one of the lowest in the EU. There are numerous further exemptions.

Economy and Trade

Cyprus has a diversified, modern high-income economy, dominated by services and light industry. The services sector ir strongly represented by tourism, financial services and fin-tech, information technology, shipping and logistics. Business services (which includes this firm) remains the fastest-growing sector of the Cyprus economy.

From being among the poorest countries in southern Europe just a couple of decades ago, Republic of Cyprus has more than doubled its GDP per capita within 15 years, having recently reached the personal income levels of Italy and Spain. While also having been impacted by the financial crysis of 2008 and the European debt crisis of 2012, Cyprus has recovered much quicker than most expected.

International trade is vital to the Cypriot economy. Although significant oil and gas discoveries have recently been made in the territorial waters of the Republic of Cyprus, Cyprus has no other significant natural wealth. In particular, the island must import much of its food, raw materials, fuels, equipment and machinery. More than half of its trade is with the rest of the European Union, in particular Greece and the United Kingdom. The countries of the Middle East are also significant trading partners.

Complementing the vibrant business scene, Cyprus hosts a strong financial services sector, counting a few dozen credit institutions, including seven local banks, and over 20 branches and subsidiaries of foreign financial institutions. This is further augmented by a multitude of investment funds, asset managers and niche financial service providers. In particular, Cyprus is home to most of biggest brands in retail forex.

A GREAT PLACE TO LIVE

Cyprus constantly receives high rankings by the various “quality of life” and “human development” rankings, which are produced by a multitude of global organizations – such as the United Nations Development Programme, Eurostat and OECD. It’s easy to understand why.

The average lifetime in Cyprus is 78 years for men and 81 years for women. Cyprus has an effective, modern and accessible healthcare system. The population of the country is just about 1 million people and there are no large industrial enterprises that can pollute the environment.

Cyprus has over 320 sunny days per year and a varied, picturesque landscape – including both mountains which get snow in winter and about fifty “blue flag” beaches stretching along hundreds of kilometers of spectacular coastline. Cyprus has a rich historical heritage – in fact, it’s one of the most historic places in the world, having been inhabited for over ten thousand years. It bears the markings of all great civilizations that have graced and grazed the region over the millenia – Romans, Venetians, Persians, Greeks and Ottomans. It’s practically breathing ancient history.

Cyprus also enjoys one of the lowest crime rates in the world. The country has a relaxed and friendly multi-cultural society, based on the principles of tolerance and openness. Almost all Cypriots are multi-lingual, English being widely used as the primary business language. The country also has one of the best systems of secondary education in Europe (also multi-lingual).

At the same time, the costs of living and running a business in Cyprus remain quite moderate, especially when compared to some of the global mega-cities. Therefore, it is no accident that foreigners, who have recently established their primary or secondary residence in Cyprus, now constitute about a fifth of the total population of Cyprus.