With a 21.9 billion Euro total GDP in 2019 and ranking 54th in the world for doing business, the Republic of Cyprus has experienced a continuous expansion which has transformed its economy to a thriving business environment and an investment hotspot. Structural reforms alongside a range of financial incentives for international commerce have translated in a surge of business opportunities in Cyprus.
The Aspen Trust Group breaks down the key sectors of this flourishing economy and the many benefits associated with the business opportunities in Cyprus, despite the challenges of Covid-19.
Cyprus as a Business Destination
Economic growth in this Mediterranean island is forecast to continue in 2021. In 2019, real GDP growth was 3.2 percent and, regardless of the slowdown due to the pandemic, Cyprus is on a path to have a 3.7 percent real GDP growth in 2021.
The largest sector of the economy is service-based, accounting for 71.9 percent of the country’s business. Yet, over the last 20 years, investment opportunities in Cyprus led to the diversification and evolution of the country as an important global business center. The geographical location between three major continents, as well as the well-structured and mature administration and services infrastructures have made Cyprus an efficient and profitable business community.
The government of Cyprus pursued numerous initiatives through 2019 and 2020, even though the pandemic has curbed government action in other parts of the world. The country established a new Deputy Ministry of Research, Innovation, and Digital Policy in March 2020, which rapidly prompted the digitalization of the public sector.
The Fast Track Business Activation Mechanism was also approved in September 2020 to continue the efforts made by the Fast Track Headquartering scheme in 2019, allowing non-EU nationals greater business opportunities in Cyprus when setting up headquarters for more access to emerging and established markets in Europe, the Middle East, Africa, and Asia. Foreign investors and business owners starting a business in the country only need 1 to 3 days on average to establish a European Union company within Cyprus.
Types of Business Opportunities in Cyprus
Foreign nationals interested in becoming business owners, from establishing an online business to franchises in Cyprus or taking small ideas and transforming them into profitable businesses, can find many business opportunities in Cyprus regardless of the kind of business industry they are seeking.
Outside of finance and financial services, there are many other unique established industries in Cyprus:
Reserves of vast natural gas in the Exclusive Economic Zone (EEZ) of Cyprus as well as its surroundings have been discovered in recent years since 2011 and encouraged regional ambition to strengthen the energy industry. The oil and gas sector promises to be a key economic growth driver and the Minister of Energy has already discussed Cyprus’s partaking in cross-border infrastructure projects by selling part of the natural gas supply to large corporations.
This also includes a drive to push hydrocarbon initiatives in the Eastern Mediterranean and expand energy-focused business opportunities in Cyprus.
Solar energy is another field aimed at introducing new business and government developments. From smart-grid technologies to utilizing the huge potential of solar energy throughout real estate, transport, and public good industries, Cyprus is making strides towards sustainable innovation, efficiency, and improved storing methods. The boom in solar projects is forecast to create thousands of jobs on the island in the next decade and have cost-saving benefits and business potential for companies in any industry.
Construction and Real Estate Industry
Many new luxury and large-scale construction projects contributed to nearly 8 billion Euros in foreign investment in the country and promoted an upward trajectory in the real estate market throughout the past few years.
Among these are a growing demand for office spaces and headquartering locales in several of the city centers around Cyprus. It is projected that Cyprus should achieve 260,000 square meters of office space at the closing of 2020. Included in this is the capital of Nicosia with new commercial developments such as Nicosia City Centre, the Cymiva Office Tower, and the Capital Gate and the Asteroid Tower.
Since the Cypriot government introduced its film scheme in 2018 to include incentives for film production that includes cash rebates, tax credits, tax allowances for infrastructure investments and equipment, and VAT refunds on certain income, Cyprus has become a popular film destination. This scheme has attracted multimillion budget movies with Hollywood actors like Nicholas Cage and William Baldwin. The movie Jiu Jitsu starring Nicholas Cage has successfully completed filming in August 2019.
The Aspen Trust Group was also named a “leading service provider” for international film production incentives as the film production service sector continues to grow.
Over 7 percent of the GDP relates to maritime activity, contributing more than 1 billion Euros per year. Companies located in Cyprus manage around 20 percent of the global third-party managed fleet in part due to the shipping incentives offered in the country. Cyprus is an attractive maritime center with low-cost registration, a range of tax benefits and ideal tonnage tax system, a number of bilateral agreements, highly-skilled professionals and quality infrastructure, and the benefits of a white-listed European Union flag.
Technology and Start-Ups
With a new focus on diversification and technology-driven enterprise, digital business opportunities in Cyprus are rapidly expanding. The largest industry making the shift is the financial sector, and demand for support services and skill training is increasing. Online business owners, digital marketers, and companies that offer web design or web hosting also enjoy the plethora ofbusiness advantages of registered Cyprus companies. The country has already attracted over 7,000 IT professionals and the Start-Up Visa scheme, extended until May 2021, has enticed more international talent to join the growing industry in Cyprus.
A Distinguished Business Destination
As a flourishing economy with many expanding industries, Cyprus is an ideal place to start a company or relocate the headquarters of an existing company. As an EU member-state, the country allows access to a market of over 500 million EU citizens as well as markets in Africa, the Middle East, and Asia.
Furthermore, Cyprus has the lowest corporate tax rate in the EU (12.5 percent) and many tax incentives such as no capital gains tax, transferring tax, or withholding tax. The jurisdiction is often cited as an ideal destination within Europe for tax optimization for many types of companies and individuals with financial goals in mind. It has also been a strategic relocation business center for UK companies following Brexit.
Another huge draw for foreign business is the quality of protections and financial benefits experienced as a result of the Cyprus Intellectual Property (IP) Box regime which encourages innovation and safeguarding of strategic business goods that are both non-physical and cross-border. Cyprus is leading the digital business age by being one of only a handful of countries to offer such policies.
Finally, the large talent pool of corporate and financial services enriches all the industries in Cyprus, offering quality professional services that maintain competitiveness with other global jurisdictions. As more businesses establish branches in Cyprus, the service industry continues to thrive and adjust for better business management and optimization.
Interested in learning about the specific business opportunities in Cyprus for your business needs and the many benefits for tax optimization and financial services? The Aspen Trust Group provides a range of high-quality professional services and tailor-made consultation on solutions for the establishment of your business in Cyprus. Contact us for more information today.