Successfully investing in Cyprus

published on May 16, 2018


​​​​How do you assess the current economic situation in Cyprus?

The recovery of Cyprus since the 2013 economic crisis borders on a miracle. However, a persisting problem is the large percentage of non-performing loans, especially household loans still not reassured by the banks. Cyprus is booming and is listed as one of the fastest growing economies in the EU. The country surpassed international expectations as its economy reversed within just three years following the devastating financial crisis; one year earlier than initially predicted. However, a persisting problem is the large percentage of non-performing loans, especially household loans that are hampering the banks’ performance.

Cyprus has been growing since 2015; the growth rate was 1.7 percent in 2015 and 2.8 percent in 2016. For 2017, there has been a growth rate of 3.8 percent. The unemployment rate started falling in the first half of 2015, averaging 14.9 percent. In 2016, it fell further to 13.3 percent. The unemployment rate is expected to drop to 12 percent in 2017 and to 11 percent in 2018. 


How would you describe the investment climate in Cyprus and which industries have great potential?

Since 2015, there has been a positive investment climate. This was driven by the fiscal measures and incentives announced in 2015 and 2016, including:
  • Promotion of economic development. The country is the second fastest growing country brand worldwide (Brand Finance 2017)
  • Favoring the introduction of new equity as an alternative to excessive leverage
  • Incentives for doing business through attractive income benefits for individuals
  • Introduction of tax incentives for intellectual property, innovative small and medium-sized enterprises (SMEs) and start-ups


High potential industries that have proven to be resilient and have grown since 2015 include:
  • the shipbuilding industry, which is being boosted by new ship registrations and the relocation of shipping and other services to Cyprus,
  • the construction industry,
  • the leisure and tourism industry as well
  • the service sector.
  • The energy sector with the discovery of a large quantity of hydrocarbons in Cyprus’ Exclusive Economic Zone (EEZ) has attracted global interest from international energy giants. This has created new and exciting prospects for Cyprus becoming a regional energy hub with emphasis on multilateral cooperation agreements with neighbouring countries.


What challenges does a German entrepreneur have to master in Cyprus?

All challenges can be overcome with the right support and guidance from consultants. It is crucial for success that an entrepreneur surrounds himself with expert advisers who have the knowledge and competence to assist and guide him through the planning stages, and who also take on the ongoing advice.

Investing in Cyprus has many advantages:


  • The land is strategically located in the eastern Mediterranean and has been an EU Member since 2004 and Eurozone member since 2008.
  • A robust and modernized business hub, it has access to more than 500 million EU citizens, the single market and trade agreements. As a reliable EU business partner it can offer competitive benefits and sold business solutions.
  • Cyprus can be used as a hub for investment in the Middle East. It has concluded agreements with many of these states to avoid double taxation (the country has more than 60 double tax treaties). The DTA with Iran was recently signed.
  • Cyprus's simple tax and regulatory legislation makes the country a gateway to and from Eastern Europe, the Middle East, Africa, the Indian subcontinent and the Far East.
  • The majority of the population speaks English. There should be no challenges in communication. In addition, the country has highly skilled, multilingual professionals and the youngest workforce in the EU many of which are internationally educated (UK, USA and Europe).
  • Cyprus also has modern infrastructure and an advanced and efficient banking system. The legal system closely aligned to English Common law with flexibility and constant updating to meet investors changing needs.


Those investing in Cyprus will be able to use tax incentives for first employment which provide for exemption from income tax for part of their basic salary of between 20 and 50 per cent; It will also benefit from the exemption from withholding tax on dividend distribution and interest income, as well as the low income tax rate: the maximum rate is 35 per cent. An important recent development is the introduction of the ’60 day rule’ by the Cyprus Parliament which loosens the restrictions for proving tax residency in Cyprus from 183 to 60 days of physical presence on the island.
Since joining the European Union, Cyprus has become a multicultural, cosmopolitan society. Many working professionals move to Cyprus because of the high quality of life, especially to Limassol. Cyprus has a very low crime rate, practically without significant violent crimes; Children can walk and play safely on the streets and there are several very good schools to teach in English, from pre-school to high school.
The weather is of course also a magnet. The winters are short and the summers long. A challenge is deciding how to spend your free time - hiking or skiing in the mountains or swimming in the sea. Or both on the same day.


What opportunities and challenges could a reunification of Cyprus bring with it?

Cyprus is a divided island and has the only shared capital in the world. There have been many attempts in the past to find a solution that satisfies both sides of the conflict. The end of the conflict will bring new opportunities and new challenges and unknowns to the united island. The peace process, which started in 2016, has stalled in recent months but new attempts are being made to revitalize it.
Regardless of the outcome and outcome of the process, a united and a divided Cyprus will face many challenges. As well as the challenges faced by reunified Germany, one of the biggest challenges will be raising the economy and living standards - including infrastructure modernization, etc. - to the north in the north to the level in the south of the island.
In addition to these challenges, a reunited Cyprus will also offer German companies the opportunity to be part of the economic growth that many economists and commentators expect from a united Cyprus.     


Marios Loucaides

+357 25 7553 01

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