Investing in Cyprus startups

Posted on 01 Mar 2016, by Eleni Drakou

The rapid developments in the Cypriot start-up ecosystem have caught the attention of investors both in Cyprus and abroad who see great opportunities for huge returns in high-growth start-ups.

Cyprus Start-ups benefit from a range of tax advantages that derive from the country's favourable legislation compliant with OECD and EU requirements, as well as from the wide network of double taxation treaties. There are many reasons to start a business in Cyprus besides the low tax rate which currently stands at 12.5%. Local and foreign companies who conduct business on the island benefit from incentives introduced by the Cyprus Government to enhance the country’s competitiveness: tax free repatriation of profits and capital, no tax on dividends or interest payments to non-residents, no withholding taxes on royalty payments relating to the use of rights outside Cyprus, favourable tax treatment of losses, no tax on capital gains, no tax on profits from reorganisations, and no tax on profits from permanent establishment outside Cyprus, subject to conditions.

Cyprus Start-ups can also benefit from EU funding programmes, such as the European Commission funding for SMEs under Horizon2020, and can also enjoy world-class business support and mentorship.

Administrative procedures for registering a company are simplified, reflecting the country’s establishment as a renowned international business centre. Cyprus Companies can be entirely owned by foreigners and can easily operate abroad. Cyprus also offers well-trained and qualified professional and technical labour force with wide experience and fluency in English, among other languages.

The country’s strategical location operates as a platform for business activities and investment between the neighbouring countries. Start-ups can take advantage of Cyprus resources, for example natural gas, tourism, professional services, and discover new technologies to further develop these resources.

There are several examples of Cyprus star-ups that demonstrate how entrepreneurship contributes to innovation, growth and job creation. As the emphasis of the Government on supporting entrepreneurship and innovation development continues, Cyprus start-ups continue to prove successful. Recently, thirteen selected start-ups presented their innovative ideas, services and products to foreign and local angel investors and venture capitals, during the Invest Cyprus Start-up Demo Day. The event was organized by the Cyprus Investment Promotion Agency (CIPA). The investors were mainly from Israel, Greece, USA and Cyprus.

Our services

Michael Kyprianou & Co LLC has a dedicated team who can provide the investor and the founders with the legal, administrative and technical support for every start-up. Incorporation of the corporate vehicle, preparation of joint venture agreements, tax structures, corporate governance manuals, opening of bank accounts either in Cyprus or abroad, EU grants, general legal advice and a lot more can be provided by the firm either at the early stage of the start-up or during its development.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought on your specific circumstances. For further information, please contact Eleni Drakou.