Cyprus geographic placement, capable service sector, EU membership, interconnectivity, British law heritage, and Mediterranean lifestyle are very attractive to many international companies across many sectors. Matching this value proposition with one of the lowest Tax regimes across Europe, makes Cyprus a very competitive business centre. Politically, Nicosia has long viewed foreign investment as a useful tool for both growth and geostrategic cloud, however the incentive schemes have been focusing on one off or ad-hoc investments. Following recent trends, Nicosia aligned with EU policies and focused its energy on acquiring its place on the global tech map.
In fact, Foreign Direct Investment (FDI) intelligence data, show a remarkable increase in software and information technology investments close to 600% growth in the first half of 2022, compared with the same period in 2019. In plane numbers, Cyprus’ policy to provide incentives to high-tech companies is calculated at 7,000 new work permits granted to highly specialised professionals so far in 2022. The reason behind this trend is linked to the enactment of a series of tax laws that appeal to high-tech firms. The permits are approved by the Deputy Ministry of Research and Digital Policy and processed through the Ministry of Commerce’s fast track service.
This state reinforced action plan, provides an unprecedented push for upgrading local talent and capabilities to a global industry standard. The strategy is that Cyprus will eventually grow to be a very strong centre for IT start-ups and headquartering. Within this ecosystem, the newly arriving tech professionals will live, work, get paid, consume and send their children to schools; therefore, actively contributing to the market and the society. Additionally, this organically forming technology ecosystem will be linked with the local market and begin exchanging knowledge through association and networking. It is a long term strategy that can be shaped to offer strong technological capabilities across sectors.
See here the list of most important CIPA incentives:
- A dedicated business relocation facilitation unit.
- A very competitive overall cost of doing business.
- A favourable IP regime which can be as low as 2.5%.
- A very competitive corporate and income tax regime.
- A large pool of tech savvy EU and international talent.
- A gateway to 500 million Europeans and the MENA region.
- A highly educated, skilled and multilingual local Back Office.
- A safe environment, amazing weather and a cosmopolitan lifestyle.
- A robust legal framework aligned with European Union law and best practises.
The incentives expand to particulars including a digital nomad visa for a period of up to 3 years, access to the local labour market for spouses of highly skilled employees earning at least a gross salary of €2,500, a 50% tax exemption for new non-domiciled employees with employment remuneration of ≥ €55.000 etc. But the purpose of this article is not to extrapolate or list an exhaustive analysis of the incentives but rather break down the benefits of a smart FDI strategy. In this case, the government and its agencies realised current market trends and formed a clear strategy on how to accomplish the goal. The state should continue to collectively focus and produce value through a digital economy, secure and efficient global communications and incentives. This helps to continue to entice leaders such as Microsoft, SAP, ESET, Oracle and IBM as well as produce start-ups such as 3CX, Exness, EMBIO, FxPro, Investing.com, PumaPay, Viber, Wargaming etc.