Cyprus is the third largest and third most populous island in the Mediterranean and constitutes a “bridge” between East and West. It is situated in the north-eastern corner of the Mediterranean basin east of Greece, south of Turkey, west of Syria and Lebanon, northwest of Israel and north of Egypt.

Nicosia, the capital of the island, is dominated by government services and houses the headquarters of most banks and finance houses. Limassol, the second largest city, houses the main commercial port having the highest proportion of overseas residents and of companies active in shipping. Larnaca and Paphos house the island’s international airports, with both cities having a sizeable proportion of overseas residents and a rapidly expanding tourist industry.

The political system is characterised as “Presidential Democratic” one.

The Executive authority is vested in the President, who is elected for a 5-year term by Cypriot citizens, and is exercised by a Council of Ministers appointed by the President. The Legislative authority is exercised by the House of Representatives whilst the administration of Justice is exercised by the Judiciary, which is a separate and independent from the Executive and Legislative authorities.

Education and Human Talent and Healthcare

Human talent constitutes a significant advantage for the country, complemented by a broad range of high quality professional services. Cyprus holds thousands of highly educated and skilled individuals, multilingual in their majority, ready to serve the needs of any business in a competitive environment.

A general healthcare system has been recently introduced and is effective as of 1 June 2019. The system is generally easily accessible, both in the public and in the private sector. EU citizens and holders of permanent residence permits are eligible for state healthcare.

Doing Business in Cyprus

A transparent and robust legal and regulatory framework are in place which, together with a particularly attractive tax regime, they offer a wide range of incentives and benefits both for entities and individuals.

The country’s legal system, based on English Common Law principles, is widely recognised as a business-friendly and effective system that ensures transparency and reliability in business practices. Providing foreign businesses a familiar and reliable framework within which to operate, Cyprus’ legal system is also fully compliant with the EU, the Financial Action Task Force on Money Laundering (FATF), OECD, FATCA, the Financial Stability Forum laws and regulations and EU AML directives.

Moreover, Cyprus offers an attractive and transparent tax regime, fully compliant with EU, OECD and international laws and regulations. Providing access to an extensive network of more than 60 Double Tax Treaties, and maintaining a corporate tax rate of 12.5%, one of the lowest in the EU, Cyprus offers international investors and domestic businesses confidence to invest, grow and prosper.

The Property Market

Cyprus Economy has been transformed from a basic agricultural, and underdeveloped one, into an economy with an open free market, a Westernized standard of living, an internationally important tourist center and a rapidly growing strong real estate market.

The property market experienced significant growth during the period 2005 – 2009, primarily due to the government’s open policy for foreign investments (especially from Russia), effect of entry of the island in to the EU, increased lending by most local banks and a balanced political risk from the negotiations for the settlement of the Cyprus problem.

After 2009, the global crisis has significant effect into the market (and the country in general), in the same way as it affected most countries globally. Inevitably, the demand for real estate has decreased dramatically and there was a deep and immediate decline on property values.

The rescession continued for some years, as, in addition to the global effect, the debt crisis in Greece and the local government being unable to pay back investors, including Cypriot banks which have invested in to Greek government bonds were disastrous triggering factors of the current economic recession in Cyprus, did not improve the situation.
The 2013 Cypriot financial crisis was an economic crisis that involved the exposure of Cypriot banks to overleveraged local property companies, the Greek bonds, the downgrading of the governments bond credit rating, the consequential inability to refund its state expenses from the international markets and the reluctance of the government to restructure the troubled Cypriot financial sector.

On 25 March 2013, a €10 billion international bailout by the Eurogroup, EC, ECB, and IMF was announced, in return for Cyprus agreeing to close the country’s second-largest bank, the Laiki Bank, imposing a one-time bank deposit levy on all uninsured deposits there, and seizing possibly around 48% of uninsured deposits in the Bank of Cyprus.

Following a period of uncertainty, the real estate market in Cyprus started “picking-up” on or about 2015 and promising signs have been observed for even better days in the market.

Indeed, the headquartering to Cyprus of large institutions (especially in the technology sector), the Cyprus Investment Programme and other Immigration Schemes which have been in place but also other financial and economic factors, resulted in a significant increase in real estate transactions (sales, rents, etc) but also in the prices in the market.

By way of example, during 2021, residential property index prices recorded a 3% growth compared to 2020, mainly driven by demand from local buyers (particularly for apartments), aided from the subsidisation of interest rates on housing loans (the Government support schemes and the second moratorium for deferral of loan instalments). During Q3 2022 (latest available information), residential property index prices maintained their increasing trend, marking a 6% YoY increase, compared to Q3 2021, and a 5% increase compared to Q4 2021. The increase in index prices is partially attributed to domestic housing demand and partially driven by increases in construction costs, as well as the higher levels of demand from foreign companies relocating to Cyprus (mainly Q1-Q3 2022 affected).

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