Tech outlook in Cyprus in 2024

In recent years, Cyprus has cultivated a thriving tech eco-system, positioning itself as a strong innovator, with a commitment to driving competitiveness and strategic service delivery. The country’s ICT sector is said to have contributed €3bn+ to the Cypriot economy in 2022, constituting 13% of the country’s GDP—a substantial leap from 7% in 2019 and 8.5% in 2020. Notably, €1bn is reportedly attributed to the influx of international firms and specialised human talent to Cyprus, a trend accelerated by the conflict in Ukraine.

In 2023, we observed Cyprus make remarkable progress in the technology sector. Fuelling this growth was the emergence of tech start-ups and digital enterprises, supported by government initiatives and organisations like TechIsland, Cyprus’ largest tech association, designed to attract high-calibre tech corporations worldwide. With over 270 member companies, TechIsland aims to enhance the tech industry’s operating environment, unite diverse stakeholders, and promote sustainable growth, contributing significantly to the country’s economic prosperity through tech.

Championing innovation and legal reform

Elias Neocleous & Co (ENC) has been an ardent supporter of Cyprus’ tech initiatives, which includes cementing the island as a sought-after jurisdiction for technology companies, start-ups, and tech enthusiasts. Our goal of streamlining the process of relocation for these entities and individuals to the country is ultimately what led to the launch of a new tech law department which serves as a single point of contact for tech-related enterprises wishing to establish a presence on the island, looking after all their needs from A to Z.

Additionally, our firm has taken great strides to invest in a future driven by digital transformation and ongoing social and technological changes. Our focus on new technologies, the upskilling of talent, the development of specialised services, and building strategic partnerships fall under the scope of ENC’s legal tech hub, the first of its kind for law firms in Cyprus. The first major project of the hub was the development of Neolaw.ai, a revolutionary tool that combines law with the firm’s extensive knowledge base using AI capacities to become an indispensable legal assistant and knowledge repository for in-house and practising lawyers in Cyprus and abroad. In 2024, we will continue to explore ways in which neolaw.ai can be leveraged to assist tech start-ups with commencing their operations at a price point that considers the financial position of early-stage businesses.

Looking ahead in 2024

As the year kicks off, Cyprus is poised to sustain its tech boom as the country solidifies its position as a highly sought-after jurisdiction for tech decision-makers aiming to establish a global presence in a business-friendly environment. To support its ambition of becoming a technology hub, the Cyprus government will persist in advancing innovative national strategies, underscoring its commitment to facilitating the relocation of individuals and groups, and enhancing Cyprus’s appeal as a destination for professionals contemplating such a move. These efforts seamlessly align with the country’s strategic geographical proximity to EU, African, and Asian markets. Coupled with enticing incentives such as a low corporate tax rate and progressive immigration measures like the Blue Visa legislation, Cyprus emerges as an exceptionally attractive choice for both global and regional tech multinationals.

The robust regulatory and legal framework of Cyprus, built on established EU standards and UK common law principles, adds a layer of consistency and predictability for tech businesses considering relocation or establishing headquarters on the island. Furthermore, the country’s strategic intellectual property (IP) regime, operating on a nexus approach, offers significant tax advantages, including an 80% tax exemption on R&D expenditure and tax amortisation of intangible assets for up to 20 years.

‘Our focus on new technologies, the upskilling of talent, the development of specialised services, and building strategic partnerships fall under the scope of ENC’s legal tech hub, the first of its kind for law firms in Cyprus.’

The appeal of Cyprus will be further heightened by its advantageous corporate tax regime, boasting one of the lowest tax rates in Europe at 12.5%. Notable features include exemptions from corporate tax on various income sources, notional interest deductions on investments, and flexible practices for managing tax losses. A strong network of double tax treaties covering approximately 60 countries will continue to provide strategic advantages for international operations.

Cyprus also stands out for its highly skilled workforce, ranking among the highest in Europe for university graduates relative to its population. The country’s tech-savvy human capital contributes to a flourishing technology ecosystem, complemented by cost competitiveness in operating a technology company.

Embracing a dynamic future, we anticipate Cyprus thriving as a global tech hub. With a booming sector, national IT strategies, and the promotion of emerging technologies, our firm stands at the forefront. In 2024, we remain cognisant of the need for digital transformation across industries and are geared to empower tech start-ups and advance Cyprus’s appeal with its strategic advantages.