Cyprus’ appeal as a convenient international headquartering location is gaining momentum. Its stable business environment and emerging prospects in multiple sectors, strategic EMEA access and excellent quality of life are just a few of the many reasons why companies are relocating their strategic operations to Cyprus. A key attraction to set up headquarters (HQ) in Cyprus is the country’s good relations in the region and its convenient access to both the EU’s single market of over 500 million people and markets of the Middle East, Asia and Africa. The country’s government and private sector have recognised the growing appetite of companies and have been expanding the list of incentives to attract more headquarters to its shores and establish the island as the ideal East Med HQ base.
An added boost has come from the strong economic growth and investor confidence of the past few years, and emerging prospects in the real estate, investment fund, shipping and energy sectors. Another area where Cyprus ticks all the boxes for companies seeking a regional base, is its efficient and transparent legal and regulatory framework, modern banking sector, and its competitive EU-approved corporate tax regime. This coupled with the relatively low set-up and operational costs, convenient time zone and various tax breaks for expat executives have created a winning combination for decision makers.
Cyprus’ can-do attitude, easy access to decision makers, and wide range of services make running a multinational business a smooth task. Its geographical location in the Eastern Mediterranean at the crossroads of three continents has long played a pivotal role in influencing the country’s destiny and prosperity – and has fostered close cultural and business relationships with countries in the region. The island has good air connectivity through two international airports and sophisticated ports to support operations, as well as excellent satellite and telecommunications infrastructure.
Cyprus’ entry into the EU in 2004, and the eurozone in 2008, was welcomed by the international business community, who saw it as a new opportunity for foreign companies to use Cyprus as a convenient entry point into the EU marketplace. As part of the European Single Market, Cyprus enjoys the free movement of goods, services and capital with other EU member states and members of the European Free Trade Association. This comes without tariffs, complex bureaucracy or regulatory obstacles allowing companies to benefit from the more than 40 EU trade agreements and double tax treaties with 65 countries.
Multinationals from a range of different sectors have already cherry-picked Cyprus as the location for their regional headquarters. Global companies such as NCR, Kardex, Wargaming, eToro, 3CX, TSYS and Amdocs are just some of the corporations that have based operational or corporate management functions on the island. An added benefit of Cyprus is its secure and stable EU environment in a turbulent region. Prominent news organisations, such as AFP, have capitalised on this aspect and use the island as their base between Europe and the Middle East due to its security, convenient time zone and travel times, reliable communication infrastructure and availability of multilingual support staff. Cyprus is an especially ideal base for regional headquarters or ancillary and support services for investors with clients in the wider Eastern Mediterranean and Middle East region.
Two prime examples of this are Sykes and Whipper. A global leader in business process outsourcing, Sykes Enterprises, picked Cyprus from 20 other competing jurisdictions as its base, citing the right work-life balance as a key reason. High-tech and entertainment start-up Whipper, led by a founding team of executives and advisors who hail from Riot Games, Netflix, Swiftkey, Amazon, Echo UK, Omnicom, and Viber, also established its global headquarters in Limassol – adding more gravitas to the growing start-up culture in Cyprus.
Major multinational firms in the ICT industry, including consulting, fintech and regtech firms, set up a base in Cyprus to use the country as a gateway into and out of the EU for various corporate services, such as sales and marketing, project management, software development, systems integration, testing services, training and development, disaster recovery and business continuity, as well as joint R&D among countries in the region. Also, international giants such as Microsoft, Oracle, SAP and IBM have been based in Cyprus for many years, supporting the country’s tech evolution.
A crucial element especially when it comes to the ICT and tech industry is guarding intellectual property (IP), and Cyprus offers strong IP protection through domestic legislation and a network of EU and international agreements. Cyprus’ regime applies to a wider range of income than that of other IP Box regimes – as most focus exclusively on income derived from patents and offer less exemptions on capital gains on the disposal of IP assets.
The main feature of the Cyprus IP Box regime is the 80% deduction of revenue earned from the use of intangible assets. This four-fifths exemption from profits means that only 20% of IP income is taxed at the corporate tax rate of 12.5%. After applying the calculations, Cyprus-resident companies can see an effective tax rate as low as 2.5% – the lowest in Europe. The IP regime of Cyprus is largely responsible for the growing interest in the jurisdiction. Digital goods are increasingly more valuable and the favourable tax and business environment in Cyprus has made it a hub for digital business goods, IT software, and related services.
As a former British colony, Cyprus has also proved a convenient alternative for global companies in the post-Brexit world. Its modern and forward-looking legal and regulatory framework based on English Common Law principles offer companies the advantage to continue operating in an EU jurisdiction with a familiar UK legal framework.
A first point of contact for investors is the country’s investment promotion authority Invest Cyprus, which is a key player supporting foreign investors interested in setting up business functions on the island.
Doing business in and from Cyprus is easy and straightforward. Home to a major international business and financial services sector, the country is an ideal base for region-wide corporate coordination and central management functions, sales, marketing and customer service. As a probusiness, neutral, cost-effective and politically stable country, Cyprus offers companies a perfect climate to successfully compete in the region and beyond.
Decades of experience as a successful international business centre means Cyprus has a vast talent pool in the corporate and financial services sphere. The country has more than 4,000 registered accountants and 700 registered accounting firms – which include all major global firms – and more than 3,000 registered lawyers and around 160 law firms.
Cyprus has also taken a strong approach in promoting its digital agenda and research and development by utilising EU funding. Supporting these efforts are its booming higher education sector with innovative programs in computer science, software engineering and ICT to produce tech savvy talent, as well as incentives for start-ups and entrepreneurs. Foreign companies already based in Cyprus comment positively on their experiences with local employees in terms of productivity, language skills and dependability. The business language is English and the country has one of the youngest and most highly educated workforces in the EU. In addition, the EU has a workforce of 240 million people and Cyprus offers visa-free access to this talent pool – allowing companies to attract the best of the best into their ranks.
Top Shipping Hub
Cyprus is one of the most influential global hubs for ship owning and shipmanagement services. Today, Cyprus is the largest third-party shipmanagement centre in Europe and the largest crew management centre in the world, while the island’s international ship register is the third largest in Europe and the 11th largest in the world. Thanks to its advantageous legislative framework the island has attracted some of the world’s most influential names in shipping for the last 50 years, with most headquarters located in Limassol – the island’s maritime capital. The country’s Shipping Deputy Ministry is determined to maintain Cyprus’ competitive edge by further expanding the island’s registry and maritime cluster, strengthening international relations, and upgrading available services.
Cyprus is the EU’s largest shipmanagement centre, with one in five vessels under third party management controlled from Cyprus. With more than 200 ship-owning, management and other shipping-related companies based in Cyprus, such as Columbia Marlow and BS Shipmanagement, the success of the sector has developed clusters and auxiliary services, which is a model that could be successfully replicated in other sectors, such as the growing oil and gas sector. Cyprus provides a secure and convenient base for operations for various ancillary services to the oil and gas industry as well as for company headquarters to support activities in the EMEA region.
Connecting with the World
In addition to its geographical proximity to major markets, Cyprus has good connectivity. The country is connected by its two international airports with major cities in Europe and key destinations in Asia, North Africa and the Middle East. In the last two years, connectivity has seen further improvement with new airlines adding Cyprus to their schedules and existing airlines increasing the frequencies of their flights. Naturally the current coronavirus pandemic has forced Cyprus to take strict measures at the moment in terms of airline traffic, but the measures are being continuously assessed and modified as the situation evolves.
Thanks to its location, Cyprus enjoys business- friendly time zones, enabling international companies to do business with the East in the morning, Europe throughout the day and with the West in the afternoon. The country also has long-established links with Russia and Eastern European countries with many Cypriot professionals having in-depth knowledge of these markets, and often acting as key business introducers.
Luxury Office Space
The flood of new companies setting up in Cyprus and seeking top-tier real estate has driven the development of new luxury multi-use office complexes in Limassol and Nicosia. With the completion of the office developments currently under construction, Cyprus should reach a staggering 260,000 square meters of office space in its market by the end of 2020. Among the major office projects that are planned to be delivered to the market in Nicosia are the signature lifestyle commercial development Nicosia City Centre (NCC), the Capital Gate and the Asteroid Tower, as well as upcoming projects like the Cymiva Office Tower.
Over the years, the coastal city of Limassol has steadily grown to become the main international business hub, while the inland capital city Nicosia attracts multinationals that require closer access to government. The majority of international companies choose Limassol, due to the cosmopolitan seaside lifestyle, the large expat community and the short distance to both Larnaca and Paphos international airports.
Landmark commercial buildings like The Oval and Trilogy have raised the bar for prestigious commercial addresses in Cyprus. As some of the tallest office buildings in Limassol these projects offer large open-air balconies and uninterrupted views across the Mediterranean – an enviable working environment for mixing business with pleasure. A number of other mixed-use buildings are springing up across the city offering residential, commercial and retail space and are changing the skyline of Limassol, offering stunning views and luxury living.
For companies requiring proximity to ministries, embassies and government departments, the capital Nicosia is also expanding its stock of state-of-the-art offices. For jet-setters, Larnaca – located on the sea and adjacent to the airport – might be the right choice. Cyprus caters for companies of all sizes, and smaller organisations or those new to Cyprus can easily find companies offering serviced office rental on a short-let or permanent basis. Regus, with offices across the world, have locations in both Limassol and Nicosia, and have been joined by numerous local companies offering turn-key spaces.
Cosmopolitan and Safe Lifestyle
Boasting one of the lowest crime rates in the EU and ranked as one of the top five safest countries in the world by Value Penguin, a superb Mediterranean climate, competitive personal tax rates, as well as excellent educational and healthcare systems, Cyprus is an easy sell for expats and in particular to those with families. Cyprus is an ideal location to achieve work-life balance, and to make business both pleasurable and profitable. A stable business environment and excellent quality of life are just a few of the many reasons why companies relocate operations and other strategic functions to Cyprus. In the long term, the country has great prospects to benefit from growth in the region and become an increasingly popular choice as a location for international and regional headquarters and act as a strategic springboard into neighbouring markets.
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