Cyprus

Cyprus: a top destination for investors and businesses

Upheavals in the Middle East and Brexit in Europe have helped Cyprus to become the top destination for investors and businesses.

With the turmoil in the Middle East, and the risks associated with the geopolitics of the area, and amid the Brexit chaos in Europe, investors are seriously looking at Cyprus as the best alternative for business and investments. They are wary and nervous even in places like Dubai which is witnessing a slump in property values and bankruptcies. Therefore investors are always on the lookout for safe and politically stable environments to invest, grow and prosper.

Over the last few years, Cyprus has been the favorite destination for business and companies to locate headquarters. Cyprus is the gateway to Europe and the EU market of 500 million consumers. It also offers a springboard to European and Western companies wishing to expand their operations eastward towards the Middle East and beyond. Cyprus has good and friendly relations with most Middle Eastern and Arabian Gulf countries.

According to Cyprus Profile which issues regular reports on business activities, projects, and development:

“Property sales in Cyprus also marked a significant increase thanks to foreign buyers and a growing number of attractive offerings for the luxury end of the market. One of the latest projects is the Sofitel Resort & Spa, a joint venture between Singapore-headquartered Oxley and Planet Vision on the Limassol beachfront, which promises to take luxury and lifestyle residences to the next level. Property purchases completed by overseas buyers increased 16.5% year-on-year in 2017, with overseas buyers making up 30% of all real estate transactions.”

Cyprus continues to be on the top of the list for investors, holiday-home seekers, expats, and retirees. With a strategic location, Cyprus is an ideal bridge between the Middle East and Europe. Even Brexit has also provided opportunities. The major global shipping insurer, London P&I Club, announced in July 2018 that it was setting up a ‘post-Brexit subsidiary’ in Cyprus.

A TOP FDI DESTINATION

Interest in real estate has partly been spurred on by the incentives offered in the country’s permanent residency and citizenship programmes, which require investment in property. According to some reports the schemes are said to have brought in over €5 billion ($5.6 bn) in revenue over the past two years, with most enquiries coming from Russia and China. Recent studies conducted by global immigration experts rank the Cyprus Investment Programme amongst the top ten worldwide, and one of the strongest in the EU.

The programme was revised in September 2016, making it even more attractive. The investment required is €2 million and a residential property worth €500,000. If an investor chooses to invest only in residential properties in Cyprus, their investment is limited to €2 million. Investment options include real estate, investment in Cyprus companies, investments in Alternative Investment Funds and bonds issued under the auspices of the Cyprus Securities and Exchange Commission (CySEC), or a combination of the above.

AN EXPERT’S VIEW FROM THE INSIDE

Speaking in London to a group of businessmen Stella Kammitsi the Head of the International Corporate Department of Chryssafinis and Polyviou LLC since 2006, told potential investors in London recently that Cyprus has a favourable tax regime, a multi-lingual educated work force and a safe environment.

Cyprus offers a well-developed infrastructure and a transparent legal system and a friendly environment. It has a full membership in the European Union and the Eurozone (relates to Customs status). A liberal modern economy and an excellent range of professional services, banking, telecommunications and transport infrastructure”.

Cyprus is busy building new large-scale real estate projects, luxury marinas and pioneering tourism infrastructure, as well as exciting new opportunities in the energy sector, which are all reinforcing Cyprus’ appeal as an interesting investment location. Already known as a popular holiday destination, the island is home for many international corporations offering exciting business and investment opportunities.

Companies and businessmen wishing to relocate and establish businesses in Cyprus will not encounter massive bureaucratic obstacles like in some countries. Of course there are legal formalities and procedures to be followed and complied with. As Stella Kammitsi has indicated Chryssafinis & Polyviou LLC is one of the leading Cyprus law firms that offers a wide range of services ranging from banking and finance laws to labour and competition law, employment law etc. and its International Corporate Department specialises in company law, tax, trust, succession planning, immigration and other related matters.

When Kammitsi was asked to explain the latest residency tax rules for individuals, she explained:

“The Cyprus Parliament in July 2017 has amended the Income Tax Law to provide that an individual is considered as a Cyprus tax resident provided (a) he stays in Cyprus for at least 60 days during the year of assessment; (b) he does not stay in any other state for a period exceeding in total 183 days in the same year of assessment; (c) he pursues business in Cyprus and/or works in Cyprus and/or is a director in a company tax resident in Cyprus at any time during the tax year; and (d) he maintains a permanent residence in Cyprus, which can be either owned or rented by him.

This has attracted a lot of interest for international businessmen who have opted to become tax residents in Cyprus taking into consideration the various tax benefits that Cyprus offers and electing for their worldwide income to be taxed in Cyprus. One of the major tax advantages being that there is no capital gains tax on sale of shares and no inheritance tax.”
EXPANDING DEVELOPMENT

New luxury developments are under construction across the island backed up by foreign investments. The FDI (Foreign Direct Investment) into Cyprus has increased 8 fold in 2017. With money flowing in from the Middle East, USA, and Russia. Cyprus’ liberalized Foreign Direct Investment Policy, both for EU citizens and investors from third countries, along with its favorable tax regime makes it one of the most attractive centers for FDI in Europe.

According to financial media and business reports: “Improvements in Cyprus’ macroeconomic and financial environment are reviving international interest in around 30 major development projects on the island, and with the government expecting a healthy 3.5% growth in 2018, the island’s FDI appeal is on an upward trajectory.

Investment opportunities in Cyprus’ large-scale projects span various sectors, including high-value tourism and housing developments, projects with a special focus on golf courses and luxury marinas, as well as education and energy.”

Such developments have also been recognized internationally, as Global Finance magazine’s ‘FDI Superstars 2018’ ranked Cyprus 8th out of the top 20 countries globally for FDI performance and appeal.

TOURISM SECTOR IS EXPANDING

Tourism-related real estate and infrastructure continue to be one of the most attractive investment opportunities in Cyprus, evidence of this is the number of foreign investors closing multimillion-euro deals in the last three years.

Agia Napa Beach in Cyprus

3.6 million Visitors spent their holidays in Cyprus in 2017. By 2025 some 5 million will visit Cyprus and spend a total of Euro 3.5 billion ($4 bn). Local media sources talk about the construction and investment in multipurpose projects such as luxury marinas, golf courses and more recently the island’s first-ever and only integrated luxury casino resort, are all part of the plan to upgrade Cyprus’ tourism product.

Investment in the Ayia Napa Marina project is seeing a transformation of the area, while the casino, which is being run by the globally renowned Melco, will have extensive facilities and exceed five-star status. The investment for this mega project is expected to exceed €500 million – making it the first of its size in Europe.

A PROMISING ENERGY SECTOR

Cyprus’ hydrocarbon discoveries have captured the attention of several global energy giants, such as ENI, Kogas, ExxonMobil, Royal Dutch Shell, and Total, who have all secured exploration licences, with further drilling in Cypriot waters expected in 2018.

ENI announced a promising discovery in Block 6 in early 2018, which initial estimates put at around 6-8 trillion cubic feet (tcf). ExxonMobil was due to drill in the second half of 2018 and Cyprus could be signing its first gas export deal in 2018. US-company Noble Energy made the first natural gas discovery in 2011, with estimated reserves of 4.54 tcf in the Aphrodite field.

Cyprus has been deepening cooperation with Egypt, Israel, Jordan, Lebanon, Greece and Italy, positioning itself as a convenient regional energy hub in the eastern Mediterranean.

SHIPPING AND MARITIME SERVICES

Cyprus plays a leading role in the international maritime industry mostly due to the attractive tax system for ship owners and ship managers and due to its ratification of major international maritime conventions. Furthermore the island’s strategic location at the crossroads of Europe, Asia and Africa played a crucial role in enhancing its success as an international shipping centre.

Since 1963 Cyprus has attached ship entrepreneurs developing into an attractive shipping centre combining both a sovereign flag and a resident shipping industry. The Cyprus Ship Registry ranks tenth among international fleets and Cyprus is amongst the top five countries and territories in the world with the largest number of third party ship-management companies.

In conclusion I refer the reader to this article in the London FT 31st May 2018 – Cyprus developments offer a passport to the sun.

Nehad Ismail

Nehad Ismail is a journalist based in the United Kingdom. He writes on the economic issues particularly oil and gas. He has a special interest in the Middle East. He worked 15 years in the oil industry and 6 years in the media. He worked in a newspaper and in a TV channel presenting a political program between 2005 and 2010 (Arab News Network). His articles appeared in many esteemed media. He reviewed more than 12 books.
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