The small yet dynamic Mediterranean island of Cyprus, famous for the warmth and hospitality of its people, continues to be an attractive location to live, work and invest. The island’s sophisticated and sunkissed lifestyle coupled with its exceptional business infrastructure has proven a winning combination.
Located in the Eastern Mediterranean at the crossroads of Europe, the Middle East and Africa, Cyprus’ strategic position has played a key role in shaping its history and in developing the island into a centre for trade and international business. Despite being a country of only 865,900 people, the Republic of Cyprus has steadily built itself into a thriving business centre and has much to offer in these terms. The EU-compliant domicile has a well-educated workforce, a low-cost business environment with a wealth of support services, a sophisticated ICT infrastructure and an investor-friendly tax regime – backed up by an extensive network of double taxation agreements with around 60 countries. Not only is Cyprus a developed business centre, but also one of Europe’s favourite holiday destinations, offering a perfect balance between business and pleasure.
The island enjoys around 340 days of glorious sunshine a year and a coastline teeming with endless stretches of golden sands, secluded bays and rocky coves, all surrounded by the crystal waters of the Mediterranean Sea. The landscape is dotted with the fascinating remains of history, from Neolithic settlements and ancient city-kingdoms to exquisite Byzantine art and magnificent Venetian architecture. The people of Cyprus are the descendants of two major civilisations: the Greek Cypriots from the Mycenaean Greeks and the Turkish Cypriots from the Ottoman settlers. While Cyprus is a Greek-speaking nation and Cyprus’ official languages are Greek and Turkish, English is almost universally spoken and written and is the language of international business. German, French and Russian speakers are also easily found, thanks to the high number of Cypriots with international degrees, the country’s commercial ties with the global business community, and the island’s popularity as a tourist destination.
A Divided Country
Cyprus gained independence from Britain in 1960, however a Greek-sponsored coup d’ιtat in 1974 was swiftly followed by an invasion of Turkish forces which occupied the northern one-third of the island. Despite numerous efforts over the intervening decades, the island remains de facto divided, and the self-declared ‘Turkish Republic of Northern Cyprus’ (TRNC) remains unrecognised by the international community. The Greek Cypriot and Turkish Cypriot leaders continue to look for a solution to end the division of the island, but while negotiations have been slow, some progress is being made with many seeing 2016 as a potential milestone for achieving reunification. The capital city, Nicosia, is split between the two sides, though visitors can access either side from checkpoints at Ledra Palace and Ledra Street, establishing Nicosia as the last remaining divided capital city in the world.
People & Culture
Cyprus is well known for its hospitality, a fact reflected in the Greek word, ‘xenos’, used for both stranger and guest. Life is meant to be enjoyed in Cyprus, which is renowned for its excellent quality of life with an emphasis on working to live, rather than living to work. Cafι culture predominates, with both business and social meetings taking place over a leisurely frappe (iced coffee) in the numerous cafes in every town and city. As with most Mediterranean cultures, food plays a vital role and the famous Cyprus meze – a large selection of small, delectable dishes – is best enjoyed ‘siga siga’ (slowly slowly) al fresco, surrounded by friends and family and accompanied by a glass or two of excellent local wine.
A Resilient Economy
Cyprus has a dynamic and flexible economy that has time and time again proven its capacity to adjust to continuously changing conditions. Before its independence from the UK in 1960, the Cyprus economy was primarily based on agriculture and the export of minerals. However, in the last few decades the country has established itself as a serious business and service centre for shipping, financial services and commerce, and is classified by the World Bank as a high-income country.
The island’s accession to the EU in 2004, and the adoption of the euro in 2008, was the catalyst for transforming Cyprus into a financial and business services hub. Following the country’s financial bail-out in 2013, Cyprus has implemented major reforms and although still facing economic challenges, the small nation has proven its resilience. The year 2015 signalled a sooner-than-expected exit from recession and a return to growth, with GDP expected to increase by 1.4% in 2016 and 2% in 2017.
The island’s international financial centre has suffered a blow in the wake of the crisis, but with robust restructuring to clean up the banks’ balance sheets and build stronger institutions with better supervision, the country is already reaping the rewards of these reforms. Bank deposits are on the rise and Cyprus has retained and strengthened its reputation as an attractive and effective investment gateway to the European Union and other high-growth markets. Offering a tax-efficient company domicile within the EU, the country is now also emerging as an attractive location for fund managers and promoters.
Leading Maritime Hub
A major success story for Cyprus has been the maritime sector, which accounts for €1 billion in annual revenue and around 7% of the island’s GDP. Apart from offering shipmanagement and business services to the industry, the Cyprus Registry is classified as the 10th largest merchant fleet in the world, and the third largest fleet in the European Union. Having introduced an advantageous EUapproved tonnage tax system in 2010, Cyprus attracted increasing numbers of shipping companies from across the world to explore the unique opportunities it offers.
Tourism has been a key driving force of the Cypriot economy for decades, and 2015 saw record-breaking numbers of tourist arrivals. New projects are currently underway to boost the tourism sector and encourage year-round visitors, ranging from the construction of brand new golf courses, marina developments and the upgrading of the island’s wellness and medical tourism product. In addition, the country has successfully attracted a number of new carriers to the island, making it even easier and cost effective for visitors to reach Cyprus. A new and exciting prospect is the development of a luxury casino resort – the first of its kind – which has been put out to tender and attracted investors worldwide. The integrated resort is set to exceed five-star status, opening a whole new market for niche tourism on the island.
Emerging Energy Player
Apart from the sun and the sea, Cyprus has few natural resources and has been dependent on oil imports to satisfy its energy demands. However, the world-class discovery of natural gas and potential oil deposits in Cyprus’ Exclusive Economic Zone (EEZ) in the Mediterranean Sea is expected to change all this. Appraisal drillings in block 12 by US company Noble Energy confirmed natural gas reserves of 4.54 trillion cubic feet (tcf) – enough to meet Cyprus’ domestic gas demand for over 100 years – and has attracted international energy heavyweights, such as Total and Eni, to explore the island’s waters for new discoveries. Cyprus’ energy sector currently presents one of the best opportunities for foreign investors and for economic growth.
Luxury Real Estate
Beyond finance and commerce, Cyprus is also highly attractive to real estate investors and has long been a magnet for international buyers – establishing the real estate and construction sector into an important component of the island’s economy. With new up-market developments, increased foreign investment in hotels and major infrastructure projects springing up, Cyprus’ attractiveness as a property investment location is set to grow. Also the fall in property prices and recently introduced incentives make this an opportune time to invest and buy real estate in Cyprus.
Foreign Direct Investment
Cyprus’ favourable and EU-approved tax regime, its flat rate of 12.5% corporate tax, pro-business government and highly skilled workforce, have long attracted foreign investment into the country. Most capital, predominantly coming from Greece, Russia, the US and UK, has been invested in the real estate, banking and wholesale trade sectors, but the economic crisis has opened new opportunities. With large scale developments, major infrastructure projects in the pipeline, new privatisation plans, and with a restructured banking sector, many international investors are recognising interesting opportunities on the island.
A Bright Future
Cyprus has all the right elements firmly in place, to maintain its reputation as an international centre of business excellence in one of Europe’s most interesting investment locations. Offering a professional atmosphere that makes doing business pleasurable as well as profitable, Cyprus’ Mediterranean lifestyle coexists happily with a cutting-edge international business centre, allowing investors to enjoy the best of both worlds: a safe and secure environment for family life and a sophisticated infrastructure from which to grow and develop business.
Updated July 2016