Cyprus

Whenever a new legislation is introduced, it is easy to assume that everything in business will suddenly change. In Cyprus, the first months of this year have brought two significant developments: a tax reform that came into force in January, and new foreign direct investment legislation that began applying in April. At first glance, these may appear to be technical updates, but the bigger story is about trust, stability, and the certainty businesses require to invest on the island. While some rules have become stricter to align with global standards, many of Cyprus’ tax advantages remain, preserving its appeal as a business hub. These reforms are not just compliance developments, they reflect a broader shift towards a more transparent and predictable investment environment, where companies can operate with confidence. From tax haven to trusted hub Cyprus has long been associated with a favourable tax environment. Recent legal reforms, however, demonstrate a deliberate shift toward positioning the island as a transparent and stable business hub. While some rules have become stricter and certain corporate tax advantages have been recalibrated in line with international practices, such as anti-money laundering measures and corporate taxation, many of Cyprus’ attractive business features remain in place, notably the well-established IP box regime and the non-domiciled regime. For investors, the significance lies less in the technical amendments themselves and more in the clearer framework they create.  They are not simply rules to be complied with but part of a broader framework that contributes to a trusted and stable operating environment for businesses. This means that the island is not merely open to investment but offers a legal and commercial environment in which operations can be planned with greater certainty. The rules, in other words, are not just rules, they are signals of regulatory maturity and long-term policy direction. The Tax Reform The tax reform that came into effect in January exemplifies how legal change can simplify, clarify, and enhance certainty without fundamentally altering the system. The reform addressed key areas where uncertainty had previously existed, particularly in relation to corporate tax treatment and compliance expectations, providing clarity on grey areas that could create doubt for companies operating on the island. Rather than overhauling the entire tax system, the reform focuses on certainty and reliability. At the same time, some adjustments were introduced in line with global practice, particularly around corporate tax rules and anti-money laundering obligations. These changes reflect the growing expectation for transparency and alignment with international standards. For investors, the effect is significant. A clear and predictable tax framework allows companies to make more informed decisions. The reform demonstrates that Cyprus is committed to a system in which the rules are transparent, manageable, and dependable. It signals that the island values stability, and that planning can be undertaken with greater clarity rather than concern.   The FDI Legislation The legislation on foreign direct investment, which came into force on 2 April 2026, builds on Cyprus’ long-standing policy of encouraging FDI to diversify the economy. Historically, Cyprus has been an attractive destination for individuals, investors, and businesses, with no general restrictions on ownership or investment and no capital controls beyond standard EU requirements. The new law implements the EU FDI Regulation (2019/452) and introduces a national screening mechanism to review investments in strategically important sectors, particularly those linked to national security or critical infrastructure.  The legislation does not seek to close the market to foreign capital, but to subject certain investments to a clearer review framework, ensuring that Cyprus can welcome capital while maintaining a secure business environment. Together with the tax reform, this legislation illustrates Cyprus’ holistic approach to legal change, where stricter standards coexist with simplifications and retained advantages, creating an ecosystem where serious investors can operate effectively. Why legal rules do not operate in isolation Legal reforms rarely operate in isolation. Even changes that appear minor can ripple across corporate structures, financing arrangements, and contractual obligations.  Those effects are not necessarily negative, they are often part of what makes a legal framework more coherent and easier to assess. Businesses and investors notice them. Stability and legal certainty often outweigh the significance of any single tax rate or procedural requirement. The combination of tax reform and FDI legislation shows that Cyprus is thinking strategically about its business environment. The rules themselves become a mechanism to signal confidence, transparency, and reliability to those considering investment and long-term jurisdictional commitment. Rules as Signals, Not Just Requirements While each of these reforms carries its own pros and cons, their true significance lies in the broader strategic direction they reflect, positioning Cyprus as a credible and forward-looking international business hub, strengthened by both regulatory maturity and its strategic geographic location, aimed not merely at attracting investment, but at drawing serious investors committed to building long-term value. Legal change is about more than a list of obligations, it is about shaping perceptions and guiding behaviour. Cyprus’ recent reforms demonstrate that serious investors can rely on the island’s legal framework. Planning is simplified and uncertainty is reduced, but the system is not oversimplified or loophole-driven. The tax reforms clarify previously uncertain areas, while the FDI legislation ensures that serious investment is supported by a predictable and structured legal framework. At the same time, stricter requirements and increased alignment with global standards show that Cyprus is serious about maintaining a trusted, stable environment. The combination of simplifications and stricter standards ensures that the island remains attractive, but in a responsible, internationally aligned way. Investors may need to review their structures, but the broader significance lies not simply in the fact that the rules have changed. It is that the overall direction appears to be towards greater clarity, structure, and regulatory maturity. That is why legal change is rarely just about the rules themselves. Alexandros Neofytou - Associate    

Public procurement procedures are often surrounded by persistent misconceptions such as the perception that they are strictly formal processes where “the lowest price always wins” and where even minor errors automatically lead to exclusion. In practice, the legal framework governing public procurement is significantly more nuanced. From infrastructure and road construction projects to the procurement of medical equipment, school supplies and the construction of hospitals or educational facilities, public procurement in Cyprus operates within a complex legal environment. This framework combines national legislation with European Union directives and the jurisprudence of the Court of Justice of the European Union (CJEU). Although the Cypriot legal system has fully transposed the EU public procurement directives, practical application continues to give rise to misunderstandings, sometimes due to the complexity of procurement procedures and sometimes due to an incomplete understanding of the underlying legal principles. This article highlights some of the most common misconceptions encountered in practice and clarifies what applies under Cypriot and EU public procurement law. Does the lowest price always win? No. Since the adoption of Directive 2014/24/EU, contracting authorities are encouraged to apply award criteria that enable them to obtain works, goods and services of appropriate quality that meet their actual needs. The “most economically advantageous tender” (MEAT) may be identified on the basis of price, cost, or the best price-quality ratio. Consequently, the lowest price is no longer necessarily the decisive factor but rather one of several possible evaluation parameters, depending on the nature and characteristics of the specific contract. If a document is missing, is exclusion automatic? Not necessarily. The Court of Justice of the European Union clarified in Case C-599/10, SAG ELV Slovensko, that EU law does not preclude contracting authorities from requesting clarifications or allowing the correction of obvious clerical errors in a tender, provided that such intervention does not in substance amount to the submission of a new tender. Can contracting authorities impose any requirements they wish in tender documents? No. The principles of proportionality, transparency and equal treatment are fundamental pillars of EU public procurement law. The CJEU has emphasised, among others in Case C-76/16, Ingsteel and Metrostav, that minimum capability requirements must be linked to and proportionate to the subject matter of the contract. Financial and economic capacity requirements must therefore be suitable for assessing the financial and economic standing of the economic operator and proportionate to the importance of the contract. Requirements that exceed the actual needs of the contract may be considered disproportionate and may unjustifiably restrict competition. Do review procedures merely delay procurement processes? This perception does not reflect their actual function. In Cyprus, review procedures before the national review body (Tenders Review Authority) allow procurement errors or disputes to be addressed within relatively short timeframes. The availability of interim measures aims to safeguard the effectiveness of remedies without unnecessarily disrupting procurement procedures, unless such disruption is justified after balancing the interests involved, including the public interest. Can a public contract be freely modified like a private contract? No. Although the signature of a public contract creates a contractual relationship between the contracting authority and the contractor, the contract does not lose its public law dimension. Public contracts remain subject to principles of legality, transparency and competition. From an EU law perspective, contract modifications are particularly sensitive because they may affect the outcome of the original competitive procedure. The CJEU has consistently held that a modification which substantially alters the original terms of the contract may amount to a new award if it changes the economic balance of the contract in favour of the contractor, significantly extends the scope of the contract or introduces conditions that could have influenced the outcome of the original tender procedure. The rationale is clear: a contract awarded through a competitive process cannot be transformed during its performance into a substantially different contract without reopening competition. Are exclusion grounds applied automatically? No. Article 57(6) of Directive 2014/24/EU introduces the concept of “self-cleaning”. Even where a mandatory or discretionary ground for exclusion exists, an economic operator may demonstrate that it has taken sufficient remedial measures to restore its reliability. Such measures may include compensation for damage caused by active cooperation with investigative authorities and the implementation of effective compliance and internal control mechanisms to prevent future misconduct. Contracting authorities must assess these measures before deciding on exclusion and must provide adequate reasoning, considering the seriousness of the infringement and the principle of proportionality. Is the contract performance stage merely a formal phase? Not at all. Contracting authorities have a duty to monitor the performance of the contract, verify compliance with contractual obligations and properly document any modifications. Deviations from contractual terms without proper approval may lead to liability or even invalidate certain contractual arrangements. Are public procurement procedures unsuitable for small and medium-sized enterprises? On the contrary. EU public procurement law actively promotes the participation of SMEs. This is reflected in measures such as the encouragement of contract division into lots, restrictions on disproportionate turnover or experience requirements and the possibility for economic operators to participate as groups or consortia without a predefined legal structure. SMEs are not only able to participate; the system is designed to encourage their involvement. Must abnormally low tenders always be rejected? No. An abnormally low tender is one that raises doubts regarding its seriousness or the ability of the tenderer to properly perform the contract. In such cases, the contracting authority must first request explanations from the tenderer. Exclusion may only follow where the explanations provided are deemed unsatisfactory. Public procurement law does not penalise low prices as such; it addresses the inability to justify them. Can contracting authorities require a specific legal form for a consortium before submission of a tender? Generally, no. EU public procurement law seeks to maximise participation in competition. Economic operators may participate individually or as groups without being required to adopt a specific legal form at the tender submission stage. The CJEU has indicated that requiring a specific legal form in advance may infringe the principles of proportionality and equal treatment, particularly where it unnecessarily restricts participation by SMEs or groups of economic operators. Under Article 19 of Directive 2014/24/EU, contracting authorities may not require groups of economic operators to adopt a specific legal form to submit a tender or request to participate. However, they may require a particular legal form after the contract has been awarded, where this is necessary for the proper performance of the contract and objectively justified. Conclusion Public procurement is not merely an administrative process. It is a legal and economic mechanism that significantly affects competition, public spending and the functioning of markets. Misinterpretations, however minor they may appear can lead to distortions, disputes and unnecessary delays. A proper understanding of the applicable rules, combined with transparency and good faith between contracting authorities and economic operators, remains essential for ensuring a modern and reliable public procurement system that effectively serves the public interest. Maria Christofi – Senior Associate

Those dealing with cross-border family law matters in Cyprus—whether they concern issues of jurisdiction, child abduction, or divorce, maintenance and parental responsibility applications with an international dimension—are quite understandably likely to feel anxious during a volatile and transitional period of their lives, in which they must navigate a complex legal framework that requires specialized knowledge of both international family law and national legislation. The purpose of this article is by no means to provide legal advice, but rather to decode the main issues that arise from international family law in Cyprus and to briefly outline the legal framework, to somewhat ease any concerns. One issue that frequently arises is whether a family court has jurisdiction to hear a case. This is particularly evident, for example, in cross-border cases of parental responsibility. Within the European Union, the issue of jurisdiction in matters of parental responsibility is regulated by Regulation (EU) 2019/1111. According to article 7 of Regulation (EU) 2019/1111, the courts of the Member State in which the child has their habitual residence at the time the court is seized have jurisdiction. In particular, the relevant court carries out a holistic assessment of the factual circumstances that demonstrate the child’s genuine integration into their social and family environment. Regarding the matter of jurisdiction, a relevant issue is that of property disputes that may arise between foreign spouses who reside abroad but own property in Cyprus. Τhe Law on Family Courts Νο. 23/1990 and specifically section 12(1)(d) provides that jurisdiction lies with the family court of the district in which the immovable property is located. Furthermore, if a couple is struck by the scourge of marital breakdown and incompatibility, separates, and one parent abducts and wrongfully removes the minor child, then procedures under the Hague Convention on the Civil Aspects of International Child Abduction of 1980—of which Cyprus is a party—must be activated. This Convention governs the procedures to be followed in cases of child abduction and their retention abroad. It is problematic when a State is not a party to this Hague Convention and when there is not at least a bilateral treaty providing for cases of international child abduction. Of course, in a global society where families and people in general move across borders and countries, it is very common for problems to arise after the dissolution of a marriage, such as issues of maintenance and custody of minor children. For example, imagine that maintenance and parental responsibility court orders have been issued in a foreign country, and one parent wishes to relocate to Cyprus. What exactly happens in such a case? Are foreign court orders valid? In such cases, it is particularly important whether the foreign State where the relevant court orders were issued is a Member State of the European Union or not. If the order was issued in an EU Member State, then it is automatically enforceable under Regulation (EU) 2019/1111. However, if it is a foreign order issued in a third country outside the European Union, one must examine whether there is a bilateral treaty providing specific recognition procedures or whether the relevant States are both parties to another international convention governing the issue. For example, regarding divorces relevant is the Hague Convention of 1970, regarding maintenance matters the Hague Convention of 2007 applies, and regarding parental responsibility matters the Hague Convention of 2006 applies. In summary, with proper guidance, anyone can overcome their concerns. They can stand tall and gain courage, with the strength to stand independently on their own feet and walk with confidence. Whether it is a divorce, an international child abduction, an application for recognition of a foreign custody or maintenance order -any family difficulty- is something deeply personal, sometimes painful and psychologically burdensome. Nevertheless, whatever the question may be, the answer can always be one: the best interests and welfare of the children of each family.   Anna Demetriou, Advocate/ Partner at Elias Neocleous & Co. LLC/ Fellow of the International Academy of Family Lawyers.   Petros Papadopoulos, Advocate/ Associate at Elias Neocleous & Co. LLC.    

In cases of cross-border parental responsibility, borders do not merely divide States but also lives. Where different legal systems and perceptions of the child’s best interests intersect, jurisdiction emerges as the modern “apple of discord.” This is evident from the recent Court of Appeal decision dated 12/3/2026 in Civil Appeal No. E58/25 (W. S. v. J. I. K.), which concerned parental responsibility with an international element, where the key issue was whether the Cypriot courts had jurisdiction to hear the case. In the present case, the father filed an application for parental responsibility, seeking sole parental responsibility over his four minor children, as well as regulation of their residence and contact arrangements. Following the mother’s departure in 2021, the children had moved to and settled in Germany. This became the core of the dispute, as the father claimed that the relocation had taken place without his consent and characterized it as abduction. He reported the mother to the police and initiated proceedings under the Hague Convention for the repatriation of the children back to Cyprus. However, the mother argued that there had been an agreement between them for permanent relocation to Germany due to better living conditions and educational opportunities for the children. During the first-instance proceedings, the Limassol Family Court examined a preliminary objection raised by the mother concerning lack of jurisdiction. The court held that, based on the relevant European regulation, the children’s “habitual residence” at the time the parental responsibility application was filed was no longer in Cyprus but in Germany. Significant factors in this assessment included the children’s long-term stay in Germany, their schooling there, their social integration, and the lack of day-to-day living in Cyprus. Subsequently, the father appealed the first-instance decision before the Court of Appeal, arguing primarily that the lower court had improperly taken into account a decision of a German court which had rejected an application for the return of the children under the Hague Convention, despite that decision not having been recognized in Cyprus. He further argued that this decision should not have influenced the assessment of “habitual residence.” The Court of Appeal dismissed the appeal, holding that the first-instance court had not relied on the foreign decision in determining jurisdiction, but had merely acknowledged the fact of its existence. The substantive assessment of the lower court had been based exclusively on the factual circumstances of the children’s residence and on the concept of “habitual residence.” In support of this approach, the Court of Appeal adopted the ruling of the Court of Justice of the European Union in Case C-523/07, where it was stated that habitual residence “corresponds to the place which reflects some degree of integration by the child in a social and family environment”. Consequently, the Court of Appeal upheld the first-instance decision, finding that the Family Court had correctly ruled that it lacked jurisdiction, since the children’s habitual residence at the critical time was in Germany.   Therefore, the issue of court jurisdiction in matters of cross-border parental responsibility has intensified because of globalization and the continuous movement of people between States. Nevertheless, it remains a crucial legal issue that places the child at the center of the analysis while taking into account the child’s best interests and their actual integration into society.   Anna Demetriou – Advocate/Partner at Elias Neocleous & Co LLC / Member of the International Academy of Family Lawyers   Petros Papadopoulos – Advocate/Associate at Elias Neocleous & Co LLC