Introduction

In light to Cyprus’ accession to the EU however, the harmonization liberalized the system and foreign investment on the island is now permitted and encouraged. New procedures are now in force within Central Bank of Cyprus and the Ministry of Commerce, Industry and Tourism, which simplify the evaluation of applications considerably.

Cyprus used to be a kind of a “closed and protected economy” until recently. In light to Cyprus’ accession to the EU however, the harmonization liberalized the system and foreign investment on the island is now permitted and encouraged. New procedures are now in force within Central Bank of Cyprus and the Ministry of Commerce, Industry and Tourism, which simplify the evaluation of applications considerably.

The existence of Cyprus’ impressive network of double tax treaties and the mutual promotion and protection of investments coupled with the above liberalization have again managed to make Cyprus an attractive location for foreign investments, with expanded possibility of international tax planning.

In most cases the foreign investment participation is permitted even up to 100%. This is the case for nationals from EU member countries, with the exception of the banking sector, where the maximum is set at a 50%. For nationals coming from non EU member countries, the investment participation varies. For publicly traded companies, is set at a maximum of 49%. The same stands for agriculture and livestock, import and distribution, tourist agencies.

A foreign participation of 100% with minimum investment of CYP 50,000 is allowed for investments in the following sectors: Professional Services, Computer hardware and software, Research and Development, courier services, entertainment, and the tourist industry. For investments in cargo freight, rentals, telecommunications, construction, environmental services and training, a minimum investment of CYP 100,000 is required.

In the case of investments in industrial units and bonded, the participation by non EU nationals can be 100%. Insurance and financial services, airline companies and media publications are considered on a case-by-case basis, while in saturated industries such as public utilities real estate, and higher education no foreign participation is permitted. In general trading, the participation is also set at 100% for non EU nationals.