Republic of Cyprus

The ROC has a favorable attitude towards FDI and welcomes U.S. investors.  There is no discrimination against U.S. investment; however there are some ownership limitations and licensing restrictions set by law on non-EU investment in certain sectors, such as private land ownership, media, construction, etc. (see Limits on Foreign Control, below).  The ROC promotes foreign direct investment (FDI) through a dedicated agency, the Cyprus Investment Promotion Agency (CIPA). CIPA’s Invest Cyprus program is the ROC’s dedicated partner tasked to attract and facilitate FDI in key economic sectors of shipping, education, real estate, tourism and hospitality, energy, investment funds, filming, and innovation and startups. (https://www.investcyprus.org.cy/about/invest-cyprus  ).  InvestCyprus is the first point of contact for investors, and provides detailed information on the legal, tax and business regulatory framework.  The ROC and CIPA also promote an ongoing dialogue with investors through a series of promotion seminars each year and a robust Cyprus Chamber of Commerce and Industry (CCCI) with country-specific bilateral chambers dedicated to promoting FDI.

For more information:

Cyprus Investment Promotion Agency, InvestCyprus
9 Makariou III Avenue
Severis Building, 4th Floor
1965 Nicosia, Cyprus
Telephone: +357 22 441133
Fax: +357 22 441134
Email: info@investcyprus.org.cy
Website: https://www.investcyprus.org.cy  

One-Stop-Shop & Point of Single Contact

Ministry of  Energy, Commerce, and Industry (MECI)
13-15 Andreas Araouzos
1421 Nicosia, Cyprus
Telephone: +357 22 409318 or 321
Fax: +357 22 409432
Email 1: onestopshop@mcit.gov.cy
Email 2: psccyprus@mcit.gov.cy
Website: www.businessincyprus.gov.cy  

Area Administered by Turkish Cypriots

Turkish Cypriots welcome FDI and are eager to attract investments, particularly those that will lead to the transfer of advanced technology and technical skills.  Priority is also given to investments in export-oriented industries. There are no laws or practices that discriminate against FDI. The “Turkish Cypriot Investment Development Agency (YAGA)” is a one-stop shop for all investors.  “YAGA’s” investment consultants provide consultancy services, guidance on the legal framework, sector specific advice and information about investor incentives.

“Turkish Cypriot Development Agency” (“YAGA”)
Tel: +90 392 – 22 82317
Website: http://www.investinnorthcyprus.org  

Limits on Foreign Control and Right to Private Ownership and Establishment

Republic of Cyprus

The ROC does not have a mandatory foreign investment screening mechanism that grants approval, other than sector-specific licenses granted by relevant ministries.  CIPA does grant approvals for investment under an incentive scheme, e.g., the film production scheme. CIPA often refers projects for review to other agencies. Separately, the ROC’s residency and citizenship investment program is regulated by law, with interagency approvals after a due diligence process.

The following restrictions apply to investing in the ROC:

Non-EU entities (persons and companies) may purchase only two real estate properties for private use (two holiday homes or a holiday home and a shop or office).  This restriction does not apply if the investment property is purchased through a domestic company or as a corporation elsewhere in the EU.

Non-EU entities also cannot invest in the production, transfer, and provision of electrical energy.  Additionally, the Council of Ministers may refuse granting a license for investment in hydrocarbons prospecting, exploration, and exploitation to a third-country national or company if that third country does not provide similar treatment to Cyprus or other EU member states.

Individual non-EU investors may not own more than five percent of a local television or radio station, and total non-EU ownership of a local TV or radio station is restricted to a maximum of 25 percent.

The right to register as a building contractor in Cyprus is reserved for citizens of EU member states.  Non-EU entities are not allowed to own a majority stake in a local construction company. Non-EU physical persons or legal entities may bid on specific construction projects but only after obtaining a special license by the Council of Ministers.

Non-EU entities cannot invest in private tertiary education institutions.

The provision of healthcare services on the island is also subject to certain restrictions, applying equally to all non-residents.

Finally, the Central Bank of Cyprus’ prior approval is necessary before any individual person or entity, whether Cypriot or foreign, can acquire more than 9.99 percent of a bank incorporated in Cyprus.

Area Administered by Turkish Cypriots

According to the “Registrar of Companies Office,” foreign ownership of construction companies is capped at 49 percent.  Currently, the travel agency sector is closed to foreign investment. Registered foreign investors may buy property for investment purposes but are limited to one parcel or property.  Foreign natural persons also have the option of forming private liability companies, and foreign investors can form mutual partnerships with one or more foreign or domestic investors.

Other Investment Policy Reviews

Republic of Cyprus

The ROC has been a member of World Trade Organization (WTO) since July 30, 1995.  As of May 1, 2004, the Republic of Cyprus is a member state of the EU. Cyprus has not undergone investment policy reviews by the Organization for Economic Cooperation and Development (OECD) or United Nations Committee on Trade and Development (UNCTAD).  The WTO published a Trade Policy Review on the EU28, including Cyprus, in July 2015. The text is available at: https://www.wto.org/english/tratop_e/tpr_e/tp417_e.htm  .

Area Administered by Turkish Cypriots

There have not been any third-party investment policy reviews.

Business Facilitation

Republic of Cyprus

The Ministry of Energy, Commerce and Industry (MECI) provides a “One Stop Shop” business facilitation service.  The One-Stop-Shop offers assistance with the logistics of registering a business in Cyprus to all investors, regardless of origin and size.  MECI’s Department of the Registrar of Companies and Official Receiver (DRCOR) provides the following services: Registration of domestic and overseas companies, partnerships, and business names; bankruptcies and liquidations; and trademarks, patents, and intellectual property matters.

Domestic and foreign investors may establish any of the following legal entities or businesses in the ROC:

• Companies (private or public);
• General or limited partnerships;
• Business/trade name;
• European Company (SE); and
• Branches of overseas companies.

The registration process takes approximately two working days and involves completing an application for approval/change of name, followed by the steps outlined in the following link: http://www.businessincyprus.gov.cy/mcit/psc/psc.nsf/All/A2E29870C32D7F17C2257857002E18C9?OpenDocument  .

At the end of 2018, there were a total of 216,239 companies registered in the ROC, 14,526 of which had been registered in 2018 (for more statistics on company registrations, please see: http://www.mcit.gov.cy/mcit/drcor/drcor.nsf/company_statistics_en/company_statistics_en?OpenDocument  ).

In addition to registering a business, foreign investors, like domestic business owners, are required to obtain all permits that may be necessary under Cypriot law.  At a minimum, they must obtain residence and employment permits, register for social insurance, and register with the tax authorities for both income tax and Valued Added Tax (VAT).  In order to use any building or premises for business, including commerce, industry, or any other income-earning activity, one also needs to obtain a municipal license. Additionally, town planning or building permits are required for building new offices, or converting existing buildings.  There are also many sector-specific procedures. Information on all of the above procedures is available online at: http://www.businessincyprus.gov.cy/mcit/psc/psc.nsf/eke08_en/eke08_en?OpenDocument  .

The World Bank’s 2019 Doing Business report (http://www.doingbusiness.org/rankings  ) ranked Cyprus 57th out of 190 countries for ease of doing business.  Among the ten sub-categories that make up this index, Cyprus performed best in the areas of resolving insolvency (26/190) and protecting minority investors (38/190), and worst in the areas of enforcing contracts (138/190) and dealing with construction permits (126/190).  Cyprus has generally backtracked in most areas compared to 2018, including getting credit and paying taxes, causing it to slip in the overall ranking. However, using another metric, the Global Competitiveness Index, issued by the World Economic Forum, Cyprus climbed 19 spots in the 2017-2018 edition, ranking 64th out of 137 countries.  The two most problematic factors for doing business in Cyprus, according to that report were providing access to financing and an inefficient government bureaucracy.

The Republic of Cyprus follows the EU definition of micro-, small- and medium-sized enterprises (MSMEs), and foreign-owned MSMEs are free to take advantage of programs in Cyprus designed to help such companies, including the following:

• Eurostars Cyprus:  http://www.fundingprogrammesportal.gov.cy/easyconsole.cfm/page/programme/fsId/18/lang/en  ;
• EBRD Small Firm Competitiveness Program: http://www.ebrd.com/cs/Satellite?c=Content&cid=1395266780410&d=Mobile&pagename=EBRD percent2FContent percent2FContentLayout  .

Additionally, foreign investors can take advantage of the services and expertise of the Cyprus Investment Promotion Agency (CIPA), an agency registered under the companies’ law and funded mainly by the state, dedicated to attracting investment.

CIPA
9A Makarios III Ave
Severis Bldg., 4th Flr.
1065 Nicosia
Telephone: +357-22-441133
Fax: +357-22-441134
Email: info@investcyprus.org.cy
Website: http://www.investcyprus.org.cy/  

Area Administered by Turkish Cypriots

Information available on the “Registrar of Companies’” website is available only in Turkish: http://www.rkmmd.gov.ct.tr/  .  An online registration process for domestic or foreign companies does not exist and registration needs to be completed in person.

The “YAGA” was established by Turkish Cypriot authorities with the aim of it becoming a one-stop-shop for both local and foreign investors interested in investing in the “TRNC.”  Its website (http://www.yaga.gov.ct.tr/  ) provides explanations and guides in English on how to register a company in the area administrated by Turkish Cypriots.

As of March 2019, the “Registrar of Companies Office” statistics indicated there were 20,648 registered companies, of which 15,483 were Turkish Cypriot majority-owned limited liability companies; 418 foreign companies; and 456 offshore companies.  In addition, there were 2003 limited partnership companies owned only by Turkish Cypriots.

The area administered by Turkish Cypriots defines MSMEs as entities having less than 250 employees.  There are several grant programs financed through Turkish aid and EU aid targeting MSMEs.

The Turkish Cypriot Chamber of Commerce (KTTO) publishes an annual Competitiveness Report on the Turkish Cypriot economy, based on the World Economic Forum’s methodology.  KTTO’s 2017-2018 report ranked northern Cyprus 109 among 137 economies, dropping five places from its ranking in 2016.

For more information and requirements on establishing a company, obtaining licenses, and doing business visit:

“Turkish Cypriot Development Agency” (“YAGA”)
Telephone: +90 392 – 22 82317
Website: http://www.yaga.gov.ct.tr/  

Turkish Cypriot Chamber of Commerce (KTTO)
Telephone: +90 392 – 228 37 60 / 228 36 45
http://www.ktto.net/english/index.asp  Fax: +90 392 – 227 07 82

Outward Investment

Republic of Cyprus

The ROC does not restrict outward investment, other than in compliance with international obligations, like specific UN Security Council Resolutions.  In terms of programs to encourage investment, businessmen in Cyprus have access to several EU programs promoting entrepreneurship, such as the European Commission’s Investment Plan for Europe (EC IPE), known as the “Juncker Plan” for projects over € 15 million (USD 16.6 million) or the Erasmus program for Young Entrepreneurs, in addition to the European Investment Bank’s guarantee facilities for SMEs for projects under € 4 million (USD 4.4 million).

Area Administered by Turkish Cypriots

Turkish Cypriot “officials” do not incentivize or promote outward investment. The Turkish Cypriot authorities do not restrict domestic investors.

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy

* Source for Host Country Data: Central Bank of Cyprus

Table 3: Sources and Destination of FDI

Table 4: Sources of Portfolio Investment