As Cyprus gears up for a thriving economic future, it’s paving the way for robust growth and development in key sectors. Although it faced substantial economic hurdles in the past, the nation’s resilience is commendable, now showcasing positive signs of recovery. Here at CX Financia, we perceive this as an ideal time for “investing in Cyprus’s business sectors” with a promising economic forecast and abundant opportunities, and we are committed to helping our clients capitalize on these opportunities by providing expert financial services and guidance.
Over the recent years, Cyprus has made impressive progress in stabilizing its economy. It has managed to trim down its fiscal deficit and public debts successfully, while the government has implemented several structural reforms aimed at improving the business environment and drawing foreign investment.
Growth Despite the Global Challenges
Resilience of Cyprus during the Pandemic and the War in Ukraine
In the face of turbulent global conditions caused by the Covid-19 pandemic and war in Ukraine, the Cypriot economy remained resilient during 2022. Amidst these difficult times, Cyprus recorded the eighth-highest growth amongst European Union member states.
According to the CyprusMail the Cypriot economy has experienced an impressive growth rate of 6 percent in 2022, far exceeding the Ministry of Finance’s expectations of 2.7 percent. The growth rate continued throughout the year, even with Russia’s involvement in Ukraine starting in February, spiking at 6.6 percent in the first quarter, 6.3 percent in the second quarter and 5.4 percent in the third quarter.
Outlook for the Future Cypriot Economy
For the year 2023 though, there is expected to be a slower but still positive development with a predicted 3 per cent economic growth rate – before it rises to 3.3 per cent and 3.2 per cent for 2024 and 2025, respectively. This is especially notable, as many economies across Europe expect recession periods soon, making this consistent rise in Cyprus all the more remarkable.
Cyprus Major Economic Sectors
Several key economic sectors in Cyprus are experiencing growth and drawing considerable investment, and CX Financia’s team has put together an article covering them.
With a friendly and warm culture, Cyprus is a popular tourist spot welcoming around 4 million visitors every year. The tourism sector remains a key driver for large-scale development projects such as luxury resorts, hotels, theme parks, marinas, and casinos.Cyprus is currently among the top ten travel locations that British nationals intend to visit in 2023, according to Britain’s Travel Association.
Cyprus is a popular choice for foreign investors seeking to invest in real estate, either as an investment or a second home. Its favorable tax system and reputation as a prime destination for foreign investment make it a top pick n the real estate industry. The country’s robust development sector offers an extensive range of luxurious large-scale projects, from high-end hotels and shopping centers to residential and commercial properties. Limassol, a key city in Cyprus, offers an array of apartments, villas, vacation homes, and commercial real estate spaces for sale, making it a promising hub for real estate investment opportunities.
Cyprus has been a thriving hub for international shipping for centuries, with its strategic location at the crossroads of three continents making it an ideal destination for maritime trade. The country’s shipping industry is further bolstered by its EU-approved tonnage tax system, which provides benefits for chartering and ship ownership, management, and crew management.
Cyprus boasts a sophisticated marine infrastructure and two multipurpose seaports, making it an attractive location for some of the world’s biggest shipping brands. Over 140 ship-owning and ship management businesses, along with more than 1000 registered vessels totalling 21 million gross tons, are based in Cyprus. In fact, Cyprus is now the second-largest ship management centre globally and the largest in the EU.
Cyprus’ Exclusive Economic Zone (EEZ) has become a focus of interest for major oil and gas auxiliary service industry players, such as Noble Energy, Delek, Total, ENI, and KOGAS, since the discovery of hydrocarbons. Currently, strategies are being developed to exploit the country’s wealth for local and export purposes, presenting promising opportunities for Cyprus to become an important energy hub.
While the pharmaceutical industry in Cyprus is currently small, it is projected to expand significantly in the coming years. The government is encouraging firms in this sector, and it is expected to become a significant industry for the country.
Investment Funds and the Financial Industry Sector
Cyprus has emerged as a prominent global investment fund and asset management hub, thanks to its robust and business-friendly regulatory framework. The island nation has attracted significant investments and interest from asset managers and funds worldwide. The modernization of Cyprus’ business-friendly and tax framework has played a crucial role in making the country an attractive destination for investment funds. Additionally, Cyprus’ strategic location at the crossroads of Europe, the Middle East, and Africa has also contributed to its emergence as a leading investment fund destination. With its growing reputation as a hub for investment and asset management, Cyprus is poised for continued growth and success in the industry.Cyprus’ leading role in the provision of professional financial services including corporate structuring and international tax planning and its extensive network of elimination of double taxation treaties with more than 60 countries has also assisted the fund industry to gain momentum.
Other reasons for relocating or starting a new fund in Cyprus is the low cost for setting up funds and low running expenses such as employment costs and property prices compared to other countries.
How Did Cyprus Become a Business Hub?
Cyprus has a lot to offer foreign nationals interested in business and investment prospects as it moves toward realizing its vision of becoming a corporate hub, including:
- Strategic Location: Cyprus is located at the crossroads of Europe, Asia, and Africa, making it an ideal location for businesses looking to access these markets.
- Favourable Tax Regime: With one of the lowest corporate tax rates in Europe (12.5%) and an extensive network of double tax treaties, Cyprus’s favourable tax structure makes it a desirable location for international investors wishing to reduce their tax liability.
- Well-Developed Infrastructure: The Island has a robust infrastructure, which includes a contemporary communications network, world ports, and global connectivity.
- Skilled Workforce: Cyprus has an experienced and educated workforce, with a high percentage of the population fluent in English. This can be beneficial for companies looking to establish operations in the country.
- Resilient Economic Indicators: Following a period of economic decline brought on by the Covid-19 epidemic, the economy of Cyprus has been expanding slowly and has shown indications of recovery.
- Diversified Business Sectors: Cyprus has diversified business sectors beyond just tourism, real estate, financial services, shipping, energy, and pharmaceuticals that are considered healthy and expected to continue to grow in the future.
- Easy to Do Business: Cyprus’s legal system is very straightforward and effective, and there is little bureaucracy, making it reasonably simple to launch and run a firm in any of the industries fuelling the country’s economy.
- Accessible Residency Programs: Cyprus provides various attractive residency options for foreign nationals, enabling investors to get residency in exchange for an investment in the nation or through real estate channels.
- EU Membership: Cyprus is a member of the European Union (EU), which enables companies to enter its market and conduct unrestricted trade with other EU nations.
Attractive Business Environment Draws Major Companies to Cyprus
Cyprus is quickly becoming a popular destination for business owners and investors. The country has a number of favourable foreign investment incentives that make it an attractive place to do business. These incentives include tax breaks, reduced red tape, and a stable political environment. CX Financia has prepared a related article about Cyprus: A Headquartering Hub for Tech Companies emphasizing why to choose Cyprus as a headquartering base and what the regulatory framework for Cyprus headquartering.
Foreign companies with global headquarters in Cyprus
Cyprus has seen the establishment of several major international companies in the past few years. Some of the foreign companies with global headquarters in Cyprus are:
- NCR – a world leader in consumer transaction solutions;
- Amdocs – a leading multinational software and services provider;
- Wargaming – a world-renowned video game developer;
- Viber – online communications platform;
- Sykes – a US multinational business process outsourcing provider;
- Thomson Reuters – provider of business information services;
- Nielsen – global marketing research firm;
- 3CX – business communication solutions;
- eToro – trading and investing platform;
- VTTI -energy storage providers
- MUFG – first tier 1 bank in Cyprus
- Murex -French Software Development Company
Cyprus, a Prime Destination for Investment and Growth
The presence of major international companies in Cyprus has had a positive impact on the local economy and business landscape. These companies have been able to take advantage of the country’s business-friendly environment, tax breaks, and reduced red tape, which have all contributed to their success.
If you are looking for an ideal place to establish or expand your business in Europe or the Middle East, then Cyprus is definitely worth considering. Take action today and explore all this Mediterranean island nation has to offer!
Choosing CX Financia as your trusted partner
At CX Financia, we help clients adopt strategies that position them for success.
By applying our extensive experience in the industry, we work shoulder to shoulder with our clients to register a Cyprus company, acquire work permit visas for third-country nationals, provide corporate support services, and advise them on accounting and legal matters.
We’re glad to see governmental initiatives paving the way for an international hub where tech companies can grow and transform along with a faster and more effective framework.