The Cypriot economy is seen as one of the fastest-growing economies in the Eurozone, having followed a continuous upward trajectory in recent years. This strong momentum does not show any signs of slowing down. Many key investment sectors on the island are flourishing, and foreign investment has continued to flow in at a steady pace, thanks to the numerous reasons for investing in Cyprus. There is an abundance of opportunities waiting to be explored in both traditional and emerging economic growth sectors, and Cyprus is constantly diversifying and enriching its product. Here are the eight key economic sectors to watch out for.
Banking & Financial Services
This is a diverse sector comprising domestic banks, International Banking Units (IBUs), insurance and other companies, including foreign bank subsidiaries, which has attracted significant amounts of Foreign Direct Investment (FDI), including funds from the European Bank for Reconstruction and Development (EBRD). For the past 35 years, the European Investment Bank (EIB) has been supporting Cyprus with investments of 2.7 billion euros, while Cypriot banks are all fully recapitalized and regulated by the European Central Bank (ECB) under very strict guidelines. Finally, the Anti-Money Laundering Law 81(I)/2019 is in full effect across all Cypriot financial institutions.
Thanks to its robust and business-friendly regulatory framework, Cyprus is quickly developing into global investment funds and asset management domicile. This means the island attracts interest and substantial investment from funds and asset managers worldwide. Investment funds are cost-efficient and simple to set up and run and are supervised by a competent and accessible regulatory authority. Incentives for funds’ set up and operation include no tax on the most income of a Cyprus tax resident fund, no restrictions on the type of investments, and reduced reporting requirements.
Shipping & Maritime Industry
Cyprus is a renowned international shipping centre. It offers an EU approved tonnage tax regime with benefits for ship-owning, ship-management and crew-management, as well as chartering. It is also home to some of the world’s leading names in the global shipping industry, thanks to its advanced maritime infrastructure and two multi-purpose seaports. There are currently more than 1000 vessels with 21 million gross tonnage registered under the Cyprus flag, and more than 140 ship owning and ship management companies in Cyprus. This makes Cyprus the largest ship management centre in the EU and the second largest worldwide. Additionally, Cyprus boasts the third-largest merchant fleet in the EU and the 11th largest fleet worldwide.
Tourism is one of the island’s strongest economic sectors, contributing heavily to the country’s GDP as record numbers of more than 3 million tourists visit Cyprus each year. A renowned tourist destination, Cyprus has all the prerequisites to further develop the industry. This means that there is great potential for investments in areas such as marinas, hotels, luxury developments, leisure and theme parks, luxury resorts, golf courses, integrated tourism resorts and integrated casino resorts.
Start-ups and Innovation
Cyprus has recently begun offering advantages to new businesses and start-ups, aimed at attracting foreign entrepreneurs and investors with a particular focus on innovation. Among the incentives is income tax relief of up to 50% of taxable income for natural persons investing in qualifying start-ups, an upper limit of deductions of 150,000 euros per year, and a right to claim the tax relief within a five year time period. Additionally, a start-up visa scheme offers state funding to talented entrepreneurs from countries outside of the EU who wish to establish and operate a high-growth start-up in Cyprus.
Research and Development
With great levels of incoming EU funding, Cyprus is well on its way to becoming the next research and development powerhouse within the Mediterranean. At least three new centres of scientific excellence are currently being developed, as greater recognition is placed on the importance of applied research and its role in the development of the economy. Pioneering research is being conducted in diverse fields, from monitoring climate change to the genetics of kidney disease, and this has attracted international experts who are seeking to harvest local talent. This emphasis on innovation has also encouraged foreign investment into local start-ups entering this up and coming, yet highly important business sector.
The discovery of hydrocarbons in Cyprus’s Exclusive Economic Zone (EEZ) has led to significant interest from global industry leaders, including Noble Energy, Delek, Total, ENI and KOGAS, as well as providers in the oil and gas auxiliary services sector. This has created new and exciting prospects for Cyprus to become an important energy hub, as strategies are currently being developed for exploiting the country’s wealth both locally and for export purposes.
Real Estate and Development
Acquiring property in Cyprus, either as an investment or a second home, has always been a popular choice among foreign investors. A thriving development sector offers a wide range of prestigious large-scale developments, ranging from residential and commercial developments to luxury tourist attractions.
How we can help:
CX Financia offers a wide range of services to investors seeking to do business in Cyprus. From legal support, training and international tax planning, to assist in the establishment and management of International Business Companies, our team of experts will create a bespoke solution that fits your needs perfectly. Contact us today to find out what we can do for your business.