Why Investors Impacted by Brexit Should Consider Cyprus
- Feb 08, 2018
In the aftermath of the U.K.’s decision to leave the European Union, Cyprus has emerged as a strong contender in the race for the future financial hubs of the E.U. The Cyprus Investment Promotion Agency (CIPA), a nonprofit organization, is one of the primary groups spearheading efforts to attract investors to the island.
CIPA acts as a bridge between investors and governmental authorities by providing guidance and support in all steps of an investment cycle. Natasa Pilides, director general of CIPA, talked to Commercial Property Executive about the numerous reforms Cyprus’ government has already adopted to improve legislation, as well as the factors that make the country an attractive choice for investors following the U.K.’s Brexit decision.
Cyprus’ economy has recovered and emerged stronger from the financial crisis. What are some of the key aspects that make the country an attractive choice for investors?
Pilides: Cyprus’ economy has undeniably regained momentum, as consecutive upgrades by international credit rating agencies and economic outlook forecasts reflect the ground that has been covered and the dedication of the Cyprus government. An attractive tax regime with benefits for both individuals and companies and a regulatory structure closely aligned with the English common law system ensure a transparent, fast and efficient experience in establishing and running a business. Additionally, Cyprus has specific incentive programs targeting sectors such as startups and innovation, intellectual property and the film industry.
The country’s high availability of talent can cater to investors’ technical and professional needs, at a relatively low labor cost. Quality of life is also important, and more than 300 days of sunshine in one of the top five safest countries worldwide contributes to a relaxed and pleasant living environment.
Could you tell us about Cyprus’ tax regime and how it contributes to increased investor interest?
Pilides: Cyprus offers one of the lowest corporate tax rates in the E.U., at 12.5 percent; access to more than 60 double-tax treaties and tax directives; a competitive intellectual property regime; and exemptions for both corporates and individuals. Further benefits include a participation exemption regime for dividend income, foreign capital gains and foreign permanent establishment profits exemptions; notional interest deduction for investment into Cypriot companies; no succession; no immovable property taxes; and no withholding tax on outgoing dividend, interest or royalty.
What are some of the solutions Cyprus can provide to businesses looking to retain their access to the E.U. single market?
Pilides: As an E.U. member since 2004 and a member of the Eurozone since 2008, our island is a fully compliant platform. Positioned as a gateway between the east and west, Cyprus offers full access to the E.U. single market and serves as a link between markets in the Eastern Mediterranean, Asia and the Middle East. As a small but dynamic market, Cyprus can act as a sandbox for companies wishing to test the success of goods or services before escalating their activities into bigger markets.
Legislation has been continuously improved to support the economy. Can you tell us about some of the reforms still needed to help the investment sector?
Pilides: In past years, Cyprus has focused on a comprehensive plan to achieve sustainable economic growth. Some of the measures already adopted include a reform of the Registrar of Companies, a new framework for alternative investment funds and the promotion of e-government within the civil service. One major development is the creation of a Deputy Ministry for Shipping, which will start to operate in March 2018 with the task of developing the maritime sector. Several other initiatives are in the pipeline, such as the Deputy Ministry of Growth and Competitiveness and the Deputy Ministry of Tourism.
What are some of the new and upcoming projects, developments and contracts that have contributed and are expected to boost the island’s economic growth?
A €600 million investment and the first integrated casino resort—City of Dreams Mediterranean—is expected to generate more than €800 million by 2022, while creating approximately 6,000 new jobs and increasing tourist arrivals by 300,000 annually. The government has announced a series of infrastructure projects and plans of approximately €16 million to rejuvenate the Troodos Mountains to attract visitors to the region.
The commercialization of Limassol port is expected to generate a total revenue of €1.9 billion over the next 25 years. Plans for a new port and marina in the city of Larnaca are in the pipeline for 2018, involving a development of up to 510,000 square meters (roughly 5.5 million square feet). We are really excited about RISE, (the proposed Research Center on Interactive Media, Smart Systems and Emerging Technologies). It’s the first of its kind and has been designed to act as an integrator of academic research and industrial innovation.
Can you tell us about Invest Cyprus’ (CIPA) principal role?
Our mandate revolves around three main pillars: promoting Cyprus abroad as a world-class investment destination, offering facilitation and support to all potential and existing investors in Europe, and proactively advocating reform toward the enhancement of the country’s competitive environment. Our role is to make it easy for investors to look at Cyprus, working as the investor’s first point of contact.
Image courtesy of IMH