:: Foreign Investors ::
Foreign Direct Investment
Non - EU Citizens
The Government has in the past years relaxed the rules governing foreign non-EU citizen direct investments in Cyprus. The new regulations allow foreign participation up to 100% and provide a simple administration procedure and straightforward eligibility criteria, whereby in most cases applications for inward investment are reviewed by the Central Bank.
The industrial sector, the wholesale and retail trade sector, and the services sector are all open to non-resident investors. For the industrial, wholesale and retail trade sectors, the Central Bank handles applications where foreign participation is below 50%. Where foreign participation exceeds 50%, or the investment is more than CY£750.000, applications are handled jointly by the Central Bank and the Ministry of Commerce, Industry and Tourism.
For services, up to 100% foreign participation is allowed and the Central Bank handles the applications. Services have been split into two categories depending on the minimum capital required for each company to be formed. The minimum capital can be either CY£50.000 or CY£100.000.
Investments in tourism are subject to the tourist policy applicable at the time. At present, this policy provides for up to 49% foreign participation in hotels, tourist villages, villas, etc., while 100% participation may be allowed for projects that enrich tourism, such as golf courses, theme parks, marinas etc..
(b) EU-Citizens
On January 7th of 2000, all the maximum allowable percentages of foreign participation as well as minimum levels of foreign investment in any enterprise in Cyprus (described above) were abolished, provided the foreign investors are citizens of EU member states. This new policy does not touch upon limitations applicable under other laws or regulations (e.g. this liberalization does not apply for the acquisition of immovable property). In addition, the maximum foreign equity participation of 50% in the banking sector remains.
(c) Fiscal & other incentives for foreign direct investors
Low Corporation Tax: Net profits are taxed at a rate of 20% for chargeable income up to CYP40,000 and 25% for that in excess of CYP40,000.
Low Income Tax: Expatriates employed in IBCs are charged low rates of income tax.
No Withholding Tax: Dividends paid by resident companies to foreign incorporated companies are exempt from withholding tax. In the case of physical persons, the tax withheld is credited against their own tax liability.
No Capital Gains Tax on profits generated by the sale of shares of companies listed on the Cyprus Stock Exchange (This applies until the end of the year 2001).
10-Year Tax Holiday: Profits resulting from the operation of auxiliary tourist projects such as golf courses, health centers, theme parks etc., are exempt from corporation tax for a 10-year period.
Equipment Tax Allowances: There are investment allowances for equipment and machinery used in the manufacturing sector and considerable wear and tear allowances covering both machinery and certain categories of hotel buildings.
