Investment Sectors

1. Research and Development (R&D)

The Government of Cyprus acknowledging the importance of research, development, and innovation, is strongly committed in enhancing the scientific basis in Cyprus. The Research Promotion Foundation of Cyprus funded over €25 million worth of research projects and supporting activities, and the budget is expected to grow in the coming years according to the following five strategic categories:

  • Strategic & Multi-thematic Research and Development
  • Growth of National Scientific & Research Human Capital
  • Applied Research Development and Enterprise Innovation
  • Research Infrastructure Development and Large Scale Investments
  • International Networking and Collaboration in the field of R&D and Innovation

The highly educated work force in Cyprus and the high level of scientific personnel can be engaged in both research and business innovation and entrepreneurship, taking advantage of the Government research incentives. Thus, several opportunities exist for foreign investors to invest in the growth of R&D&Innovation in Cyprus.

Sector Synopsis

In addition to the research centres within the universities of Cyprus, there are numerous specialised research centres and knowledge institutes, including:

  • The Cyprus Institute (www.cyi.ac.cy) with 6 research centres on: energy, the environment, technology, ICT, human health, and economic development
  • The Cyprus International Institute (www.hsph.harvard.edu/cyprus) for the Environment and Public Health in conjuction with Harvard University
  • The Agricultural Research Institute (http://arinet.ari.gov.cy) with the objective to increase crop yield and improve quality of agricultural production by methods that are environmentally and socially acceptable
  • The Cyprus Institute of Neurology & Genetics (www.cing.ac.cy) specializing in neurology, molecular biology and all aspects of human genetics
  • More than 10 new policy measures are in place to accelerate innovation since 2006.
  • Trademarks, patent and copyright laws have been in place for the protection of the rights of the proprietors and of the general public
  • A plethora of Intellectual Property firms in Cyprus specialize in the protection of intellectual property rights, especially filing of trademarks and patents as well as copyright rights

Innovation and Entrepreneurship

Cyprus’ innovation performance has improved in the last 5 years and Cyprus is ranked 3rd within EU in the Innovation and Entrepreneurship dimension of the European Innovation Scoreboard 2007, indicating a High Potential Market. The Innovation and Entrepreneurship dimension includes:

  • SMEs innovation in-house
  • Innovative SMEs cooperating with others
  • Innovation expenditure
  • SMEs using organisational innovation Considering Innovation in general, Cyprus moved from the “catching up countries” to the “moderate innovators”.

2. Information and Communication Technologies (ICT)

One of the priority growth sectors in the Government of Cyprus Strategic Development Plan (2007-2013), is Information CommunicationTechnology. Specifically, Cyprus welcomes FDI to expand and/or develop projects on e-Government, e-Business,e-Learning, e-Inclusion, e-Health and overall ICT services. The sector is relatively advanced and well regulated by the Office of the Commissioner of Telecommunications and Postal Regulation. This regulator was established in 2002 and the fundamental principles of its operation, based on the acquis communautaire and the European experience, are transparency, equal treatment, non-discrimination and good faith in its relations with the licensed operators and the consumer. Cyprus was ranked 32nd out of 142 countries with score 4.66 out of 7.0 for the “Global Information Technology Report (GITR) 2012” -the “Networked Readiness Index 2012”.

Advantages/Opportunities

  • Established great infrastructure with nodes connecting Cyprus to the rest of the world
  • Switching to digital terrestrial TV broadcasting by 2011
  • Focusing on Wireless Access System Networks
  • Broad array of companies offering a variety of services including 50 software develop­ment companies, more than 10 internet service providers, 5 telecommunication com­panies and 15 web design companies
  • Excellent education level of the workforce in Cyprus (33.6% of the workforce of the age group 15-64 in 2011 had completed tertiary education)
  • Over 1000 graduates in the fields of mathematics and computing every year
  • In the audio, visual and film production services, more than 20 companies are operational, taking advantage of the sunny weather conditions in Cyprus
  • Government commitment to further expansion in this sector

3. Energy

Cyprus is committed to:

  • Ensuring Security of Energy Supply
  • Protecting the Environment
  • Fostering Healthy Competition in the Energy Sector
  • Encouraging Development of renewable energy technologies and production

Sector Synopsis

  • Cyprus ranks number one in the world in solar energy use for water heating in households.
  • 1.96 million toe (tons of oil equivalent) were consumed in 2009
  • 2.6% increase in energy consumption (2000-2009)
  • €20,33 million were given by a special fund created by the Government to promote the use of Renewable Energy Sources in 2009
  • 4.9% of the national energy needs in 2009 were met through Renewable Energy Sources
  • 6.8% increase in electricity consumption (2000-2009)

Relevant Authorities Energy Service of the Ministry of Commerce, Industry and Tourism (www.mcit.gov.cy)

  • CERA - Cyprus Energy Regulatory Authority (www.cera.org.cy)
  • TS0 - Transmission System Operation (www.eac.com.cy)
  • EAC - Electricity Authority of Cyprus (www.eac.com.cy)
  • CIE - Cyprus Institute of Energy (www.cie.com.cy)

4. Shipping

Cyprus is an internationally renowned shipping centre. The island’s merchant fleet has been growing steadily, reaching a top 3 position in Europe and a top 10 global ranking. The unique geographical position at the juncture of three continents, the advanced infrastructure and services, as well as the very attractive taxation and other advantages makes Cyprus an ideal location for ship owning, ship management and ancillary shipping-related companies.

Sector Synopsis

  • The merchant fleet of Cyprus is the 3rd largest in the European Union and the 10th largest in the world
  • Limassol is the largest Ship Management Centre in the EU and the 2nd globally
  • Nearly 1,000 ships exceeding 21 million gross tonnage are registered in Cyprus
  • More than 140 ship owning, ship management and shipping related companies maintain offices in and conduct international activities from Cyprus collectively controlling a fleet of 2,400 ships with 48 million gross tonnage
  • Shipping contributes over 5% of the Gross Domestic Product (GDP) for ship management and between 7%-8% of the GDP for ship owning (2011)
  • The Cyprus shipping sector employs approximately 4,500 people ashore and approximately 55,000 seafarers onboard Cypriot flag ships

New Shipping Tonnage Tax System

The European Union/s approval of a fully revised and upgraded Cyprus Shipping Taxation System in March of 2010 is a turning point for Cyprus and European Shipping. The new Shipping Taxation System covers the three basic Shipping activities in International Shipping, namely Ship owning, Ship management (including Crew Management) and the Chartering of vessels. The benefits of the new system may soon render Cyprus, the “Shipping Metropolis” of Europe. Ship-owners are exempted from Income Tax and are automatically taxed under the Tonnage Tax System. Ship managers and Charterers can exercise their option to be taxed under the Tonnage Tax System. For more information, please visit: www.mcw.gov.cy.

Key Industry Players

Some of the world’s largest international ship management companies have headquarters in Cyprus, including:

  • Bernhard Schulte
  • Columbia Shipmanagement Ltd
  • Dartmonth Shipping Limited
  • Hanseatic Shipping Company Ltd
  • Ocean Challenge
  • OceanWide
  • Schoeller Holdings Ltd
  • Synergy

Supervisory/Regulatory Framework

As a member of the European Union (E.U.), Cyprus has a regulatory framework that is harmonized with E.U. requirements pertaining to the acquis communautaire.

Competent Authority

The Cyprus Department of Merchant Shipping (www.shipping.gov.cy)

Trade Association

The Cyprus Shipping Chamber is the trade association of the shipping industry in Cyprus, promoting the interests of Cyprus shipping and furthering the reputation of the Cyprus flag, among other priorities.

Advantages/Opportunities

  • Excellent geographical position at the crossroads of Europe, Africa and the Middle East
  • “Open Registry” (one of two countries in the European Union), allowing non-Cypriot citizens to register ships under the Cypriot flag
  • Advanced maritime infrastructure (two deep sea multi purpose ports in Limasol and Larnaca)
  • Sound international relations
  • Favourable taxation regime and other benefits for ship-owners and crew members
  • Low ship registration fees
  • No income tax, estate duty or capital gains tax for
  • Cyprus-registered ships
  • No stamp duty on documents or mortgage deeds
  • Anonymity of beneficial owners through nominee or trustee shareholders
  • Recognition of Competence Certificates from many countries
  • Easy deletion from the Cyprus Shipping Register

5. Banking and Financial Services

The Cyprus banking and financial services sector is diverse, comprising of the domestic banks, the co-operative credit institutions (CCIs), the former international banking units (IBUs), insurance companies, and other companies that offer financial intermediation services.

There are many foreign banks from the Middle East, Europe, Africa and Asia that operate as subsidiaries, branches or representative offices in Cyprus. In 2004, Cyprus completely liberalised capital movements enabling the former IBUs to provide credit and full banking services as branches or subsidiaries of foreign banks.

Sector Synopsis

  • All banks maintain correspondent networks around the world and subscribe to SWIFT, Reuters, Telerate and other services
  • In 2011, the Financial Services sector accounted for 9% of GDP
  • The Cyprus banking sector operated almost 900 branches and employed over 12,800 people in 2011
  • At the end of 2011, the banking sector held almost 54 billion Euros in deposits and loaned over 53.8 billion Euros
  • The Cyprus banking and Financial Services sector is consisting of the domestic banks, the Co-operative Credit
  • Institutions (CCIs), the former International Banking Units (IBUs), insurance companies and other companies that offer financial intermediation services
  • Many opportunities exist in financial products and services such as fund registration, administration and management
  • Legal and banking structures (still) reflect British equivalents
  • Unique opportunities for cross-border and international transactions of private as well as public investment funds through reliable infrastructure and low costs.
  • Foreign operations of Cyprus Banks

Source: Association of Cyprus Commercial Banks Annual Report; Insurance Association of Cyprus

Bank Statistics (2012)

  • Six domestic banks and 35 foreign banks
  • Five subsidiaries of foreign banks from EU countries
  • Eleven branches of foreign banks from EU countries
  • Three subsidiaries of foreign banks from non-EU countries
  • Sixteen branches of foreign banks from non-EU countries
  • One representative office of a bank

Source: Central Bank of Cyprus

Supervisory/Regulatory Framework

Various regulatory authorities are involved in the monitoring of all financial institutions:

  • The Central Bank of Cyprus, an autonomous institution established in 1963, is the supervising authority of the banking system in Cyprus. The Central Bank of Cyprus follows the Basel Committee and European Union banking regulation directives. In January 2008, the Central Bank of Cyprus was integrated into the Eurosystem under the European Central Bank
  • The Cyprus Securities and Exchange Commission
  • The Co-operative Credit Societies’Supervision and Development Authority
  • The Commissioner of Insurance Companies (Ministry of Finance)
  • Authority for the Supervision of Pension Funds (Ministry of Labour and Social Insurance)
  • Cyprus has adopted International Financial Reporting Standards over three decades and has passed Anti Money Laundering legislation (Law188(I)/2007)

Industry Associations

  • Association of Cyprus Commercial Banks
  • Association of International Banks - Cyprus
  • Insurance Association of Cyprus

Opportunities

Cyprus welcomes investors interested in Banking and Financial Services. As the global market of business processes outsourcing and knowledge processes outsourcing is forecasted to expand significantly, Cyprus is well placed to attract more of this growing market by offering its expertise, financial stability, cost competitiveness, educated human resources as well as other comparative advantages.

6. Education

Cyprus welcomes investor interest in education. Cyprus is committed to further strengthening education and is focusing on reforms to achieve sustainable growth.The Ministry of Education and Culture is harmonising the education system in line with the European Standards & Guidelines for Quality Assurance. The Cyprus Council for the Recognition of Higher Education Qualifications (www.kysats. ac.cy) has been established since 1996. In addition, Cypriot educational institutes actively participate in EU programs, like the Eurydice Network and the ERASMUS program.

Sector Synopsis Infrastructure Statistics:

  • 3 public Universities, including one Open University, and 4 private Universities
  • 339 public and 29 private primary schools (2010/11)
  • 127 public and 39 private secondary schools (2010/11)
  • 33.6% of Cypriots in the 15-64 age bracket had a tertiary educational level (2011)
  • A large proportion of Cypriot tertiary students studied abroad (46.5% in 2011)
  • Establishment of the first British University in Cyprus, granted of its academic license by the Cyprus Ministry of Education and Culture.

Opportunities

With an average annual increase of 10.5% in the total number of tertiary students in the last 5 years, and with almost a third of all tertiary students studying in Cyprus coming from abroad, there is a great opportunity for new universities, colleges and research institutes to be initiated in Cyprus.

7. Professional Services

Cyprus is recognized as an international centre of excellence for the provision of professional services. The accession of Cyprus to the European Union and the euro zone, in conjunction with the developed, free market economy, strategic geographical location, advanced and attractive tax environment, extensive double taxation treaty network, and robust and transparent regulatory environment, provides FDI opportunities, including Business Process Outsourcing and Knowledge Process Outsourcing, leveraging the professional services sector.

Accounting Services

  • There are more than 3,000 active, English-speaking, registered accountants in Cyprus
  • Cyprus offers a wide range of professional accounting, auditing, management consultancy, taxation, financial advisory and other administrative service to both the private and public sectors
  • There are more than 120 limited accounting firms and 40 partnerships operating in Cyprus
  • Top international accounting firms are established in Cyprus providing services to international investors
  • Cyprus follows the International Financial Reporting Standarts (IFRS)

Supervisory/Regulatory Bodies

  • The Institute of Certified Public Accountants of Cyprus (ICPAC), registered in 1961, is the authorized body that regulates and supervises the accountancy profession in Cyprus. The right to join ICPAC is conferred to members who meet U.K. professional standards or equivalent
  • The Institute of Chartered Accountants in England and Wales and the Chartered Institute of Management Accountants have chosen Cyprus as the first country in the world to train U.K. Chartered and CIMA accountants outside the U.K. as well as the training of U.K. Certified Accountants on the island

Legal Services

Cyprus’s legal system is based on U.K. Common Law principles. As a member of the European Union, Cyprus has introduced the body of laws and regulations of the E.U. known as the acqui communautaire. There are over 2,100 registered advocates and 160 limited liability law firms providing a wide range of legal services in Cyprus. Over half of lawyers hold U.K. legal qualifications. High quality legal services are offered in specialist areas such as international law, corporate administration, and management services. Cyprus-based Law Offices cooperate extensively with international Law Firms

Supervisory/Regulatory Bodies

  • The Cyprus Bar Association, established under the Advocates Law Cap.2 in 1960, is the professional legal body
  • Under the Advocates Law, the Cyprus Bar Association, the Disciplinary Board and the Legal Council are the bodies regulating the legal profession in Cyprus

Opportunities

There are opportunities for cooperation with local service providers to service investors who invest in Cyprus or through Cyprus Many opportunities exist for the establishment of new offices or branches in Cyprus, taking advantage of its geographical position, its membership of the European Union, as well as its good relations with Middle Eastern, Central European and Eastern European countries

Further information

Institute of Certified Public Accountants of Cyprus (www.icpac.org.cy) Cyprus Bar Association (www.cyprusbarassociation.org)

8. Medical-Health Services

The Government of Cyprus aims in the differentiation and enrichment of the tourism sector by focusing on the promotion of health services. Health services tourism is a developing industry that combines medical treatment with vacation. Health services address the needs of ill tourists, providing medico-pharmaceutical care and stay in hospitals and recuperation centres.

Sector Synopsis

  • Expenditure of health services was €1,200 million in 2009, €552 million of which constitutes expenditure of the public sector and €648 million of the private sector
  • The share of expenditure as a percent of GDP increased was around 6.3% in 2009
  • Six public General Hospitals: two in Lefkosia, and one each in Limassol, Larnaca, Ammochostos and Paphos and around 80 Private Hospitals and Clinic
  • Approximately 60,000 health travellers came into Cyprus according to the CTO 2010 Study (UK-78%, Germany-9%, Israel and Middle East-7%, Sweden-3%, Italy-3%)
  • In 2011, EU Cross Border Healthcare Directive was passed/approved and will result in the increase of individuals looking for alternative health tourism locations
  • Other specialized medical institutes, offering services in:
  •  Cancer treatment
  •  Organ transplants
  •  Services on bone marrow
  •  Cardiac surgery procedures and non-invasive Cardiac surgery
  •  Neurology and Genetics

Advantages/Opportunities

Cyprus welcomes investor interest in Health Services. Several FDI opportunities exist to build and transfer or operate centers offering care in several fields including: pathology, general chirurgical, heart operation, plastic chirurgical, ophthalmology, gastroenterology, pediatric, otorhinolaryngology, obstetrics and gynecology, urology, orthopaedics. In particular, centers providing these specialized services:

  • Cardiac Surgery interventions
  • Kidney transplants
  • Renal insufficiency care
  • Oncology services
  • Preventive/diagnostic tests
  • Dental examinations/treatments
  • Surgical remedial or aesthetic surgery/treatment
  • Rehabilitation for people who need long recovery after surgery
  • Mental rehabilitation
  • Rehabilitation for patients with respiratory problems
  • Neurosurgery
  • Other medical services such as orthopedic, plastic surgery, gynecology, in vitro fertilization, gerontology, rheumatology, endocrinology, dermatology, nature cure, etc.

Cyprus focuses on health services and offers several opportunities for partnership between private companies and local government.

9. Wellness Tourism

The Cyprus Tourism Organisation aiming at the sustainable and balanced development of tourism in Cyprus, has recalibrated its strategy to support the development of new tourism products and services, which also includes the wellness tourism products and services.

Investment opportunities in wellness services:

1. Mineral Spas

Make use of the natural properties of thermal springs,gases and mud baths with healing properties.

2. Hydrotherapy centres

The properties of water, with or without chemical additives, are used for therapeutic reasons. Hydrotherapy centres may even provide gases and mud. The centres may be near thermal springs.

3. Thalassotherapy centres

The natural properties of sea water, its products (mud, seaweed) and local climate are combined to soothe body, mind and spirit.

4. Climatotherapy centres

The advantages of the local climate are used for therapeutic purposes, and extra services for health and beauty are provided.

Advantages

  • Sea and sun, moderate climate and rich natural environment
  • Exceptional sea quality which may contribute to an increase in thalassotherapy services
  • Existence of thermal springs
  • World renown hotels and resorts with international marketing and recognition
  • Already established tourism product which may be enriched and differentiated
  • Well trained human resources with strong track record in tourism
  • State commitment for the development and implementation of the wellness product

Opportunities

Possibilities for partnership between private companies and local government for the development of wellness tourism services

  • Utilisation of EU- and nationally-funded incentives
  • Enhancing the prerequisites for developing the sector including training, capacity building and infrastructure
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