Q: Cyprus and Israel have a strong partnership in multiple areas. Which sectors are providing the most investment potential at the moment? How can Cyprus facilitate more business from Israel and make itself even more attractive to Israeli investors?
First and foremost, it is imperative to acknowledge that the relations between Cyprus and Israel are now at an all-time high, flourishing across the spectrum of bilateral cooperation, including trade, joint business ventures and investment opportunities.
As the nearest Eurozone and EU Member State to Israel, Cyprus serves as an ideal location for Israeli businesses to establish regional headquarters or remote offices and connect to the EU Single Market. Moreover, Cyprus provides direct access to Middle East and North African markets, as it enjoys long-standing diplomatic and friendly ties with the countries in the region.
A plethora of Israeli companies are, in fact, already present in Cyprus, also benefiting from the modern and simple tax, legal and regulatory frameworks, conducive to doing business and increasing international competitiveness.
Examples include the Cyprus Intellectual IP Box Regime – particularly beneficial for Israeli high-tech companies – as well as incentives and facilitation provided to the shareholders and employees of foreign companies and to digital nomads. The recent introduction of the Business Facilitation Unit (BFU), which specialises in fast-tracking business setup, permitting and licensing for companies, their employees and families, has been met with great success. In less than two years of operation, the BFU has catered to more than 550 companies that have relocated or expanded their activities in Cyprus, several of which are Israeli owned.
Israeli technology companies, especially the ones operating in industry verticals such as fintech, cybertech and Software-as-a-Service (SaaS), consider the business environment in Cyprus to be favourable for continuous growth. Advantages enjoyed by these companies include the comparatively lower operational costs, transparent and effective communication with regulatory authorities and the ease of access to expert consultancy services. In addition, the close geographical proximity of our countries provides a unique opportunity for maintaining regular face-to-face contact amongst cross-border team members, collaborating and overseeing activities more effectively.
Another example of a promising sector for collaboration is the island’s investment funds industry, which has already attracted the interest of Israeli fund and asset managers who opt for establishing management structures in Cyprus. Moreover, international investments – primarily from venture capital funds – are channelled to the Israeli tech ecosystem via investment vehicles established in Cyprus.
Cyprus, of course, also welcomes the participation of Israel in the Horizon Europe funding programme. Opportunities for establishing joint research teams and commercial ventures under this multiannual Research and Innovation framework programme, are immense.
Certainly, joint ventures between Cypriots and Israelis, registered as Cypriot legal entities, may also benefit from additional funding instruments and grants mobilised under Cyprus’ Resilience and Recovery Plan to support, amongst others, the country’s green and digital transition, as well as the competitiveness, export capacity and technological transformation of Cypriot SMEs.
As a global leader in research and innovation, Israel has a lot to offer in terms of technology transfer, as well as go-to-market expertise for worldwide growth. Coupled with Cyprus’ strong professional services and research sectors, bilateral endeavours can lead to the creation of commercial solutions to global problems in the energy, food, transport, and health domains.
The recent completion of the Maritime Spatial Planning for Cyprus will trigger additional investment opportunities in these sectors, with emphasis placed on renewable energy, aquaculture and shipping.
In addition to all these, Israeli investors continue to heavily invest in the Cypriot real estate market. FDI flows in the sector are on the rise, directed towards commercial and residential developments, as well as mixed-use projects, primarily in tourism and hospitality, healthcare and retail.
The successful bid of a Cypriot-Israeli consortium for the Larnaka Port and Marina development project, is a prominent example of a recent mega FDI from Israel, demonstrating the strong vote of confidence by Israeli businesspeople in Cyprus’ economic growth. It also paves the way for satellite investments in the areas of maritime transport, trade and more.