Cyprus is offering an enticing deal for tech companies and ICT specialists to relocate to the island as they seek more cost efficient and less crowded countries that offer a better lifestyle alongside strong telecommunication and digital infrastructures in the wake of the Covid pandemic.
Under the new Immigration Framework initiative, tech companies are entitled to employ up to 15 third-country nationals as directors and middle management executives, and any number of qualified third-country nationals in possession of required ICT skills, including: software and system engineers; ICT and enterprise solution architects; machine learning engineers; web developers and designers; cyber security specialists and AI, robotics and big data specialists.
As a member of the European Union, citizens from all European Economic Area (EEA) member states can freely work in Cyprus, without permission. The Framework means there are now no restrictions on the maximum duration of stay of third-country nationals, while employees with residence and employment permits have direct access to family reunification with their spouse and minor children, provided that the necessary conditions are met.
Investment has been boosted by a low corporate tax of 12.5% and a developed network of over 60 double tax treaties. Cyprus also offers an 80% tax exemption, on qualifying profits arising out of the exploitation of R&D intellectual property qualifying assets (Cyprus IP Regime). The effective tax rate for corporate income, taking advantage of this incentive, can be as low as 2.5%.
The initiative complements existing national strategies to integrate innovative tech that include generous fiscal incentives to attract IT start-ups and regional headquarters and is being spearheaded by Invest Cyprus, the national investment promotion agency.
Invest Cyprus chief executive George Campanellas said: “The world is changing and with Europe fast becoming a tech haven for talent and companies, Cyprus provides a very safe and attractive destination for tech firms and non-EU investors.
“We are now taking enquiries from tech companies on a daily basis. We have visited California and other tech hubs in the US, and cities in Israel, Ireland and Eastern Europe countries and we can see that Cyprus is well positioned to become among the top European destinations for setting up regional headquarters and development centres.”
Cyprus’s commitment to innovative research and its rapidly growing start-up ecosystem is supported by a generous support package with state and EU funds to spend on a number of key projects over the next three years. The funds will go towards various initiatives including the creation of new innovation clusters to bring together entrepreneurs, researchers and academia as well as digitalising over 160 state services and cybersecurity projects.
The dynamic FinTech movement in Cyprus comprises nearly 250 FinTech including start-ups, offering services ranging from real time investment portfolio securitisation and advanced performance analytics to automated order processing.
In Limassol alone, a community of more than 8,000 ICT professionals serve the FinTech industry, and it is home to some of the world’s leading names in RegTech, the ‘Internet of things’ (IoT) and cybersecurity. Among them is AmDocs, which has around 1,000 software programmers living and working in Cyprus, the multi-asset online social trading firm eToro, and Point Nine, an industry leader in outsourced operations, processing and reporting that was recently acquired by Mitsubishi UFJ Financial Group through its subsidiary in Cyprus.
Gaming platforms also feature prominently in the new tech space in Cyprus. This year Nexters Global, the Cyprus-based mobile and social game developer behind Hero Wars and Throne Rush, cemented a $1.9 billion deal with Kismet Acquisition One Corp, reflecting the strong progress it has made since moving its operations to Cyprus in 2017.
For entrepreneurs looking for a European base to begin operations, Cyprus takes some beating. Strategically located at the crossroads of Europe, the Middle East and Africa, Cyprus is an internationally recognised financial centre, with a sound banking sector and a well-established common law system. Both the banking sector and the fully comprehensive FX industry in Cyprus have opened to technological development and regulators and competent authorities take a positive pro-business approach to facilitating fintech activity – all of which offers optimal conditions for new and existing players.
To encourage the wide transformation of financial services, the Cyprus Exchange & Securities Commission (CySEC) launched the ‘Innovation Hub’ in 2018, a regulatory ‘sandbox’ to enable a seamless transfer of information as to how existing regulation applies to new products or business models, whilst also helping identify what regulatory frameworks might need to be established to meet evolving needs – all without stifling innovation.
The business models represented in the Hub include regulatory and AML compliance tools based on big data analytics and data reporting, the use of Distributed Ledger Technology (DLT), AI tools and a venture capital fund investing in blockchain start-ups.
A recent evaluation of Cyprus’s fintech laws and regulations by the Legal500.com guide concluded: “We do not identify any imminent risks to fintech growth. On the contrary, regulators’ positive disposition towards fintech should encourage its further development.”
“These continuous efforts to upgrade the legislative and regulatory regime in Cyprus, and adoption of new technologies to ensure investor protection and service quality, has also made the island one of the top emerging investment fund centres in Europe,” said Campanellas. “Its visibility has been greatly enhanced by being able to list Cyprus funds on international platforms such as Bloomberg, Clearstream, Morningstar and Refinitiv.”
Other thriving fintech companies include crypto-trading platforms and crypto-exchanges, and companies offering alternative payment solutions. Having adopted a national blockchain strategy in 2019, Cyprus has been highly successful in attracting investment capital, with 27 blockchain startups having raised a total of €142 million in funding. Cyprus has also been a trailblazer in blockchain. The University of Nicosia is the first university in the world to offer a Masters in Digital Currency and also the first to allow fees to be paid by Bitcoin.
“Cyprus has the capacity to become one of the great technology hubs in the world. Amongst our strategic priorities is to showcase Cyprus as an ideal EU location for international high-tech companies to base their operations and scale-up. In this context, we focus our efforts towards empowering a new generation of tech entrepreneurs, and nurturing a culture of innovation and entrepreneurship,” said Campanellas.