Cyprus
Nestled in the eastern Mediterranean, Cyprus has long been a sought-after destination for investors seeking a strategic business foothold in Europe and beyond. With its rich history, favourable business infrastructure, strong economy, and appealing opportunities, Cyprus remains an attractive jurisdiction for both domestic and foreign entrepreneurs, organizations, and corporations.
Business environment
Changes in 2026 versus 2025 – What has changed in the last year that has impacted the way business is conducted?
Over the past year, Cyprus has experienced several significant developments that have impacted the business environment:
Political motivation
EU Council Presidency 2026: Cyprus holds the EU Council Presidency in the first half of 2026, focusing on strengthening EU strategic autonomy, migration management, internal security, and economic competitiveness. During this period, Cyprus will coordinate Council work, facilitate legislative negotiations, and host key EU meetings, raising the island’s visibility in European policymaking.
Economic Indicators and Fiscal Policy
Inflation and Fiscal Surplus: Inflation continued to stabilise, remaining low at around 1.2% in January 2026 and 0.9% in February 2026, down from 2.2% in 2024 and 3.9% in 2023. Cyprus recorded one of the lowest inflation rates in the euro area,· (1) reflecting strong price stability driven partly by declining energy prices and modest increases in services and food. The country also maintained a strong fiscal surplus, contributing to overall economic stability. (2)
Tourism Sector
Record-Breaking Tourism Figures: In 2025, Cyprus’ tourism sector continued its strong performance, with over 4.5 million visitor arrivals in 2025,(3) and record tourism revenues of €3.69 billion,(4) representing a 15.2% increase from €3.2 billion in 2024. This sustained growth highlights the sector’s robust post-pandemic recovery and underscores its critical role in the national economy, contributing to roughly 14% of Cyprus’ GDP.
Tax reform
Cyprus implemented a comprehensive tax reform that came into effect on 1 January 2026, introducing a more modern, transparent and predictable tax framework aligned with EU standards.
Corporate Tax Adjustment: As part of the 2026 tax reform, Cyprus increased the corporate income tax rate from 12.5% to 15%, aligning with the global minimum tax framework while maintaining one of the most competitive corporate tax rates within the European Union.
Reduced Taxation on Dividends: To balance the corporate tax increase and enhance Cyprus’ attractiveness for investors, the Special Defence Contribution (SDC) on dividends has been significantly reduced from 17% to 5%. In addition, the deemed dividend distribution rules for profits generated after 1 January 2026 have been abolished, simplifying the tax system and improving predictability for businesses.
Attractive Intellectual Property (IP) Regime: The reform maintains Cyprus’ highly competitive Intellectual Property (IP) regime, which continues to provide substantial tax advantages for companies engaged in research, development and innovation, reinforcing the country’s position as a regional technology and innovation hub.
Introduction of Crypto-Asset Taxation: The reform also introduces clearer rules for digital investments through the implementation of an 8% flat tax on gains from the disposal of crypto-assets, with the ability to offset losses within the same tax year, providing greater certainty for investors in the rapidly growing digital asset market.
Abolition of Stamp Duty: The reform also provides for the full abolition of stamp duty, reducing transactional and administrative costs for businesses and individuals. This measure simplifies documentation requirements and improves the ease of doing business, particularly for commercial agreements and financial transactions.
What are the advantages of your country as a business location?
Cyprus boasts a strategic geographical position, situated at the crossroads of Europe, Asia, and Africa, making it a prime location for businesses seeking entry into these lucrative markets. This unique positioning presents a wealth of opportunities for international enterprises. Additionally, Cyprus offers an appealing tax system with one of Europe’s lowest corporate tax rates at 15% and an extensive network of double tax treaties. Further, the country has introduced a favourable Intellectual Property (IP) regime that provides tax incentives for companies holding IP rights, reducing their effective tax rate to a very low level, resulting in one of the most competitive IP tax regimes in Europe for IP-related profits.Such tax advantages make Cyprus an enticing choice for foreign investors seeking to optimize their financial profiles.
Additionally, the country is included on the OECD’s whitelist of jurisdictions and has also received positive credit rankings in 2023 from Fitch (BBB), Moody’s (Baa2) and S&P (BBB). Cyprus also finds its long-term credit rating 3 grades above the minimum investment threshold, specifically at BBB High and BBB+ by DBRS Morningstar and the Germany-based agency Scope Ratings.
The island further stands out due to its well-developed infrastructure, including modern telecommunications, global ports, and international connectivity. A skilled and educated workforce, proficient in English, strengthens Cyprus’s appeal for companies seeking to establish their operations. Beyond this, Cyprus diversifies its business sectors, extending well beyond traditional domains like tourism and real estate. Thriving in sectors such as ICT, fintech, shipping, renewable energy, entrepreneurship and innovation, investment funds, filming, and higher education, Cyprus’s economic prospects remain robust.
Moreover, its straightforward legal system simplifies business establishment and operation. Furthermore, Cyprus offers accessible residency programs for foreign investors, allowing them to secure residency through varied investment opportunities. Lastly, Cyprus’s European Union (EU) membership opens doors to the EU’s market and free trade with other member states, enhancing its business attractiveness on a global scale.
What are the business structures in your country?
Private limited liability company by shares
Such a company has share capital, and the liability of its members is limited by its memorandum of association to any unpaid amount for the shares they hold respectively. A private limited liability company by shares must have at least one (1) shareholder but no more than fifty (50), exclusive of any persons who are or have formerly been in the employment of the company and are or still continue to be members of the company. A private limited liability company cannot offer its shares for subscription to the public. This is the most common type of company.
Public limited liability company by shares
This company has share capital and the liability of its members is limited by its memorandum of association, to any unpaid amount for the shares they hold respectively. A public limited liability company may invite the public to subscribe for its shares and may be listed on the stock exchange. The number of members of a public company must be at least seven (7). The minimum authorized and issued capital of a public company, which is offered for subscription, must be twenty-five thousand, six hundred and twenty-nine euros (€25,629).
Limited liability company by guarantee without share capital
This type of company does not have share capital and its members act as guarantors rather than shareholders. The liability of its members is limited by its memorandum of association, up to the amount that the members have undertaken to contribute respectively to the assets of the company in case of dissolution.
Limited liability company by guarantee with a share capital
This company has share capital and the liability of its members is limited by its memorandum of association, on the one hand, up to any unpaid amount for the shares they hold, and on the other, up to the amount that its members have respectively undertaken to contribute to the assets of the company in case of dissolution. This type of company can be either private or public company. If it is a public company, it can invite the public to subscribe for its shares.
Variable capital investment company
This company is a limited liability company by shares. The main characteristic of this type is that, according to its memorandum of association and the rules governing its operation, its shares do not have a nominal value but rather a variable value. The company can be incorporated after it receives a relevant license from the Cyprus Securities and Exchange Commission (CySec) to operate as Collective Investment Funds (CIF).
A variable capital investment company (VCIC) can take the form of either a private or a public company, depending on the type of collective investment fund (CIF) that such variable investment company will take (UCITS, AIF, AIFLNP, RAIF). The number of members of a private company can range from one (1) to fifty (50) members while the number of members of a public company must be at least one (1).
General Partnership
In a general partnership, all partners are general partners and therefore every partner is jointly and severally liable with all the other partners for the debts and obligations of the partnership that arise while he/she is a partner. A general partnership must have at least two (2) partners.
Limited Partnership
A limited partnership must comprise of one (1) or more persons who will be the general partners and shall be responsible for all the debts and obligations of the partnership, as well as one (1) or more persons who shall be the limited partners who will contribute a certain amount or property, valued at a specific amount to the partnership and to which persons a specified number of shares may be assigned. Limited partners are not liable for the debts and obligations of the partnership beyond the amount they have contributed. A limited partnership may have a share capital and be limited by shares. Regardless of whether it has share capital or not, a limited partnership is not considered as a legal entity with an independent legal personality.
Economy
Currency strength
Cyprus adopted the Euro as its official currency on 1 January 2008. The Euro is one of the top 10 strongest currencies in the world and is the official currency of 20 out of the 27 countries that form the European Union. Euro coins and banknotes entered circulation in 2002, and the currency is free-floating.
Inflation rates
Inflation (HICP) in Cyprus has continued to moderate in recent years. Annual inflation declined to 2.2% in 2024, down from 3.9% in 2023, reflecting easing price pressures. More recent data show inflation remaining relatively low, with the Harmonised Index of Consumer Prices (HICP) rising by 1.2% in January 2026 compared with January 2025, before easing further to 0.9% in February 2026. These figures indicate a continued stabilisation of prices, supported in part by declining energy costs and moderate increases in services and food prices.
Main trade sectors
Tourism remains a cornerstone of Cyprus’ economy, with 2025 marking a record-breaking year for visitor arrivals and revenue. The sector welcomed over 4.5 million tourists and generated approximately €3.69 billion in revenue, representing a significant increase compared with 2024. The government continues to promote Cyprus as a premier travel destination, leveraging its rich history, picturesque landscapes, and strategic Mediterranean location. Despite the sector’s strong performance, continued instability linked to the Middle East conflict involving Iran may pose potential risks to Cyprus’ tourism industry. However, bookings remain stable and there are currently no indications of widespread cancellations.
Real estate remains a strong driver of economic activity, attracting both domestic and foreign investment. Cyprus’ property market showed resilience in 2025, with 19,304 property transfers worth €4.55 billion, slightly up from 19,155 transactions worth €4.12 billion in 2024.(5)Limassol, in particular, remains a hotspot for commercial and residential property development, with high-end projects catering to international buyers.
The financial services sector continues to thrive, with banks, insurance companies, and investment firms benefiting from Cyprus’ favourable regulatory and tax environment. The funds industry has seen exponential growth, attracting a diverse range of international investors.
The ship management industry also remains robust, contributing significantly to the economy. Cyprus’ shipping sector accounts for around 7% of the country’s GDP and employs more than 9,000 people onshore, as well as about 80,000 seafarers on vessels managed by Cyprus-based companies. The sector continues to strengthen Cyprus’ position as a global maritime hub, ranking 12th worldwide in fleet capacity and flag according to the United Nations Conference on Trade and Development (UNCTAD).(6)
The energy sector has continued to advance, with Cyprus strengthening its role in the Eastern Mediterranean’s evolving energy landscape. The government’s strategy focuses on expanding renewable energy, developing LNG import and regasification infrastructure, promoting regional electricity interconnections, and advancing the exploitation of offshore natural gas reserves. Cyprus has recorded six significant gas discoveries in its Exclusive Economic Zone, including Aphrodite, Calypso, Glaucus, Cronos, Zeus and the recent Pegasus discovery, with development plans for key fields progressing in cooperation with international partners. At the same time, investments in solar power, energy storage and grid upgrades are supporting the country’s transition toward a cleaner and more secure energy system in line with EU sustainability objectives.(7)
Technology and innovation have become major economic drivers, with Cyprus emerging as a regional hub for fintech, ICT services, and digital businesses. The sector has expanded rapidly in recent years, with international IT, fintech, and cybersecurity firms establishing operations on the island and creating a growing ecosystem of high-skilled employment.
According to industry estimates, the technology sector now represents a significant share of the economy, with ICT previously accounting for around 15% of GDP and generating approximately €4 billion in revenue. As Cyprus moves forward in 2026, these key sectors of tourism, real estate, financial services, shipping, energy, and technology are expected to continue shaping the country’s economic landscape. Strong growth in services,exports, rising foreign investment and the continued expansion of the technology ecosystem are reinforcing Cyprus’ role as a regional business and investment hub.
Legal system
How does the legal system operate? What should clients be mindful of when doing business in your jurisdiction?
Cyprus is primarily a common law jurisdiction with a justice system which is based on the adversarial model. This is a legacy from its period as a British colony. Much of Cypriot legislation is based on the UK law in force at the time Cyprus ceased to be a colony. It is updated and amended regularly to ensure alignment with all relevant EU Guidelines and Directives.
Where there is no applicable Cypriot legislation, English common law and equity are applicable, and English authorities have persuasive force. The courts are bound by the doctrine of precedent according to which where the common law has been interpreted by the Supreme Court of Cyprus in a particular way, the subordinate courts will be bound by that interpretation. This offers the parties to a commercial action the advantages of consistency, predictability, and efficiency.
Foreign investment restrictions
Regulatory environment
Cyprus, as an EU member state, operates within a regulatory framework that encompasses various sectors, each designed to promote economic growth, protect the rights of consumers and investors, and ensure compliance with international standards. In the financial realm, the Cyprus Securities and Exchange Commission (CySEC) oversees banking, insurance, and investment services, aligning the country with EU directives to maintain financial stability.
The nation’s competitive tax environment and the extensive double taxation treaties position Cyprus as an attractive hub for international businesses, and the government actively combats tax evasion and money laundering. Moreover, Cyprus upholds robust labor regulations and fosters fair working conditions, while consumer protection measures are in place to safeguard consumers’ rights. The regulatory landscape here extends to environmental protections, legal systems, and data privacy, with an overarching commitment to EU standards.
Cyprus also ensures a conducive environment for business operations and investment. The Department of Registrar of Companies and Official Receiver facilitates the registration of various business entities, welcoming foreign investment. In the real estate and construction sectors, regulations maintain construction quality and safeguard buyer rights, while in the telecommunications and IT domains, regulatory bodies ensure competition, service quality, and data protection. These efforts are complemented by a robust legal system based on English common law principles, providing the legal foundation for contracts, property rights, and dispute resolution.
In response to global concerns, Cyprus has implemented comprehensive measures in areas such as anti-money laundering and counter-terrorism financing, aligning its regulations with international standards and EU directives.
Additionally, the country complies with the General Data Protection Regulation (GDPR), ensuring the privacy and security of personal data. In healthcare and pharmaceuticals, Cyprus adheres to EU standards in the delivery of healthcare services and the regulation of pharmaceutical products. Overall, Cyprus’ regulatory environment reflects its commitment to maintaining a thriving economy, protecting individual rights, and adhering to international norms in various sectors of governance.
Direct Investment and Foreign Investment Screening
The Cyprus government has historically encouraged foreign direct investment (FDI) to diversify the economy. The tax regime has played a key role in making Cyprus one of the most attractive destinations in Europe for individuals, investors, and businesses. There are currently no general restrictions on ownership or investment in Cyprus, and no capital controls exist; travelers must only declare cash sums exceeding EUR 10,000 upon arrival, in line with EU rules.
On 2 April 2026, Cyprus formally implemented the EU FDI Regulation (2019/452), introducing a national FDI screening mechanism to monitor and control foreign investments in strategically important enterprises, particularly in sectors sensitive to national security, critical infrastructure, and key economic activities.
Key definitions under the law include:
Foreign Direct Investment (FDI): Any investment by a foreign investor aiming to establish or maintain lasting links with an entity in Cyprus, including investments enabling effective participation in management or control.
Control of an Undertaking: The ability to exercise decisive influence through ownership of at least 25% of voting rights or assets, or via contracts or other means allowing control of management decisions.
Strategically Important Enterprise: Any entity engaged in particularly sensitive sectors as defined in the Regulation, including companies, partnerships, associations, foundations, trusts, or foreign-established entities operating or supplying goods/services in Cyprus.
Foreign Investor: Any natural person who is not an EU, EEA, or Swiss national, or any non-EU enterprise, making or intending to make an FDI.
The new law establishes a clear FDI review process, enhancing investor certainty and enabling proactive cooperation with EU institutions. While the legislation marks a significant step in regulatory clarity, caution remains. Retrospective EU reviews may still occur, and ongoing risk assessment and client advising are essential for foreign investors.
(1) (https://cyprus-mail.com/2026/03/03/cyprus-records-lowest-inflation-in-eurozone-as-prices-stay-flat)
(2) (https://cyprus-mail.com/2026/02/25/cyprus-inflation-slows-to-1-2-per-cent-as-energy-prices-fall)
(3) (https://cyprus-mail.com/2026/03/04/record-2025-for-eu-and-cyprus-tourism-shadowed-by-threat-of-regional-instability)
(4) (https://cyprus-mail.com/2026/03/02/cyprus-tourism-revenues-hit-record-e3-69bn-in-2025)
(5) (https://knews.kathimerini.com.cy/en/comment/opinion/cyprus-property-market-2025-more-cash-unexpected-winners)
(6) (https://knews.kathimerini.com.cy/en/business/cyprus-shipping-charts-a-course-for-growth)
(7) (https://www.gov.cy/en/speeches/keynote-address-by-the-minister-of-energy-commerce-and-industry-of-the-republic-of-cyprus-mr-george-papanastasiou-at-the-eastern-mediterranean-energy-conference-and-exhibition-emc-2025/#:~:text=1.,with%20more%20exploration%20to%20come.)