Cyprus: A Start-Up Ecosystem On The Rise

 

Throughout the world, start-ups are a relatively new concept that simply defines a newly established company or organisation that is created to develop a usually unique and innovative product or service.

These are also known as Transformational Start-ups and are of utter importance not only for individual economies but for the whole world economy in general. Their importance originates from the fact that these companies on average tend to generate much greater economic growth than older companies. With Start-ups being the larger investors in Research and Development (R&D) in comparison with other type of companies, while also being great providers of employment and training for skilled labour, every government around the world is beginning to understand how important these entities are for long-run sustained economic growth. ¹

The Cypriot government along with a selective range of public and private organisations have also caught up with the importance of start-ups within an economy and have therefore made adjustments and implemented strategies in order to encourage the building of a start-up ecosystem in the island. For instance, not only are corporate tax rates in Cyprus one of the lowest within the European Union, but more importantly tech companies that own intellectual property can be exempt by up-to 80% from such corporation tax.

Further to this, investors that choose to put their money in innovative small start-ups can have their first €150,000 of income exempted from tax. Having secured over 60 Double Tax Agreements with different nations across the world, Cyprus also ensures that most investors will benefit from the avoidance of double taxation on their start-up income (both in Cyprus and in their home country).²

These economic incentives are of paramount importance for forward thinking entrepreneurs when choosing what the best location to set up their start-up is but also encourages new local entrepreneurs to consider starting up their own business. Though, independent entrepreneurs are not the only potential beneficiaries of such incentives as these are also crucial for potential international investors that look to choose in which country across the globe is their money most likely to be safe and what start-up environment is the likeliest one to enable the generation of a desirable profit.

Nevertheless, it must be noted that Cyprus as an economy has always been an inherently good location for start-ups. Being a member of the European Union while at the same time being geographically located at the crossroads of the Middle East, Africa, Asia and Europe this makes the island a prime location for international entrepreneurs looking to create their new business entities.

Finally, and largely due to Cyprus’s colonialization by Great Britain up-to 1960, a large part of the country’s population is bilingual with English being the second language that most Cypriots speak. This is a great benefit especially for new international companies as due to the fact that English is the widely accepted international language, the Cyprus labour pool and business environment will be easier to access and operate within as a language barrier will not be a problem.

These factors, among with many others, have contributed to the growth of start-up companies in the island and are the cause of Cyprus becoming an entrepreneurial and start-up hub in recent years. As a matter of fact, and as shown by the figure bellow, Cyprus ranked 4th in Europe in terms of cumulative capital investment attracted by Start-ups per GDP (Gross Domestic product) for the period between 2013 and 2018 and the island shows no signs of slowing down. For the same time period Cyprus ranks 7th in start-up cumulative capital invested per capita. This demonstrates that no matter what metric we choose to compare Cyprus’s start-up success with that of other countries, the island will always end up at the top part of any list.

 

For a list of sources, please click here.

 

For further information, please contact:

Doros Lycourgos, Partner

Papadopoulos, Lycourgos & Co LLC, Nicosia

e: d.lycourgos@paplyclaw.com

t: +357 22 676 126

 

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