No one can deny the importance of the Internet, e-commerce and the huge impact it has on our everyday lives. The current pandemic was also a significant contributor to the increased use of the Web, pushing people to spend more time online both for personal and business affairs.

What is E-Commerce

The internet has created a unified global marketplace where people can access any product or service no matter their location. You can shop anything you need from the comfort of your home and have the goods delivered to your door.

Cyprus is an ideal jurisdiction to establish your e-commerce business because of its favourable tax regime. E-business owners are eligible to the local tax regime of 10% only if their company is permanently based or managed in Cyprus.

The corporate world recognised the potential of such a system and dove in deep. Anyone can start an online business with minimal costs, especially a retail store with clothes, jewellery, crafts, or anything else. E-Business owners can also benefit from online marketing, networking and data collection to expand their revenue and profits.

Electronic Commerce (e-commerce) laws were created because of the ongoing technological and Information and Communications technology (ICTs) developments. They regulate any business activity that takes place online applying to both Business-to-Business (B2B) and Business-to-Customer (B2C) transactions.

E-Commerce Status in Cyprus

The Cyprus online trade, although relatively small, is rapidly growing, especially in recent years. Covid-19 helped increase the use of online services and transactions. Cypriot consumers are familiarizing themselves with the idea of doing business on the web.

The Cyprus Ministry of Commerce has developed this modern method of business, e-commerce. The majority of the country's population uses the internet for business transactions as well as personal matters.

The government is also improving its websites to encourage more people to settle their affairs easy and fast. Things like banking, paying your utility bills, or money transfers are easily done online without wasting time in long queues and traffic.

The Legal Framework for eCommerce in Cyprus

The e-Commerce law ensures the free movement of information society services between Cyprus and other EU/EEA countries. These include service providers, commercial communications, e-contracts, the liability of intermediaries, out-of-court dispute settlements, legal protection and cooperation among the Member States.

Cyprus has adopted new laws on the e-commerce industry to conform with European standards, mainly:

  • The Electronic Commerce Law (156(I)/2004) (the Law on Certain Legal Aspects of Information Society Services in Particular Electronic Commerce and Associated Matters of 2004)
  • Directive 2000/31/EC of the European Parliament and the Council of the European Union, June 8 2000

The 2000 Directive enforces provisions regarding the transparency of online service providers, the information requirements, commercial communications, e-contracts and limitations of liability of intermediary service providers. It also "enhances the business cooperation between the Member States and strengthens self-regulation principles.

Activities that the Directive regulates:

  • Online information services (magazines and newspapers)
  • Online advertising and marketing
  • Online selling of products and services
  • Online entertainment services
  • Any other free or sponsored/funded services

Cyprus legal system has also introduced the Law on Electronic Money (81(I)/2012). It regulates the issuance of e-money in Cyprus or another EU/EEA country; or a third country by a Cypriot national or resident or a legal person; and the authorisation and prudential supervision of electronic money institutions (EMI).

Taxation for e-commerce businesses

Cyprus is an ideal jurisdiction to establish your e-shop business because of its favourable tax regime. E-business owners are eligible to the local tax regime of 10% only if their company is permanently based or managed in Cyprus.

A permanent establishment is defined as a fixed place where a legal entity carries out its business activities.

The island's location is also considered favourable, as it is a link between Europe, North Africa and the Middle East.

The ongoing technological developments in e-commerce and e-commerce law allow business owners to expand their audience to the whole world. A more inclusive clientele means a potential increase in sales. Nevertheless, e-Commerce goes both ways; it benefits the business owners as well as the customers. As long as we plan our online business activities carefully and be properly informed about online consumer risks then our trading life will flourish.

How Our Law Firm Can Help You

The internet offers access to the international market; it requires knowledge and proper planning of taxes and legal affairs to ensure efficiency. Our expert lawyers can help you start an e-commerce business based in Cyprus and operate it successfully.

Initially, you will need to register your company in the Cyprus Registrar of Companies and develop a website. Then, you can advertise the products or e-services of your business. You need to make sure you offer online payments.

E-Commerce is a rapidly growing industry and we make sure to stay informed about new developments in the field. We provide you with adjustable solutions and expert advice on the following matters:

  • Online transactions and agreements
  • Online advertising
  • Data and privacy protection
  • Software development and licencing agreements

You can find more details about our e-commerce services here.

Bottom line

The internet and the ongoing technological developments allow business owners to expand their audience to literally the whole world. A more inclusive clientele means a potential increase in sales. Nevertheless, e-Commerce goes both ways; it benefits the business owners as well as the customers. As long as we plan our online business activities carefully and be properly informed about online consumer risks then our trading life will flourish.

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.