Cyprus: Doing Business In Cyprus

Last Updated: 23 July 2014
Article by Elias Neocleous & Co LLC

Most Read Contributor in Cyprus, December 2017


Cyprus is the third largest island in the Mediterranean Sea, with an area of 9,251 square kilometres. It is strategically located in the Eastern Mediterranean at the crossroads of Europe, Asia and Africa. Its total population is estimated at 1.1 million, of whom approximately 840,000 live in the area controlled by the Republic of Cyprus according to the 2011 census. Up to date information for the occupied area is unavailable.

The island was invaded in 1974 by the Turkish army and about 37% of the territory remains under Turkish occupation. The so-called Turkish Republic of North Cyprus is recognised only by Turkey, and all the references in this brochure to Cyprus relate to the legitimate government of the Republic of Cyprus. While political uncertainty continues to surround "the Cyprus problem", and it is hoped that there will be a satisfactory resolution in the near future, day-to-day business life is unaffected by the issue.

Cyprus is very well placed as an international business and financial centre. Apart from its strategic geographical location, relaxed way of life and attractive climate, it offers an excellent commercial infrastructure, a highly educated English-speaking labour force, a business-friendly environment, particularly in the area of taxation, a high standard of living and a low rate of crime. Living costs are moderate, and good airline connections and telecommunications and increasing alignment with the European position in matters of culture and trade make it an effective bridge between West and East. Its time zone is 7 hours ahead of New York, 2 hours ahead of London, 1 hour behind Moscow and 5 hours behind Beijing. The official languages are Greek and Turkish, but English is the lingua franca of business.

Cyprus is an independent, sovereign republic with a presidential system of government and a written constitution which safeguards the rule of law, political stability, human rights and the ownership of private property. Cyprus has been a member of the European Union since 1 May 2004. In preparation for EU membership Cyprus made significant structural and economic reforms that transformed its economic landscape and created a modern, open and dynamic business environment. Since accession, Cyprus has successfully faced the challenge of European integration, and has established itself as the natural portal for inward and outward investment between the EU and the rest of the world, particularly the rapidly-growing economies of Russia, Eastern Europe, India and China. Cyprus is a member of the Commonwealth, the Council of Europe, the IMF, the UN, the World Bank and the WTO, and a founder member of the Organization for Security and Co-operation in Europe.

On 1 January 2008 Cyprus adopted the euro as its currency.

The legal system, modelled on the English common law system since independence in 1960, is harmonised with the acquis communautaire of the EU. Cyprus is a signatory to a large number of international conventions and treaties, including an extensive network of more than 40 double taxation treaties.

Cyprus is a low-tax jurisdiction whose fiscal and regulatory regimes are aligned with EU norms, particularly the Code of Conduct for Business Taxation, and fully satisfy the

requirements of the OECD, the Financial Action Task Force of the OECD and the Financial Stability Forum. It has been on the OECD White List of jurisdictions complying with international best practice since its inception. The regulatory framework is designed to maintain the respectable and responsible reputation of Cyprus while allowing businesses to conduct their activities in an environment as free as possible from onerous bureaucratic restrictions.

Commercial environment

Cyprus has an open, free-market, service-based economy with some light manufacturing. According to the International Monetary Fund, in 2012 GDP per capita was USD 27,086, thirty-seventh in the world and on a par with Malta and the Czech Republic. The United Nations Human Development Index for 2012 ranks Cyprus thirty-first in the world as regards quality of life.

The government's economic policy is aimed at promoting and maintaining favourable investment conditions and supporting private initiatives. Foreign participation in the economy has been officially encouraged and liberalised for some time. Administrative procedures have been simplified and in all but a few strategic or specifically regulated industries such as banking there are no limits on foreign investment. Citizenship is available for significant investors. There is a growing awareness among foreign corporations and individuals of the particular advantages of using Cyprus as a business base for both inward and outward investment. At the 2011 population census, 24% of residents of the government-controlled area were non-Cypriots, of whom a small majority were EU nationals.

In recent years the inflow of approved foreign investment has increased considerably. Cyprus has 24 bilateral treaties for the encouragement and reciprocal protection of investments and more are under negotiation. The purpose of the treaties is to create and maintain favourable conditions for investments made by nationals of one treaty state in the other treaty state for their mutual benefit on a long-term basis, to guarantee the protection of such investments (including the repatriation of profits) and to establish procedures for settling any disputes that may arise. Cyprus is a signatory to the convention which in 1988 established the Multilateral Investment Guarantee Agency, a member of the World Bank Group.

There are many well-qualified lawyers who are experienced in all aspects of company law and tax planning. The principal international accountancy firms practise in Cyprus, as well as insurance, financial services and fiduciary companies. Limassol, Cyprus's commercial and shipping centre, is among the world's most important third party ship management centres.

The Cyprus telecommunications system is excellent and costs are among the lowest in Europe. CYTA, the government-owned service provider, operates fixed and mobile networks with a full range of voice and data services. Following liberalisation of the market a number of other service providers now offer similar services in competition to CYTA.

The government has established a free trade zone close to Larnaca offering excellent infrastructure, low rents and customs-free status. It also plans to establish a Software Technology Park to stimulate and encourage the flow of knowledge and technology among research, development and educational institutions, corporate bodies and other participants in the IT market.

The country's two international airports, situated near Larnaca and Paphos, which serve numerous international airlines, were reconstructed and upgraded in the past few years

Seaborne traffic is served by the two multi-purpose ports of Limassol and Larnaca, which are used as warehouse, distribution and container transhipment centres.


The far-reaching tax reform that took effect on 1 January 2003 brought about major changes to the Cyprus taxation system. An increase in the rate of VAT to 15% (since increased to 19% but still among the lowest rates in Europe) made possible a reduction of certain taxes and the abolition of others. The old, complex tax regime was replaced by a new system that eliminates discrimination and differential treatment between different categories of business and is simple and transparent. The distinction between local and international companies was abolished and the corporate tax rate is now uniform and only 12˝%, among the lowest in the EU. The maximum tax rate for resident individuals is 35%.

Exchange control

With the abolition of exchange controls on 1 May 2004 both residents and non-residents, whether individuals or corporate bodies, may hold and manage assets and liabilities in any currency and in any country. There is no distinction between nationals of Cyprus, nationals of other EU member states or third country nationals.

Anti money-laundering measures

The principal anti-money laundering legislation in Cyprus is the Prevention and Suppression of Legalising Proceeds from Illicit Actions Law of 2007, Law 188(I) of 2007 ("the Law"). The Law, which was passed on 31 December 2007, consolidates, amends and replaces the Prevention and Suppression of Money Laundering Activities Laws of 1996 to 2004 with effect from 1 January 2008.

The Law contains both suppressive and preventive provisions against money laundering, and fully implements the Third Anti- Money Laundering Directive, Directive 2005/60/EC of the European Parliament and of the Council of 26 October 2005 and the Financial Action Task Force's ("FATF") revised 40 Recommendations against money laundering and its 9 Special Recommendations against terrorist financing.

The Law criminalises money laundering from all crimes punishable with imprisonment in excess of one year as well as terrorist financing activities. All persons carrying on "relevant financial business" (including credit institutions, investment firms, insurance companies, lawyers, accountants, real estate agents and dealers in precious metals and stones) are obliged to implement strict procedures to preventing the abuse of their services for money laundering. Persons subject to the Law are required to implement procedures for customer identification, record keeping and internal reporting. They must ensure that their employees are aware of their obligations under the Law and provide adequate training to assist them in recognising money laundering transactions. Organisations must appoint properly qualified persons as "Money Laundering Compliance Officers".

The Law designates the Central Bank of Cyprus ("CBC") as the competent supervisory authority for all banks operating in Cyprus and assigns to it the responsibility of ensuring banks' compliance with the provisions of the Law. The CBC is also the supervisory authority for providers of money transmission services. The relevant professional bodies are responsible for their members' activities.

The CBC has issued useful guidance on customer identification, record keeping and other procedures for the prevention of money laundering, including the identification of beneficial owners of accounts and transactions and checks on the source and legitimacy of funds flowing through the banking system in Cyprus. These are available on the website of the Central Bank of Cyprus.

The Law established a special Unit for Combating Money Laundering ("MOKAS") as part of the Attorney General's Office, to take responsibility for the receipt and analysis of suspicious transaction reports and money laundering and terrorist financing investigations.

The measures taken in Cyprus for combating money laundering and terrorist financing have been evaluated several times by the FATF and the Council of Europe's Moneyval Committee, an FATF regional body whose membership comprises all European states, including Cyprus, which are not members of the FATF.

In its official report published in June 2000, the FATF recognised that the anti-money laundering system of Cyprus complies with international standards. Subsequent evaluation reports adopted by the Moneyval Committee commend the legal and other measures taken by Cyprus in line with international conventions and standards, and the efficiency and effectiveness of the practical implementation of those measures.


Cyprus has aligned its immigration law and regulations with the EU's acquis communautaire on matters such as entry and stay of third country nationals for self- employment and study purposes and long-term residence. Nationals of non-EU countries who have been residing in Cyprus for at least five years are entitled to Long-Term Residence Permits which have an indefinite limit; their issue is a requirement imposed on all EU member states. Visa obligations for foreign nationals are in line with EU obligations. Cyprus is a signatory to the Schengen agreement and is currently going through the pre-implementation evaluation procedure. A "fast-track" economic citizenship programme, offering accelerated citizenship by naturalisation to qualifying persons, is also available.

Work permits

Citizens of EU member states may work in Cyprus. If they are employed, they must obtain residence permits, to which they are entitled as of right. Nationals of other countries wishing to work in Cyprus require employment permits. These are granted for employment by a specific employer and are normally valid for one year, although they can be renewed .

As part of its drive to attract foreign investment the government has put in place a "fast-track" scheme for dealing with applications by foreign companies to employ workers from third countries, offering:

  • simplified procedures and conditions for granting work and residence permits for third country employees of foreign companies;
  • reduction of the time taken to examine applications;
  • indefinite work and residence permits for senior management and other key employees;
  • streamlined procedures for domestic staff employed by senior management personnel;
  • reduction of documentation required to support applications to the essentials; and
  • relaxation of re-entry visa requirements for third country workers who frequently travel outside Cyprus.

In particular, Russian businessmen in senior management positions who reside mainly in Cyprus may apply for permanent residence permits, and a fast-track procedure has been established for applications to be examined by the Immigration Control Committee. The Committee liaises closely with the Russian Chamber of Commerce and the Embassy of the Russian Federation in Cyprus in order to resolve any problems that may arise.

Economic citizenship programme

The Civil Registry Law, 141(I) of 2002 provides for non-Cypriots of full age and capacity to acquire citizenship by naturalisation. Applicants are generally required to have lived in Cyprus for seven years prior to submitting an application. In 2013 the Cyprus government introduced a fast-track procedure under which qualifying persons can obtain Cypriot citizenship by naturalisation on an accelerated basis. Applicants must own a permanent residence in Cyprus with a value of €500,000 or more excluding VAT and have no criminal record and no asset freezing orders outstanding against them. In addition they must satisfy at least one of the following criteria:

  • The applicant has invested at least €2 million in the purchase of shares or bonds (or a combination of the two) issued by the National Investment Company that is to be established and has donated €500,000 to the government Research and Technology Fund. Pending the establishment of the National Investment Company the funds may be deposited with the government.
  • The applicant has invested at least €5 million in Cyprus in the following:
    • acquisition of immovable property (residential properties, commercial properties, hotels, and other similar types of properties). Undeveloped land does not qualify;
    • acquisition of businesses or companies based and operating in Cyprus;
    • acquisition of shares of companies registered in Cyprus;
    • acquisition of financial assets such as bonds registered and issued by the Republic of Cyprus including those which will be issued by the Solidarity Fund in accordance with the National Solidarity Fund Law of 2013;
    • participation in a company or a joint venture which is undertaking the execution of a project in Cyprus. The investments concerned must be retained and not fall below the specified minimum for at least three years.
  • The applicant has deposits in Cyprus banks amounting to €5 million for a minimum term of 3 years. The deposits may be personal or corporate or held by a trust of which the applicant is the beneficiary.
  • The applicant has a combination of the investments specified in the preceding paragraphs amounting to at least €5 million.
  • The applicant has significant business activities in Cyprus, being a substantial shareholder or beneficial owner of a company incorporated and doing business in
  • Cyprus which has paid at least €500,000 per year to public revenues or for professional services over the preceding three years. If the company concerned is based in Cyprus and employs at least 5 Cypriot citizens the annual expenditure requirement is reduced from €500,000 to €350,000. If it is based in Cyprus and employs at least 10 Cypriot citizens the annual expenditure requirement is reduced to €200,000. If the annual payments fall short of the required minima the shortfall may be made good by financial investments described in earlier paragraphs. Up to two applications for naturalisation may be submitted in respect of a company.
  • The applicant was the holder of deposits in Bank of Cyprus or Laiki Bank at 15 March 2013 and incurred losses of €3 million or more as a result of the measures imposed on the two banks during March 2013. If the loss was less than €3 million the shortfall may be made up by investment in government funds or assets in Cyprus.

To view full article click here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions