How To Start A Business In Cyprus

Cyprus is renowned for its breathtaking beaches and rich history dating back centuries. Tourists flock to the Mediterranean’s third-largest island to enjoy the scenic Troodos Mountains and lively nightlife in Ayia Napa.

But beyond tourism, Cyprus is becoming a top spot for international business. The island has seen the growth of some exciting startups in the last few years and with its access to Europe, the Middle East and Africa, it’s set to continue on this trajectory.

Why Start A Business In Cyprus?

There are currently more than 5000 startups in Cyprus. According to StartupBlink, the island ranks 18th in Western Europe for ideal locations for starting a business. Let’s take a look at some of the reasons as to why this is the case.

Part of the EU: Cyprus is a member of the European Union which allows easy access to other European countries and markets.

Low tax rate: The tax rate is 12.5%, making it one of the lowest in Europe and highly favourable.

Good location: For businesses who want to trade internationally, Cyprus is strategically located between Europe, the Middle East and even Africa.

Skilled workforce: Residents have a good understanding of English and it is widely spoken in most circles. This makes it easier to run a business with limited language barriers.

Which Industries Have Business Opportunities?

When starting a business in any location, it’s crucial to understand what the markets are like there. Finding a gap in the market to innovate in can set you up for success from the start.

Real estate and property development: Due to the influx of foreign investors and expatriates, the demand for housing continues to grow to accommodate them.

Agriculture: Cyprus is a well-known producer of olives, wine and citrus fruits which presents opportunities in these sectors and exporting.

Technology: The government actively supports startups who are innovating in tech, AI or blockchain.

Shipping and maritime: Cyprus has one of the biggest merchant fleets in Europe, opening the door for new startups in logistics and shipping.

Finance and forex: The island has become a hotspot for startups in finance and fintech.

Tax Regulations In Cyprus

Cyprus is highly tax-efficient, with a corporate tax rate of 12.5%. Value Added Tax (VAT) has a standard rate of 19% but a reduced rate of 9% for transport and hospitality and 5% for food and medicine.

Personal income tax has progressive rates and can range from anywhere between 0% to 35%.

Cyprus also has agreements with more than 60 countries to avoid double taxation.

Visa And Residency Requirements For Foreigners

For those wanting to start a business in Cyprus, there are several visa and residency options available.

Temporary Residence Permit: This is required for those who plan to stay in the country for longer than 90 days.

Business Visa: Suitable for short-term business visits.

Investor Immigration: Entrepreneurs who are able to invest a minimum of €300,000 in property or business are then permitted to apply for permanent residency.

Digital Nomad Visa: This is available for remote workers or those who are self-employed and is valid for up to a year, with the option to extend.

Potential Challenges To Keep In Mind

While starting a business in Cyprus can be an incredibly exciting venture, there are some things to keep in mind.

There is significant competition in some sectors which are already saturated, especially tourism, real estate and forex. Some business processes can also be on the slow side and time-consuming.

Although English is commonly spoken, some documentation may be in Greek. If you are unable to understand it, you may need to consider working with a translator to help you.

How To Start A Business In Cyprus

If you have decided that Cyprus is the top location choice for your business, here is a step-by-step guide on how you can get started.

Choose A Business Structure

Cyprus has four types that you can choose from:

Private Limited Company: This is the most common choice that is suitable for most businesses.

Sole Proprietorship: Ideal for smaller businesses with one owner.

Partnerships: These can be general or limited liability.

Public Limited Company: Suitable for large companies.

Register Your Business Name

The second step is to check the availability of your desired name with the Department of Registrar of Companies and Official Receiver. If it is available, you can submit a request for approval.

Formulate Legal Documents

You can then draft your Memorandum and Articles of Association with a local lawyer and appoint one director as well as one shareholder for the business. This can be the same person for both.

If you are operating as a limited company, you will be required to appoint a company secretary.

Register The Business

After this, you can submit your company documentation to the Cyprus Registrar of Companies and pay the registration fee. This is around €165 for private limited companies.

Get A Tax Number

You will need to register with the Cyprus Tax Department for tax purposes and obtain a VAT number if it is applicable to your business and industry.

Open A Business Bank Account

The next step is to open a corporate bank account with a Cyprus-based bank. In order to do this, you will need to submit your company registration documents, identification of director and a proof of address.

Should You Start A Business In Cyprus?

The decision to start a business in Cyprus could certainly be a promising opportunity. The island’s tax regulations along with its location and business support make it a top choice for international entrepreneurs.

If you can prepare for some potential challenges along the way, you will be able to set up a successful venture especially in tech, finance, tourism or real estate.

Good luck!