Strategically located at the crossroads of Europe, the Middle East, and Africa, Cyprus has long leveraged its position to become a hub for trade and international business. Despite a population of under one million, the Republic of Cyprus has steadily established itself as a thriving business centre. As a member of the EU and eurozone, and boasting one of Europe’s most highly educated workforces, Cyprus has cultivated a robust, service-driven economy. Its investor-friendly environment features low operational costs, an extensive ICT infrastructure, and a beneficial tax regime enhanced by double taxation agreements with 68 countries. These attributes have positioned Cyprus as a significant hub for European and regional financial and business services.

Beyond business, Cyprus is one of Europe’s most popular holiday destinations. The island enjoys 340 days of sunshine a year and is celebrated for its pristine coastline, offering golden beaches, secluded bays, and some of the cleanest waters in the Mediterranean. History comes alive across the landscape, with Neolithic settlements, ancient city-kingdoms, exquisite Byzantine art, and impressive Venetian architecture adding to the island’s charm. Blending a vibrant, cosmopolitan lifestyle where East meets West, Cyprus strikes a unique balance between business and leisure, making it an ideal destination for those seeking opportunity and quality of life.

People & Culture 

While the Republic of Cyprus is a Greek-speaking nation, English is almost universally spoken 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. 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. Cafe 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 also plays a vital role in family and social life. The famous Cyprus meze – a large selection of small, delectable dishes – is best enjoyed siga siga (slowly) and al fresco.

Robust EU Economy 

Cyprus has a resilient economy that has time and time again proven its capacity to adjust to continuously changing conditions and bounce back from external shocks. 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 international 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 with the subsequent adoption of the euro in 2008, was the catalyst for its transformation into a competitive financial and business services hub.

Over the past decade, Cyprus has demonstrated a remarkable resilience in navigating economic shocks. The island nation rebounded swiftly from the global pandemic in 2020, with revised 2024 figures highlighting a modest GDP contraction of only 3.2% in 2020, followed by an impressive 11.4% growth in 2021. Similarly, Cyprus recovered robustly after the 2013 banking crisis, regaining an investment-grade credit rating by 2018 and achieving an average annual real GDP growth of 5.8% from 2018 to 2023. In response to the challenges posed by Russian sanctions following the war in Ukraine, Cyprus successfully diversified its economy, tapping into rapidly expanding markets in tourism and communications. The banking sector has undergone significant transformation, consolidating its position, strengthening its capital base, and reducing non-performing loans by more than 95%. Meanwhile, the government has made substantial progress in fiscal management, including paying off its IMF debt five years early in 2020 and setting a course to reduce public debt to below 60% of GDP by 2025. Consistent credit rating upgrades have further boosted confidence, and foreign direct investment has been flowing into all key sectors. These achievements have created valuable fiscal space, enabling the government to focus on strategic investments for a sustainable and prosperous future.

Cyprus has retained and strengthened its status as an attractive investment gateway to the EU and other high-growth markets, as well as a secure base to tap into opportunities in the Middle East. Offering a tax-efficient EU company domicile, the country is emerging as an increasingly attractive location for fund managers and promoters, and a compelling destination for regional headquarters and a base for tech companies.

Rising Hub for Tech and Innovation

Cyprus’ technology sector is gaining momentum, bolstered by increased government support, the rollout of national strategies to integrate cutting-edge technologies, and attractive incentives for digital nomads, IT start-ups, and regional headquarters. The information and communications technology (ICT) sector is the undisputed champion of growth in Cyprus and rose on average by an astonishing 17.1% per year in 2014-23. With a renewed emphasis on long-term development, Cyprus is actively diversifying its economy and driving growth through tech innovation – these efforts have borne fruit as the country has seen an influx of foreign tech companies relocate headquarters and other operations to the island. The financial sector remains the largest consumer of IT services, followed by telecommunications and public administration. Despite its small size, Cyprus has carved out a strong reputation in research and development, outperforming expectations for one of the EU’s smallest member states. Unprecedented investment in technology and ambitious projects are positioning the island as both a hub of innovation and a regional centre of excellence, fostering robust connections with the global scientific and tech communities.

Growing Investment Fund Sector

Cyprus is making significant strides in the investment funds sector, aiming for a larger share of the global asset management market. The rapid growth in both Assets under Management (AuM) and the number of licensed fund structures highlights the country’s appeal as an emerging financial hub. AuM in Cyprus surged from €2.7 billion in 2016 to an impressive €9.4 billion by the second quarter of 2024. While still relatively small in size, this remarkable growth has captured the attention of the global asset management and investment community. Investment funds in Cyprus have already channelled over €2.5 billion into key sectors of the local economy, including shipping, hospitality, education, healthcare, and renewable energy. The country offers a competitive framework, including EU-regulated Undertakings of Collective Investment in Transferable Securities (UCITS) and Alternative Investment Funds (AIFs). A major milestone came in 2018, when Cyprus revamped its AIF framework to introduce Registered AIFs (RAIFs), which allow funds to begin operations without direct Cyprus Securities and Exchange Commission (CySEC) authorisation, provided they are externally managed by a Cyprus-based or EU-based Alternative Investment Fund Manager (AIFM). This innovation has been lauded as a game-changer, offering a more efficient and cost-effective way to establish AIFs in Cyprus. Currently, most alternative investment funds in Cyprus are small to medium-sized, focusing on areas such as debt and equity securities, real estate, and private equity. However, the country has also attracted larger funds, including one managing assets of €500 million. Over the past five years, the number of alternative investment funds has more than doubled, while foreign UCITS – promoted by major international financial institutions—are increasingly marketed in Cyprus, solidifying its position as a growing force in the global investment fund landscape.

Global Maritime Leader

The maritime sector stands as a cornerstone of Cyprus’ economy, generating approximately €1 billion annually and contributing around 7% to the island’s GDP – of which shipmanagement alone accounts for around 5%. Cyprus offers a comprehensive suite of services to the global shipping industry, including shipmanagement and business support. Its registry is among the most prominent worldwide, ranking as the third-largest merchant fleet in the EU and the 11th-largest globally. Moreover, Cyprus is the EU’s leading shipmanagement hub and one of the top three globally.

The sector has experienced steady growth, with Cyprus now focusing on restructuring its commercial shipping framework to bolster competitiveness. The introduction of an EU-approved tonnage tax system in 2010 has been pivotal in attracting a growing number of international shipping companies to the island. Limassol, the nation’s maritime capital, hosts some of the industry’s most influential players, managing about 20% of the world’s third-party managed fleet, cementing Cyprus’ status as a global shipping powerhouse.

East Med Energy Boom

Long reliant on oil imports to meet its energy needs, Cyprus is now poised for a transformative shift thanks to significant natural gas discoveries and potential oil deposits within its Exclusive Economic Zone (EEZ) in the Mediterranean Sea. Exploratory drilling by global energy giants has confirmed reserves capable of meeting Cyprus’ domestic gas needs for over a century, with additional capacity for exports. This hydrocarbons boom has drawn major international players, including Total, ENI, Chevron, Kogas, Royal Dutch Shell, and ExxonMobil, alongside numerous auxiliary service companies supporting exploration and production efforts. In parallel, Cyprus is tapping into its abundant sunshine, with solar energy becoming a rapidly growing segment. The government is prioritising renewable energy to achieve a zero-carbon economy, aligning with global sustainability goals. Cyprus’ first-class universities and research institutes are also at the forefront, driving innovation in clean technology and advancing research to combat climate change, ensuring a more sustainable energy future.

Year-Round Tourism Appeal

Tourism has long been a driving force of the Cypriot economy, consistently delivering record-breaking numbers of arrivals and revenue in the years leading up to the pandemic. While Covid-19 temporarily disrupted this growth, the sector is bouncing back, supported by a series of ambitious projects aimed at diversifying Cyprus’ tourism offerings and attracting visitors year-round.

These initiatives include the construction of new golf courses, luxury marina developments, and enhancements to wellness and medical tourism infrastructure, and a focus on sustainability. A standout addition is the Republic’s first-ever luxury casino resort, a €600 million integrated project spearheaded by a consortium led by Melco, a renowned Hong Kong-based company. Exceeding five-star standards, the resort has opened the door to niche tourism markets, marking a new era for the island’s tourism industry.

Top Destination for Property Investment

Cyprus continues to attract international investors, expats, and retirees, drawn by its Mediterranean climate, high quality of life, safety, and strategic position as an EU member state at the crossroads of Europe, the Middle East, and Africa. The Cyprus real estate sector showed strong market performance up until 2019, but the pandemic in 2020 marked a turning point. Despite this setback, the market has rebounded with impressive momentum in 2022 and 2023, reflecting renewed confidence from both local and international buyers. In 2024, the real estate market has remained robust, with Limassol and Nicosia leading the way in terms of contract volume. Despite historically high interest rates, property sales have remained strong, a testament to the enduring appeal of Cyprus as a desirable residential and investment destination. With one of the highest homeownership rates in Europe and a long-standing market for second homes and holiday villas, Cyprus has a property market that plays a central role in its economy. The sector’s growth is further fuelled by new upscale developments, significant foreign investment in high-end hotels, and major infrastructure projects. This momentum is expected to continue, with Cyprus solidifying its position as a top destination for property investment.

FDI Powerhouse

Cyprus is attracting billions in foreign direct investment (FDI) as it diversifies into new sectors, solidifying its position as a key destination for global investors. The island’s geostrategic location within the EU offers a stable and secure environment in a region often marked by volatility, making it an ideal gateway to both established and emerging markets. In recent years, Cyprus has gained traction as an emerging tech hub, drawing high-tech companies with its innovative incentives and business-friendly policies. The island’s reputation for stability and business-friendly regulations has spurred major investments across sectors, particularly in financial services, real estate, and ICT, with blue-chip investments in banks, luxury marinas, and large-scale tourism projects. Between 2018 and 2022, Cyprus saw significant FDI inflows, with substantial investments also emerging in energy, asset management, and shipping. This growth is reflected in Cyprus’ impressive resilience: real GDP growth averaged 4.8% from 2019-2023, despite global disruptions like the pandemic and the war in Ukraine. Cyprus has also become a leader in innovation, ranking as a strong innovator for the third consecutive year in the EU’s 2024 Innovation Scoreboard, thanks to dynamic public-private sector collaboration. With FDI inflows totalling €107.5 billion from 2014-2023, Cyprus is firmly establishing itself as a compelling investment destination for global capital.

Business Excellence and Mediterranean Living

Cyprus offers the perfect balance between professional success and a relaxed lifestyle, making it an ideal destination for business and pleasure alike. Investors enjoy a secure, family-friendly environment coupled with a world-class infrastructure, positioning Cyprus as both a hub for global business and a haven for personal well-being. With its EU-approved tax regime, a competitive 12.5% corporate tax rate, and tax incentives for high earners, Cyprus presents compelling advantages for business growth. A pro-business government, a highly skilled workforce, and continuous development across key sectors further enhance its appeal. As the country’s economic prospects continue to rise, Cyprus is firmly cementing its reputation as a premier international business destination, combining growth potential with an exceptional quality of life.

All rights reserved. The material on this site may not be reproduced, distributed, transmitted, cached, or otherwise used, except with the prior written permission of The Profiler Group.

December 2024