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Perspective on Cyprus

Ideal investment platform to Europe, Middle East & Africa - Latest Facts

Cyprus is a small island nation, with a strong economy, business friendly government, and excellent geopolitical relations. Throughout history, Cyprus has always been a strategic platform for trade, politics and investments. Today, this has emerged into professional business services, such as registering company formations, tax planning and international banking. More than ever, credibility and legitimacy in being an EU and Eurozone member positions Cyprus as a global investment and financial centre.

Investment Benchmark

Key global investment jurisdictions

Compare Cyprus to other global investment jurisdictions also offering various company formation, tax planning benefits and other professional services. In truth, few have gained the recognition and credibility of this EU, Eurozone and Commonwealth member. And few have the benefits of a prime geographical location together with excellent geopolitical relations to encourage growth and investments to the EMEA region – EU, Europe, Russia and CIS, Middle East & Africa.

Key Economic Sectors:

Professional Services in Cyprus

Professional services, including legal, accounting-tax-auditing, finance, banking and consultation services are primary drivers of the Cyprus economy (for growth, GDP contribution and employment). In fact, this sector represents fourth fifths of national GDP. Due to its importance to national economy, the professional services sector is always a high priority of government. Thus, significant efforts (in investments and regulations) are geared towards maintaining its stability and growth. Indeed, Cyprus offers extensive company formation, banking, accounting-tax-auditing advantages and has become one of the most popular jurisdictions in the world for professional services. And for very good reasons:

• Excellent infrastructure for professional services activities, such as over 2,700 active English-speaking, registered accountants, over 120 limited accounting firms and 40 partnerships and over 2,100 registered legal advocates and 160 limited liability law firms.
• A highly educated and multilingual workforce – both Cypriots and residents from a host of nationalities, including the UK, USA, Russia, CIS, France, other European countries, Australia, India and the sub continent and China, among many other. Most of the local workforce has also been educated and trained in leading institutions such as in the UK and USA.
• Cyprus is the lowest tax jurisdiction in the European Union that is not offshore and has the lowest non-investment jurisdiction corporate tax rate in the world – standard corporate tax rate is now 12.5% (0% for shipping companies, 4.25% for maritime management companies) and double tax treaties with over 50 countries and a further 40 currently being negotiated.
• Cyprus is a premier company formation and holding centre/jurisdiction, with thousands of registered companies from all over the world – also requiring regular professional services.
• An advantageous geographical location established Cyprus is the ideal platform for investments into many neighbouring markets, including the EU, Russia, CIS and Eastern Europe, as well as the Middle East and North Africa.
• Stable geopolitical situation and business friendly government.

Lowest non-investment tax jurisdiction in the EU & World; excellent infrastructure

Cyprus Tourism Industry

Tourism is major service export for Cyprus, fuelling not only economic revenue, but also employment, tourism-related investments, as well as in-direct benefits. With over 2 million international tourist arrivals each year, Cyprus is the 40th most popular destination in the world and ranks as 6th most popular in the world per capita. According to the World Economic Forum's 2007 Travel and Tourism Competitiveness Index, Cyprus' tourism industry ranks 20th in the world in terms of overall competitiveness and 3rd in terms of Human, Cultural and Natural Resources in tourism.

Cyprus is a popular Mediterranean tourist destination, with key feeder markets being European, namely the UK, Germany, Scandinavian countries, Benelux, Greece, Russian, CIS and France, as well as Middle Eastern travellers. In addition, there are also many Cypriots residing abroad returning regularly, as well as Cypriot descendants visiting from countries such as the UK, USA, Australia, Canada and South Africa – where there are large Cypriot communities.

Sun and sea tourism has been the industry's foundation for many years, with summer (May-October) the peak season. However, many recent initiatives have helped diversify the industry and extend the season, such as business tourism and MICE (Meetings, Incentives, Conferences, Events), medical/health and wellness, as well as special interest sectors, including agrotourism, nature-based, sports, culture and history, religious, cruising and nautical. Cyprus is a truly unique tourism destination, fortunate to posses many attributes, including:

• Mediterranean climate with year-round sunshine.
• Diverse nature and topography, from mountains, sandy and pebble beaches, pine forests, valleys and distinctive flora.
• Excellent transport and accessibility infrastructure, such as two brand new international airports (Larnaca and Pafos), excellent road network, and a newly revamped public transport system.
• Quality hotels throughout the island, leisure facilities and restaurants/nightlife.
• Many tourist attractions within close proximity – easy access.
• Safe and tolerant environment, culturally and ideologically in line with key source markets, and
• Highly skilled and educated work-force – languages widely spoken in the hospitality sector include Greek, English, Turkish, Russian, French and German. Other language are also commonly spoken, such as Arabic, Scandinavian languages, Polish, Romanian, Bulgarian, Serbian, Mandarin, Hindi, Pilipino, among other.

6th most popular tourist destination in the world per capita; year-round destination

Cypriot Shipping Strength

Shipping and maritime is another key contributor to Cyprus' national economy, utilising the country's favourable geographical location, as a natural transhipment load hub for shipping lines between European and Middle East ports in the Mediterranean Sea and close to the Suez Canal – as well as excellent conditions for shipping company registration and operations.

Limassol Port is the largest port in Cyprus, serving most of the island's seaborne cargo and passenger traffic. In addition to being a major container transhipment centre in the Eastern Mediterranean, Limassol is an important regional and international cruise liner hub. Larnaca also has a port, although much smaller, serving both cargo and passengers. On-going upgrades are being made to both ports, to increase ship and cargo handling capacity, as well as passenger handling capacity. At present, there are approximately 1,000 ships registered in Cyprus; over 130 ship owning, ship management and shipping related companies maintaining offices and conduct international activities from Cyprus; and over 2,000 vessels with 40 million gross tonnage.

Currently, shipping contributes to around 5% of GDP in Cyprus and employs approximately 4,000 people ashore and approximately 40,000 seafarers onboard Cypriot flag ships. Indeed, Cyprus is an internationally renowned shipping centre. In fact, Cyprus is the third largest maritime nation in the EU and top 10 in the world; and steadily growing. For the country's small size, that's truly a remarkable statistic.

A new tonnage tax system was approved by the European Commission on March 24, 2010 under state aid rules for maritime transport. The simplified tonnage tax system extends the favourable benefits available to owners of Cyprus flag vessels and ship managers to owners of foreign flag vessels and charterers. It also extends the tax benefits that previously only covered profits from the operation of vessels in shipping activities, to cover profits on the sale of vessels, interest earned on funds used other than for investment purposes and dividends paid directly or indirectly from shipping-related profits.

3rd largest maritime nation in the EU and top 10 in the world

Real Estate & Construction

Over the last decade real estate and construction in Cyprus has boomed, offering great opportunities for those endeavouring to invest, retire, relocate, or for a holiday home. British and Russian home seeker markets were particularly buoyant. In turn, this has cause a considerable rise construction activity and in property prices, particularly in residential, and further benefiting the national economy.

Despite recent setbacks caused by the global financial downturn, especially in key source markets such as the UK, real estate remained rather stable in Cyrus, supported by diversification in buyers and the domestic market. Recent recovery in the global economy, together with some restructuring from sellers is now helping to re-orientate the sector and drive growth.

Cyprus offers excellent living conditions, with a warm Mediterranean climate, safe and affordable lifestyle, culture and entertainment and nature. Business and commercial sectors are also growing rapidly and offering new opportunities; both in the domestic market, and as unique crossroad gateway between Europe and the Middle East Africa region (EMEA).

Recently (August 2012), the Cyprus government moved to further endorse the Cypriot property and real estate development market by offering permanent residency visa in Cyprus for property purchasers of at least 300,000 euro. Read more about the terms.

Residential – holiday, second home & retirement; Commercial centre

Regional Education Hub

Cyprus is committed to further strengthening education and is focusing on reforms to achieve sustainable growth in this sector. The aim is to establish Cyprus as a regional educational and research hub, attracting international students from the likes of Eastern Europe and Asia, such as India, Pakistan, Nepal, Bangladesh, Sri Lanka, China, African countries, among others. At the same time, forming synergies with EU based educational institutions – the education system has been harmonised with the European Standards & Guidelines for Quality Assurance. Education has been highlighted here as a key growth sector not only because it drives economic growth, but because it also helps create better infrastructure, with a larger and more qualified labour force in variety of industries.

The number of tertiary students in Cyprus has grown rapidly over the last ten years, with an average annual increase of around 11% since 2006 – over half coming from abroad. At present, there are over 21,000 Cypriot students studying in Cyprus (plus approximately 22,000 Cypriot students studying abroad each year) and over 11,000 foreign students studying in Cyprus. The higher education system in Cyprus is shaped by the European Higher Education Area. Higher Education in Cyprus consists of the public and private institutions of Higher Education at University and non University level. There are three public universities with various campuses throughout the island, including the University of Cyprus, Open University of Cyprus and Cyprus University of Technology, and a further four main private universities, including EUC European University-Cyprus, Frederick University - Cyprus , University of Nicosia, Neapolis University – Cyprus. In addition, there are numerous other specialised educational institutions.

Fast becoming a regional educational & research hub; emerging sector

Emerging Economic Sectors

Energy – natural gas & petroleum: Cyprus is now embarking on a major new chapter in its economy, having only recently signed an accord demarcating their maritime borders to facilitate a search for mineral deposits in the east Mediterranean where huge natural gas reserves have been discovered. Cyprus has such agreements with Israel, Egypt and Lebanon. Gas reserves are believed to be significant. No doubt, the Cypriot economy will experience significant change from these discoveries, with economic growth and new investments.

Drilling will be carried out by USA based firm Noble Energy, which has the concession over the area known as block 12. Noble and its Israeli partners recently made one of the largest deepwater gas finds of the past decade at Leviathan, an Israeli investment field just 34 km away from the Cypriot block. According to Noble Energy, Leviathan represents the largest exploration success in the company's history, with gross mean resources of 16 tcf of natural gas. The company is actively studying multiple export options for the natural gas, including both LNG and pipeline scenarios.

In addition to these recent major developments Cyprus is also continually striving to better its domestic energy sector, such as ensuring security of energy supply, increased competition and protecting the environment. Some noteworthy facts with this include:

• Cyprus ranks number one in the world for solar energy use in residential water heating systems.
• A special fund has been created by government to promote the use of renewable energy sources. Over €20 million was provided to this fund each in both 2009 and 2010.
• 4.9% of the national energy needs in 2009 were met through renewable energy sources.

Agriculture and manufacturing: throughout history, agriculture and light manufacturing have been a pivotal component, or asset rather to Cyprus' society. It has always been a key trading avenue, facilitating the needs of passing though nations, and in many ways sustaining the country's growth and development. Even to this day, such activities are imbedded in the people and culture, with so many maintaining a rural and natural way of living.

Since independence in 1960, the Cypriot economy has shifted from agriculture and light manufacturing to services. At present, agriculture makes up only 2.4% of the GDP and employs 7.5% of the labour force. Yet it is still a vital component of the economy, particularly as it helps cater to domestic demand. Industry and construction contribute 19% and employ just over 20% of the labour force.

Manufactured goods account for 58.3% of domestic exports food and beverage processing, cement and gypsum production, textiles, light chemicals, metal products, wood, paper, stone and clay products, with potatoes and citrus constituting the principal export crops. Other key agricultural products include vegetables, barley, grapes, olives, poultry, pork, lamb, dairy and cheese. Trade is vital to the Cypriot economy and most goods are imported, such as fuels, most raw materials, heavy machinery, and transportation equipment. Over 67% of imports come from the European Union, particularly Greece, Italy, and the United Kingdom, 11% from Asia, 9% from the Middle East, and just under 2% come from the USA. Key export partners again are mainly within the EU, namely Germany (16%), the UK, Greece and Italy.

Economy to boom from newly found gas & petroleum recourses