Cyprus is perfecting its pitch as an ideal headquartering hub in the East Med, especially for international ICT companies. Its geographical location, advantageous regulatory framework and new incentives geared at facilitating more non-EU business are boosting the island’s image as a strategic HQ destination for multinationals.
Already an established international business centre and influential global shipping hub, Cyprus is now laser focused on boosting its burgeoning status as a headquartering (HQ) location of choice. The country has seen serious traction over the years with companies from around the world setting up operations and regional headquarters on its shores, and armed with new incentives Cyprus is determined to strengthen its offering to attract more international business.
Cyprus’ appeal has remained strong thanks to its stable pro-business environment, EU membership coupled with convenient EMEA access and its safe and relaxed Mediterranean lifestyle for expats. Pre Covid, the country was on an upward swing with strong economic growth and emerging prospects in multiple sectors. Despite the challenges the global pandemic has brought in its wake, Cyprus has retained a solid position and investor confidence is high, with 2021 GDP growth estimated at a healthy 5.4%. The comparative advantages that have made the country a hot spot for investment continue to tick all the boxes of decision makers looking for an ideal operational base.
A WINNING PACKAGE
As an HQ jurisdiction, Cyprus has a lot to offer. Doing business in and from Cyprus is easy and straightforward. The country has modern infrastructure and telecommunications. A transparent regulatory and legal framework and a strong financial and professional services base with decades of successful international experience. It has an advantageous EU-approved tax regime with numerous incentives for corporations and individuals alike. Access to the EU Single Market of half a billion consumers and a geostrategic location between three continents, provides a convenient time zone for international business.
Its highly educated and multilingual population provides a vast talent pool for companies to hire from, but as an EU member state, it also provides easy opportunities to headhunt talent from within the Union, which has a workforce of over 240 million people. New incentives have also been introduced to enable the easy transfer of non-EU staff to Cyprus.
Another key attraction for companies to relocate strategic operations to the island has been the fact that set-up and operational costs are comparatively low – a major deciding factor for many companies in today’s economic climate. In addition, the island has good air connectivity through two international airports with major cities in Europe and key destinations in Asia, North Africa and the Middle East, as well as sophisticated ports to support operations.
The surge of interest in Cyprus from companies has driven the development of new multi-use office complexes and signature commercial developments primarily in Limassol and Nicosia over the last few years. Many of these projects offer amazing views across the Mediterranean Sea and combine luxury residential and commercial space. Whether looking to build a bespoke building for headquarters or to rent turn-key offices, Cyprus caters for companies of all sizes and budgets.
Traditionally, the majority of international companies choose Limassol, due to the seaside lifestyle, the large expat community and the short distance to both Larnaca and Paphos international airports. The coastal city and shipping hub has grown to become the main international business centre, while inland capital city Nicosia attracts multinationals that require closer access to ministries, embassies and government departments. However, Nicosia is currently transforming into the main knowledge and innovation core of the island, attracting entrepreneurs with strong interest in tech and R&D.
The robust economic growth and investor confidence of the past few years, coupled with emerging prospects in the real estate, investment funds, shipping and energy sectors have provided a strong pull factor for companies to set up in Cyprus and use it as a launch pad both into the EU market place and other emerging or high-growth markets in the region.
A significant benefit of Cyprus is its secure EU environment in an often turbulent region. For example, prominent news organisation AFP, has capitalised on this aspect and uses 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.
In recent years, a number of tech companies have relocated or expanded operations in Cyprus. This sector has become a new key target and the government has plans to launch more incentives to the tech sector in order to build up a dynamic cluster similar to its shipping industry – which is the largest third-party shipmanagement centre in Europe and the largest crew management centre in the world.
Major multinational firms in the ICT industry, including consulting, fintech and regtech firms, have set up a base in Cyprus 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. Global companies such as NCR, Kardex, Wargaming, eToro, 3CX, TSYS and Amdocs are just some examples of businesses that have based operational or corporate management functions on the island. More recently, online giant Amazon set up a data service arm in Cyprus – presenting a big win for the jurisdiction. In addition, global heavyweights such as Microsoft, Oracle, SAP and IBM have been based in Cyprus for many years.
A crucial element especially when it comes to the ICT and tech industry is guarding intellectual property (IP), and Cyprus offers strong and advantageous IP protection through domestic legislation and a network of EU and international agreements. 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. In addition, with Cyprus currently placing a strong focus on developing the jurisdiction into a science, tech and start-up hub, the country also provides companies with an ideal sandbox for new emerging tech like blockchain, artificial intelligence and big data.
ATTRACTING NON-EU BUSINESS
Continuously looking to improve its offering and to simplify procedures for companies looking to establish or expand their activities in Cyprus, the government launched a new Action Plan in 2021. This new set of incentives has considered the best practices from other European countries, with emphasis on domains related to technology, shipping, innovation, research and development, biogenetics and biotechnology, without excluding any other companies that choose Cyprus as their place of business. The Plan includes legislative proposals for more tax breaks and introduced a Business Facilitation Unit serving as a single point of contact for companies to help with all aspects of their set up. Another significant move is implementing better provisions for employing highly skilled third-country nationals by simplifying the process of granting immigration and work permits. In addition, Cyprus will be issuing Digital Nomad Visas with a maximum initial limit of 100 beneficiaries.
With these new incentives, Cyprus can also serve as a strategic location for UK companies choosing to retain a presence in the EU. Human talent, an attractive IP regime, alongside a thriving professional services industry, means that Cyprus is able to offer significant benefits to businesses seeking to build headquarters in Europe. Also the fact that its legal and regulatory framework is based on English Common Law principles offer companies the advantage to continue operating in an EU jurisdiction with a familiar UK legal framework.
One of the top factors expat executives consistently note as being a key decider for choosing Cyprus over other jurisdictions is the climate and the lifestyle the island offers. Its 340 days of sunshine and pristine beaches, the overall stability and high quality of life makes Cyprus an easy choice. Ranked as one of the top five safest countries in the world by Value Penguin, the excellent healthcare and educational systems, and the welcoming environment score high on the list especially for expats with families. Incentives and competitive personal tax rates play a part too, but ultimately it is Cyprus’ overall package that facilitates successful cross-border business and allows these companies to thrive and compete on a global level.
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