Cyprus - the road to becoming the European technology hub
Contributed by Oxford Tax Solutions
30 September, 2021
Cyprus's strategic geographical position, high quality of living, robust legal framework, security and stability are a few reasons behind the re-location or expansion of many successful tech companies to Cyprus. A number of international companies are using Cyprus as a hub for software development, testing and marketing services, research and development activities and system integration.
Government officials have expressed their plans to brand Cyprus into a technology hub. Cyprus offers a number of programs aiming to boost entrepreneurship and innovation ideas such as the ARIS program and the IDEA:
ARIS is a programme that is funded by Bank of Cyprus and Deloitte and aims to provide entrepreneurs at their beginning stages with an innovative workspace.
IDEA (Innovate, Develop, Excel, Accomplish) Innovation Centre was originally founded in 2015 and is now the largest, non-profit organisation in Cyprus that supports start-ups' and innovative Small and Medium Enterprises (SME's).
Such programs give the opportunity to its participants to gain valuable guidance and mentoring from experts as well as giving entrepreneurs the support they need in order to develop their ideas into concepts. These programs provide a co-working space, coaching and peer-to-peer networking.
In addition to the above programs, a new Cyprus Tech Association was launched this year, with more than 100 tech companies, that will be used as a podium for all international information and communications technology (ICT) companies that have been established in Cyprus to come together. The association will support both existing and future foreign investors, assist in the development of SME's and focus on high potential technology start-ups.
Cyprus also holds a number of events and conferences for such businesses. On the 14th â 16th of October 2021, Reflect Festive will take place in Limassol with over 3,000 attendees and 53 speakers over the span of 3 days. Doers will unite in the heart of Limassol to bring forward the best of innovations, provide opportunities for business networking and act as an educational hub.
One of the Cyprus government's main goals is to also grow highly skilled and experienced technology talent locally while at the same time aiming to persuade global talent to relocate to Cyprus. Long-term investment in the tech sector can lead to increased productivity, development and economic progress for the society.
The island is a member of EU and Eurozone, providing access to 500 million EU citizens, 40+ EU trade agreements and a large amount of experienced, highly educated and multilingual workforce. Cyprus is in full alignment with OECD regulations and is expanding rapidly in various industries.
Office rental rates are on the lower-end in Europe as well as general office operation costs. Cyprus aims to ensure that tech workers feel at home. Any employee relocating to Cyprus can be at ease since their family will be able to enjoy high quality of healthcare, a number of private education facilities to choose from and a safe, relaxing way of living. In addition to this, the government has amended the Blue Visa legislation that will give access to local labour market to spouses of these workers.
Cyprus has also implemented the "Fast Track Business Activation Mechanism". Under this mechanism, the registration and incorporation of a company in Cyprus can be completed within 7 working this. This is assuming that all appropriate and required documentations are in place and have been submitted.
A company re-locating to Cyprus can also enjoy the very attractive Intellectual Property (IP) tax regime. Under this regime, 80% of qualifying profits generated from qualifying intangible assets will be deemed to be tax deductible. This can result in an effective tax rate as low as 2.5%. "Qualifying intangible asset" is defined as an asset which was acquired, developed or exploited by a person in furtherance of their business which is the result of research and development activities.
Cyprus is also considered as one of the most favourable EU countries when it comes to personal taxation rates. A number of expatriates work and live in Cyprus due to this.
Tourism has always been one of the main sources of the country's economy. However due to the pandemic and the drop in tourism, Cyprus has shifted its focus in the ICT sector. Cyprus has all the potential to build a leading environment for IT companies in Europe and the rest of the world and steer IT to being one of the leading sectors of the country's economy.
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