Foreign Direct Investments In Information Technology

Hello, I’m Vera Lyssiotis, a Greek Cypriot lawyer. Firstly, I would like to thank the organization for inviting me to this amazing and thought-provoking conference here in Brussels.

I am happy to present Cyprus’ experience and elaborate in Foreign direct investments in ICT, as we have made significant steps forward during the last couple of years.

In fact, we have such an ascending trend in research and innovation, that made us one of the strongest and robust Tech- hubs within EU and EMA region.

Since 2020 we have 150% increase in foreign, direct investments in ICT and went up 50 places to Rank the Top Ten for the recovery of investments following the pandemic.

Cyprus being a small country in the Mediterranean and a crossroad between 3 continents, has traditionally based its GDP on tourism, real estate and services. However, having recognized the importance to invest in tech and innovation and diversify our economy, we have managed to increase the GDP contribution from 2020 till today by 50%.

To achieve this, funding was made available through the Cyprus Research Innovation Foundation and European funding programs of Horizon Europe, for: state-of-the-art research and infrastructure, innovation and technology transfer, startups and scale ups.

For example, twenty-seven (27m) euros were allocated in the last three years for the creation of startups and innovative companies within many sectors, but mainly in the ICT space.

The eligibility criteria are for either the majority of shareholding to be third country nationals or public companies registered on any recognized stock exchange, Cyprus shipping companies, Cyprus high-tech – innovation companies.

The ultimate beneficial owner has to deposit the amount of €200k in an account held by the company or submit evidence of an investment, amounting to €200k for the purpose of operating of its business to Cyprus. The employees must receive a monthly income of 2500 euro plus social insurance plus national healthcare and then their spouses are automatically allowed work in the free market and their family to enjoy the relaxed lifestyle of Cyprus and attend one of the many multilingual international schools.

The BFU acts as a one stop shop and offers guidance throughout the business’ life cycle.

Two thousand (2000) companies were registered under this new scheme in 2022, 1400 Ukrainian, 200 Israeli, Lebanese and many others. 30,000 employees moved to Cyprus with their families, contributing in multiple ways into our economy.

Cyprus is a full member of the EU since 2004 and of the Eurozone since 2008, enjoying free movement of goods, services and capital.

Therefore, companies in Cyprus have full access to European markets plus benefiting from more than 40 EU trade agreements and 64 double tax treaties., a considerable advantage on structuring activities through Cyprus.

76 % of the population speaks English and the business language is English being unique within Europe.

The corporate Tax in Cyprus is 12.5%, making us the most attractive tax regime in Europe with zero (0%) tax on profits for disposal of securities 0% on capital gains deriving from the sale of investments, and most interestingly 80% deduction on corporate taxation for companies, who can satisfy the requirement of the IP box regime dropping the income tax to an effective tax rate of 2.5%. This provision, perfectly integrated with European standards, OECD (Organization for Economic Cooperation development) and all the main treaties and protocols on the subject

It applies for profit made from the use of an IP asset ie intellectual property, developed or exploited in Cyprus, and which is a result of research and development activities exercised in Cyprus. This can be patents, computer software, other IP assets which are legally protected. Income should come from royalties or other in connection with the use of the qualifying IP assets, licenses for the operation of such, compensation in relation to asset, capital gain and other income from the sale of the IP asset.

There are also tax deductions for investment into startups, for R&D expenditure and for investment in approved innovative companies.

Our government has also given incentives to high-net-worth individuals to come and live in Cyprus: they can enjoy a tax exemption of 50% for income that is higher than €55,000 per year and they can keep this advantage for the next 17 years.

In Cyprus there is a tax-free band of €19,500 for all Cyprus residents.

An applicant can bring his family to Cyprus, rent home, enjoy the low property prices the sunny weather and also enjoy the tax advantages.

So, by living in Cyprus either for 183 days a year or for 60 days, but no more than 183 days anywhere else in the world, one can become a Cyprus non- Dom tax resident and enjoy significant tax advantages.

By the 60-day rule, in addition one must hold an office under a Cyprus Tax Resident company and maintain a permanent home in Cyprus owned or rented.

Non-Cypriot resident who decides to move their personal Tax residence in Cyprus will automatically be considered as non-Dom for the next 17 years. They are completely exempted from tax on dividends, interest and rental income received from any country.

From all the above it is clear, that Cyprus is indeed a compelling destination for regional headquarters and a base for Tech companies to be established and attract Foreign direct investments.

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