Why to invest in Cyprus is a frequent question that the real estate specialists at Property Experts Cyprus get.
The island’s high quality of life with warm weather (300 days of sunshine) and stunning beaches (76 Blue Flag Beaches) together with affordable living costs attract foreigners from all over the world.
A continuous increase of foreign property buyers in Cyprus is anticipated due to the rapidly growing number of international HNWIs seeking opportunities abroad due to the situation in their home countries as well as smart investors aspiring to get ahead/leverage the global recession.
Following our experts’ article on best places for real estate investment in Nicosia, this article will examine which investment opportunities in Cyprus you simply can’t miss in the 21st century.
5 Reasons Why to Invest in Cyprus – Individuals & Businesses
Cyprus is not only one of the most popular relocation destinations in the world, but also one of the best locations for doing business. Overall, Cyprus and its inhabitants are friendly and welcoming.
1. Positive Economic Outlook
Despite the Covid-aftermath, ongoing Russian-Ukrainian war, and a global recession/inflation, Cyprus’ economy is standing strong with continued growth. The Cypriot GDP has an average growth rate of 3%, reaching 28 billion USD in 2022. This makes it one of the fastest-growing economies in the EU.
The key sectors of Cyprus’ economy are shipping, real estate, investment funds, and tourism. The overall economic and political situation in Cyprus is very stable and safe. The region is also not prone to natural disasters or other types of crises.
2. Strategic Market Access
As a full EU-member (Schengen candidate) and with a strategic geo-political location in Southeast Europe, Cyprus easily connects Europe, the Middle East, Africa, and Asia.
Low-cost airline Ryanair announced five new routes departing from Paphos airport from summer 2023 to Greece, Italy, France, and Poland as well as an increase of existing flight schedules.
3. Ease of Doing Business, Excellent Regulations, Qualified Talent
UK companies may be re-evaluating their business setup in the aftermath of Brexit, in which Cyprus can be an attractive alternative headquarter location. In fact, many international tech companies have recently headquartered in Cyprus to take advantage of the island’s attractive tax regulations and other incentives.
The low level of bureaucracy in Cyprus makes the destination particularly attractive for progressive entrepreneurs with powerful ideas.
Besides the native languages Greek and Turkish, English is widely spoken, as well as some Chinese and Russian. The workforce is generally well educated, easing business operations. Cypriot higher education has an excellent quality and is affordable at the same time.
The availability of free high-quality healthcare (GeSY) also for foreigners, is an added benefit for business people and employees. The healthcare tax contribution is at a low 2.65%-7%.
Compared to other popular investment immigration destinations like Greece or Portugal, Cyprus is best for financial optimization.
4. Low Taxes & Various Business Incentives
Cyprus has one of the most attractive tax systems in the world
- Personal income tax: 20%-35% (19,500 Euros per year tax-free); 20%-50% tax breaks may apply
- Corporate tax: 12.5% (lowest in Europe)
- VAT: 19% (reductions may apply)
- No capital gains tax or inheritance tax
- No tax on gains from the sale of securities
- No withholding taxes on dividends
Unique tax and financial incentives include energy sources, the film industry, intellectual property, the shipping industry, international trusts, and funds. Overall, you can deduct many expenses from tax to achieve an effective tax rate of around 5% for your business.
The island currently has 67 double tax treaties with other countries.
Tax Residency in Cyprus as a Non-Dom
In general, “domicile” is a legal concept, different from nationality, citizenship or residence. It is important for legal purposes like paying taxes, voting, and claiming benefits. When you are born, you receive the same domicile as your parents, which continues until you acquire a new domicile.
The non-domiciled status refers to individuals whose permanent home is outside a specific country.
Who can apply for Non-Dom Status inn Cyprus
- Under the “60 Day Rule”, online entrepreneurs and digital nomads aspiring to get tax residency will be considered non-domicile (Non-Dom).
- This tax resident status can be maintained for up to 17 years before being considered domiciled, which comes with different tax requirements.
Tax advantages for Non-Doms in Cyprus
- 0% Special Defense Contribution (SDC), meaning zero taxes on international dividends/stock investments, “passive” interest income, or profit from the sale of securities.
- Otherwise (for domiciled individuals), the tax rate on worldwide income on dividends is 17%, 30% on bank interests, and 3% on rental income.
In Cyprus, you have Non-Dom status if
- you spend at least 60 days per year in the country
- don’t spend more than 183 days in any other country
- are not a tax resident in another country
- maintain a permanent home in Cyprus (rented or owned)
- conduct (online) business in Cyprus
- you have not previously had a residency in Cyprus or are a Cyprus national
5. Attractive RBI Program
For non-EU HNWIs, investors, digital nomads, business people, and retirees from around the world, Cyprus offers one of the most attractive Residency by Investment programs with lifetime residency rights. The spouse, parents, and children (up to 25 years old) can be included in the RBI application.
The real estate investment route starts from 300,000 Euros at an estimated ROI of around 7% per year (when the property is rented out). Additional costs for a lawyer, stamp duty (0.15%-2%), and VAT apply. There is no immovable property tax.
Since March 2021, it is also possible to invest in commercial real estate, which can also be second-hand and more than two. Residential investment properties may not be second-hand and a maximum of two properties applies. Commercial and residential investments may not be combined.
This makes the Cypriot RBI programs one of the most affordable and attractive ones in the world. Cyprus is particularly attractive for international retirees as it grants access to a low pension tax rate of 5% for amounts over 3,420 Euros.
Watchouts When Investing in Cyprus
As always, it’s important to be aware of potential risks and downsides. When considering to invest in Cyprus, keep in mind the following:
- Get local legal advice before signing any paperwork.
- While popular tourist destinations basically guarantee a positive ROI, consider that these destinations might get crowded during peak holiday seasons. Slightly smaller destinations or hidden gems with added benefits could be a suitable alternative.
- Clarify beforehand if any restrictions to rent your property apply in your case (e.g. since 2023, a license for holiday rentals is required).
So, what projects and regions are best to invest in Cyprus? First, let’s recap.
Why to Invest in Cyprus – Recap
In general, real estate is one of the most attractive investment options as, for example, compared to stocks investors have a tangible asset that they can rent or re-sell. With increasing real estate demand in Cyprus, the risk of a potential loss is minimized.
Besides, as more and more companies relocate to Cyprus and investors set up startup companies and business hubs, the international and local workforce also need living space.
Moreover, the demographic development in Cyprus displays a positive population growth, which is unique compared to other EU countries, and ensures a continued demand for real estate.
In the last decade, the amount of new building permits has more than doubled, and continues to grow steeply. Residential skyscrapers with exquisite seafront views, luxury hotels, golf resorts and commercial areas are booming. More than 20 large-scale projects, valued at 8 billion Euros, are expected to change the landscape of Cyprus in the coming years.
Where to Invest in Cyprus
About half the properties in Cyprus, whether new or resold, are purchased by foreigners, typically under the RBI program or for business purposes.
Following the in-depth real estate market report by the specialists at Property Experts Cyprus, the most attractive real estate investment regions in Cyprus and recent development projects are as follows:
As the capital city of Cyprus, Nicosia is also the business hub of the island. Besides Limassol, Nicosia has the highest number of property transactions in Cyprus. The rental and office segment are particularly strong (local market).
- Unique residential commercial spaces and architectural focal points in Cyprus
- High-quality medical facility for locals and foreigners to boost medical tourism
- Talk to Property Experts Cyprus for for investment projects in Limassol
Together with Paphos, Limassol is the most popular destination for luxury residential property investments. The district with its many new skyscraper developments, casinos (including the biggest one in Europe), and golf resorts is favored by Russians.
- Limassol Marina: completed, triggered more development in luxury seafront spaces (residential/commercial combinations)
- Luxury residential developments
- Tourism projects: hotels and (medical) resorts
- Golf clubs
- Contact Property Experts Cyprus for for investment projects in Limassol
In 2020/21, Larnaca experienced a steep rise of property transfers. Larnaca with its many new development projects is attracting a large Israeli community of investors.
- Larnaca Marina
- The island’s first independent power producer, including eco-friendly projects
- The specialists at Property Experts Cyprus can connect you to further investment opportunities
One of the most popular investment regions for luxury homes besides Limassol. Exclusive five-star hotels shall attract luxury travel to the region. Paphos with its 17 Blue Flag and upscale properties is favored by British tourists and retirees.
- Golf resorts
- High-end residential developments, including smart eco-city projects
- Hotel & residential combinations
- Luxury retirement homes
- The island specialists at Property Experts Cyprus can help you with further information
This is the main holiday region in Cyprus, boasting 26 beautiful Blue Flag beaches.
- Ayia Napa Marina: one of the biggest investment opportunities in the district
- Message Property Experts Cyprus to discuss further investment projects
Why invest in Cyprus – The Takeaway
To sum it up, Cyprus is a popular investment hub. The country’s booming business industry, a revitalized travel sector post-Covid, and an increased demand among foreign HNWIs, investors, digital nomads, and retirees to escape the conditions in their home countries, make Cyprus the perfect destination for business, holiday, and permanent relocation.
New construction projects across Cyprus bridge the Mediterranean way of life with urban living and commercial spaces that serve as hubs for work, leisure, and entertainment.
So, why to invest in Cyprus?
- stable and continuously growing economy
- EU-based strategic market access – from Europe to Asia
- ease of doing business, excellent regulations, and qualified talent
- low taxes and various business incentives
- attractive investment immigration program (permanent residency)
Would you like to invest in Cyprus? The real estate specialists at Property Experts Cyprus are here for you to answer your questions and connect you with prospective investment opportunities.
Our team is also happy to assist you with local business setup in Cyprus or (business) relocation to the island.