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Fiscal success for Cyprus

Fiscal Success for Cyprus

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Fiscal Success for Cyprus: 2nd-Highest Surplus in EU and Lower Public Debt

According to Eurostat data published on April 22, Cyprus recorded a budget surplus of 4.3% of its GDP in 2024, ranking second among EU member states — tied with Ireland and just behind Denmark at 4.5%. This is a standout achievement, as 21 of the 27 EU countries reported budget deficits during the same period.

Cyprus also significantly reduced its public debt. By the end of 2024, the debt-to-GDP ratio fell to 65%, down from 73.6% in 2023 — a drop from €23.08 billion to €21.83 billion. This stands out as the eurozone average debt slightly increased to 87.4%, and the EU average reached 81%.

Cyprus’ fiscal success reflects strong economic governance and bolsters its position as a credible business destination. With continued reforms and responsible policy, the country remains on a path of resilience and sustainable growth. Looking ahead, the Cyprus Government aims to further reduce public debt and is committed to maintaining a competitive, stable, and investor-friendly environment that supports business growth, headquartering, and global relocation.

Official source: CNA

Cyprus Start up Visa

Upgrades to the Cyprus Startup Visa

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Upgrades to the Cyprus Startup Visa: A Gateway for Global Entrepreneurs & Investors

Cyprus has updated its Startup Visa Scheme, effective January 7, 2025, after Cabinet approval on December 18, 2024. The changes aim to attract global entrepreneurs, foster innovation, and drive economic growth, particularly in the technology sector.

The Scheme allows skilled entrepreneurs from non-EU countries to enter, live, and work in Cyprus to establish a new startup or relocate an existing one. The Scheme is valid until December 2026, with a cap of 150 visas.

The updated Scheme offers more flexibility and support for startups at different stages by easing financial and operational requirements. Cyprus aims to position itself as a top destination for global talent while strengthening its appeal for investment-based residency and citizenship programs.

Key Changes Include:

  • Longer Residence Permits: Now valid for three years instead of two, with the renewal extended from one year to two years.
  • Lower Ownership Requirement: Applicants now need to own at least 25% of the company’s share capital, reduced from 50%.
  • Increased Foreign Hiring: Companies can now employ up to 50% foreign staff, compared to the previous 30% limit.
  • Additional Hiring for Investors: Companies investing €150,000 or more in Cyprus can hire additional foreign employees.

Renewal Criteria:

To renew the Visa after three years, Startups should meet at least one of the below criteria:

  • Achieve a 15% increase in revenue.
  • Secure €150,000 in investments.
  • Create at least three new jobs in Cyprus.
  • Participate in local innovation support programs.
  • Launch at least one product or service.

Digital Literacy and Investment Migration at the Heart of Cyprus Startup Visa Scheme

The updated Scheme places a strong emphasis on building a tech-savvy workforce by encouraging all employees to enhance their digital skills, while driving creativity and modernization. This enhances Cyprus’ position as a hub for technology-driven entrepreneurship and sustainable growth.

At the same time, the recent changes offer entrepreneurs and investors a compelling opportunity to establish themselves in Cyprus while working towards long-term residency or even citizenship, all within a supportive and welcoming environment. Not only can they diversify their portfolios, but they also contribute to the local economy by creating jobs, implementing innovative ideas, and attracting additional foreign investment.

A Promising Future

As the Cyprus Startup Visa Scheme evolves, with 21 startups already approved, it presents exciting opportunities for global entrepreneurial talent who seek to align their business goals with residency solutions. The Scheme offers a unique pathway to establish a presence in Cyprus, with a variety of financial and qualitative incentives for both individuals and companies.

Foreign talent and investors will benefit from Cyprus’s strategic location, favorable tax policies, strong legal framework, and access to mentorship, resources, funding, and networking opportunities.

The investment migration landscape is constantly evolving, and the Scheme is adapting to meet the changing needs of global startups and talent, ensuring long-term prosperity.

Our dedicated team can assist you in navigating the complexities of the Scheme and residency requirements so you can fully enjoy the benefits Cyprus has to offer. For a tailored consultation, feel free to reach out to us here.

new tax landscape in Cyprus

The New Tax Landscape in Cyprus: Key Changes for Businesses and Individuals

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The New Tax Landscape in Cyprus:

Key Changes for Businesses and Individuals

On February 27, 2025, the Center for Economic Research of the University of Cyprus presented the proposed new tax landscape for Cypriot legal entities and individuals, following the Government’s initiative.

NEW CORPORATE TAXATION

  • Corporate tax increase from 12.5% to 15% .bringing Cyprus into line with European Union requirements.
  • Complete abolition of deemed dividend distribution.
  • Reduction of withholding tax on actual dividend distribution from 17% to 5%.

Maintaining Existing Tax Benefits

  • Taxation of worldwide income with applicable exemptions.
  • Deduction of expenses for generating taxable income.
  • Strengthened tax residency criteria for companies and enhancement of the intellectual property tax regime (IP Box).
  • Maintenance of non-dom status, with an extension through an annual fee.
  • Notional interest deduction (NID).
  • Shipping regime remains unchanged.
  • 50% discount for first employment in the Republic.

Additional Tax Incentives

  • Anti-abuse clauses including higher tax rates on concealed dividend distributions.
  • Measures for “close-structured companies” allowing for the possibility of lifting the corporate veil and taxing shareholders as natural persons conducting business.
  • Enhanced deductions for expenses related to the green transition and digital transformation and accelerated depreciation and training discounts with related losses carried forward without restrictions.

Other proposed changes

  • Stamp duty abolition. Fixed amounts, to be imposed only on agreements relating to immovable property and banking and insurance transactions.
  • Tax losses are to be carried-forward to 10 years from 5 years, subject to restrictions.
  • Employee stock options possibly to be taxed at a lower rate upon exercise (subject to conditions).
  • Ex-gratia payments to employees to be tax-exempt up to a certain amount at the level of the employee. The employer will have the right to claim the full amount as tax deductible.
  • Insurance premium tax of 1.5% to be abolished.

This tax reform aims to strengthen the local economy and enhance the competitiveness of Cypriot businesses while investing in the country’s innovation, quality, and credibility.

PROPOSED TAX SCALES FOR INDIVIDUALS

  • Up to €20,500 → 0%
  • €20,501 – €30,000 → 20%
  • €30,001 – €40,000 → 25%
  • €40,001 – €80,000 → 30%
  • Above €80,001 → 35%

It is worth noting that the maximum tax rate of 35% now applies to incomes above €80,000, compared to the current threshold of €60,000.

Tax free income increases with the following tax deductions:

For households with a total gross income of up to €80,000 and two working spouses, the proposed deductions include:

  • €1,000 for each spouse for each child up to 19 years of age (female) or 21 years of age (male).
  • €1,000 for each spouse for each student up to 23 years of age (female) or 24 years of age (male).
  • Deduction of up to €1,500 for installments of a serviced first home loan or rent, for each spouse/partner.
  • Discounts for green upgrades to households, up to €1,000 for each spouse/partner, in the year the upgrade is made (e.g. up to five years). Eligible upgrades include energy-efficient home improvements, installation of photovoltaic systems, heat pumps, and even the purchase of an electric car.
  • Single-parent families to be taxed under the most favorable category, similar to two-parent working households.

The primary objective of the tax reform is to ease the tax burden on individuals and households while supporting families and the new generation, addressing housing challenges and low birth rates, encouraging women to participate in the labour market, and promoting the green and digital transition.

The Cyprus government aims for the reform to be fully implemented in 2026. Our firm will keep you informed about all upcoming changes and can be your trusted partner in navigating and adapting to the new regulations. Contact us for more information.

Next Steps procedure for Cyprus bank deposit haircut in 2013

Next Steps in the Compensation Process for the 2013 Cyprus Bank Deposit Haircut

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Next Steps in the Compensation Process for the 2013 Cyprus Bank Deposit Haircut

On 15 January 2025, Finance Minister Mr. Makis Keravnos stated, following a meeting with President Christodoulides and representatives of the Laiki Bank Depositors Association (SYKALA), that compensation disbursements to “haircut” depositors and security holders are expected to commence in May 2025.

Examination of Applications

A total of 13,000 applications have been submitted through the relevant electronic platform. The evaluation process is already underway and is anticipated to conclude by the end of January. Once the evaluation is completed, a detailed plan will be formulated. This plan will require approval from both the Board of Directors of the Solidarity Fund and the Council of Ministers and upon receiving the necessary approvals, the repayment process will begin in May 2025.

Compensation procedure

The President of SYKALA explained that the compensation process would be gradual due to the Solidarity Fund’s limited financial resources, which prevent the immediate full reimbursement of the amounts lost. Payments are expected to be made annually, with the Government supplementing the Fund through allocations from the state budget. Approved beneficiaries, as verified by the Ministry of Finance, will be required to submit their bank account details to receive payments. Beneficiaries for compensation will initially be the haircut depositors and, in a second phase, the security holders. The total amount to be disbursed has not yet been determined. This figure will be clarified following the completion of the application evaluation process.

The commencement of compensation payments marks a significant step towards addressing the financial losses experienced by depositors and security holders due to the 2013 haircut. While the process will be gradual and dependent on available resources, the government’s commitment to fairness and transparency provides hope for those affected. The forthcoming months will be critical in finalizing evaluations, securing approvals, and ensuring the timely disbursement of funds.

Read more: Partial compensation of the 2013 haircut on Cyprus banks’ deposits (Previous article April 2024)

Cyprus: investment funds centre in the EU

CYPRUS: A leading investment funds centre in the EU

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CYPRUS: A leading investment funds centre in the EU

Cyprus has emerged into a leading investment funds centre in Europe offering direct access to key markets. The island is an ideal investments gateway into the European Union and a portal for investments outside the EU, particularly into the Middle East and India. Cyprus’ competitive advantages are further enriched by a robust and transparent legal and regulatory framework and a versatile tax regime.

CYPRUS-A-leading-investment-funds-centre-in-the-EU-Sep-2024Download

For more information contact us here.

Saudi Arabia Vision 2030: key progress facts

Saudi Arabia Vision 2030: Key Progress Facts

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Saudi Arabia Vision 2030: Key Progress Facts

Saudi Arabia’s Vision 2030 is a transformative economic and social reform plan aimed at reducing the Kingdom’s dependence on oil, diversifying its economy, and developing public service sectors such as health, education, infrastructure, recreation, and tourism. Launched in 2016 by Crown Prince Mohammed bin Salman, Vision 2030 has already made significant strides across various sectors, marking considerable progress towards its ambitious goals.

A story of transformation: VISIONN 2030 KINGDOM OF SAUDI ARABIA

Economic Diversification

  1. Growth in Non-Oil Revenue:
    Non-oil revenue has seen a substantial increase, with a 30% rise from SAR 201 billion in 2016 to SAR 261 billion in 2023, bolstered by new taxes, fees, and economic diversification efforts. The introduction of VAT in 2018 and other fiscal reforms have significantly contributed to this growth.
  2. Public Investment Fund (PIF):
    PIF’s assets have grown tremendously, with revenues reaching $88.22 billion in 2023, marking a 100% increase. PIF is pivotal in driving economic diversification through investments in sectors like real estate, infrastructure, technology, and entertainment.

Tourism and Entertainment

  1. Tourism Influx:
    Saudi Arabia has rapidly become a significant player in global tourism, welcoming 60 million tourists in the first half of 2024 alone. This surge is attributed to the development of mega-projects such as the Red Sea Project, and Al-Ula.
  2. Entertainment Industry:
    The Kingdom has significantly expanded its entertainment offerings, including hosting over 2,000 events, concerts, and cultural festivals annually. The establishment of the General Entertainment Authority has been crucial in these developments.

Infrastructure and Urban Development

  1. Mega-Projects:
    Vision 2030 has given rise to several ambitious mega-projects, including the Red Sea Project, aimed at developing luxury tourism along the Red Sea coast.
  2. Housing and Urban Development:
    The Sakani housing program has delivered over 200,000 housing units since its inception, increasing home ownership among Saudis to 62% in 2023. Additionally, urban development initiatives are improving the livability of cities and creating new economic opportunities.

Healthcare and Education

  1. Healthcare Expansion:
    Significant investments are being made to expand healthcare infrastructure, increase the number of hospitals, and improve the quality of healthcare services. The healthcare sector is expected to grow by 6.5% annually, with the establishment of new medical cities and hospitals.
  2. Educational Reforms:
    Education is being reformed to align with market needs, focusing on STEM fields and vocational training. Partnerships with international educational institutions have resulted in 15 new university collaborations, enhancing the quality and relevance of education.

Renewable Energy and Environmental Sustainability

  1. Renewable Energy Projects:
    Saudi Arabia is investing heavily in renewable energy, with projects like the Sakaka Solar Power Plant and Dumat Al Jandal Wind Farm leading the way. The goal is to produce 50% of the Kingdom’s electricity from renewable sources by 2030. As of 2023, renewable energy capacity has increased by 25%.
  2. Environmental Initiatives:
    The Saudi Green Initiative aims to plant 10 billion trees and reduce carbon emissions by 278 million tons annually. These efforts are part of broader plans to combat climate change and promote sustainability.

Business Environment and Regulatory Reforms

  1. Ease of Doing Business:
    The Kingdom has implemented numerous reforms to improve its business environment, including simplifying procedures for starting a business, obtaining construction permits, and protecting minority investors. These efforts have significantly enhanced Saudi Arabia’s ranking in the World Bank’s Ease of Doing Business index, climbing 30 places since 2016.
  2. Foreign Investment:
    New regulations allowing 100% foreign ownership in various sectors have attracted global investors, with FDI inflows reaching $5.5 billion in 2023. The government is actively promoting sectors like tourism, entertainment, healthcare, and technology to diversify its investment portfolio.

Social Reforms and Cultural Development

  1. Women Empowerment:
    Significant strides have been made in women’s empowerment, including granting women the right to drive, increasing female workforce participation to 33% in 2023, and promoting women in leadership positions.
  2. Cultural Development:
    The Kingdom is investing in preserving and promoting its cultural heritage. Initiatives to restore historical sites and promote cultural events are fostering a renewed sense of national identity and pride. Over 200 cultural events were held in 2023, attracting millions of participants.

Conclusion

Saudi Arabia’s Vision 2030 is making substantial progress in transforming the Kingdom’s economy and society. Through ambitious reforms and strategic investments, Saudi Arabia is well on its way to achieving its goals of economic diversification, social development, and global competitiveness. As Vision 2030 continues to unfold, Saudi Arabia is poised to become a leading global hub for tourism, investment, and innovation, driving sustainable growth and prosperity for future generations.

Thinking of expansion to Saudi Arabia? Our team is at your disposal for any support and guidance you might need. Contact us here.

Saudi Arabia: an emerging business center

Expansion to Saudi Arabia: An emerging business center

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Expansion to Saudi Arabia: An emerging business center

In recent years, Saudi Arabia has emerged as a compelling destination for businesses seeking new opportunities and growth. With ambitious economic reforms, strategic initiatives, and a dynamic business landscape, the Kingdom is poised to become the next global business center. Saudi Arabia’s hype and the fact it is attracting increasing attention from businesses around the world is not based on luck.

Saudi Arabia’s non-oil sector contributed 50% of GDP for the first time last year. With the country’s unprecedented economic transformation well underway, the horizon for Saudi Arabia is bright with the promise of continued growth.

  1. Vision 2030: At the heart of Saudi Arabia’s transformation is Vision 2030, launched in 2016, a bold and ambitious blueprint for diversifying the economy, reducing dependency on oil, and fostering sustainable growth across various sectors. Through Vision 2030, the Kingdom has managed to create a vibrant and competitive business environment that attracts investment, stimulates innovation, and drives economic prosperity as well as promoting a sustainable community.
  1. Strategic Location: Situated at the crossroads of three continents, Saudi Arabia enjoys a strategic geographic location that positions it as a gateway to lucrative markets in the Middle East, Africa, and Asia. With modern infrastructure, world-class transportation networks, and state-of-the-art logistics facilities, the Kingdom offers unparalleled access to global trade routes and investment opportunities.
  1. Economic Diversification: In line with Vision 2030 objectives, Saudi Arabia is actively diversifying its economy by investing in non-oil sectors, for instance tourism, entertainment, technology, healthcare, renewable energy, and manufacturing. These strategic investments are creating new business opportunities, fostering innovation, and driving sustainable growth across diverse industries.
  1. Business-Friendly Reforms: The Saudi government has implemented several business-friendly reforms to streamline regulations, enhance the ease of doing business, and attract foreign investment. As a result, these reforms include initiatives to simplify company registration procedures, improve intellectual property protection, and enhance transparency and accountability in the business environment.
  1. Investment Incentives: Saudi Arabia offers a range of incentives and support mechanisms to attract foreign investment, including tax incentives, financial incentives, and access to government grants and subsidies. Additionally, the Kingdom has established special economic zones and investment hubs to encourage investment in strategic sectors and regions.
  1. Thriving Business Ecosystem: Saudi Arabia boasts a thriving business ecosystem characterized by a skilled workforce, vibrant entrepreneurship culture, and robust support infrastructure. From incubators and accelerators to venture capital funds and innovation centers, the Kingdom offers a conducive environment for startups, SMEs, and multinational corporations alike to thrive and grow.

Saudi Arabia’s strategic vision, geographic location, economic diversification efforts, business-friendly reforms, investment incentives, and thriving business ecosystem position it as the next business center on the global stage. As businesses increasingly recognize the Kingdom’s potential, demand for expansion to Saudi Arabia is increasing dramatically as the country is poised to play a pivotal role in shaping the future of regional and international trade, investment, and innovation.

Application deadline extended: 2013 Cyprus banks' haircut

Application deadline extended: Partial compensation of the 2013 haircut on Cyprus banks’ deposits

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Application deadline extended: Partial compensation of the 2013 haircut on Cyprus banks’ deposits

In its announcement on 14/05/2024, the Cyprus Ministry of Finance informs of the reopening of the electronic service for submitting applications by affected natural and legal persons regarding their participation in the Replenishment Scheme of the National Solidarity Fund. Applications are accepted via the Ministry’s online service from 14 May 2024 until 25 May 2024.

It is pointed out that the affected Natural and Legal Persons should have the characteristics of a “private client” and their deposits and securities have been reduced during 2013 due to the implementation of consolidation measures in the two systemic Banks (Bank of Cyprus and Laiki Bank).

Please note that access to the electronic service for submitting an electronic Application for participation is made through the CY Login Profile as follows:
• For Natural Persons with a Cypriot identity card or residence permit in Cyprus (ARC) as well as Legal Persons with a registration number in Cyprus –> Registration and identification on the CY Login Government Portal (formerly Ariadne) is required.

• For Natural Persons who do not have a Cypriot identity card and are not residents of Cyprus as well as Legal Persons who do not have a registration number in Cyprus –> They are required to be registered on the Government Portal CY Login, and they will be identified when submitting their Application through the provision of certain additional items and documents.

Participation in the Replenishment Scheme of the National Solidarity Fund is done only via the submission of an electronic application and applicants are invited to submit their application no later than 25 May 2024, as the Ministry notes that it will not be possible to submit electronic applications after that date.

Our team is at your disposal for any support and guidance you might need regarding the Replenishment Scheme applications. Contact us here.

Cyprus Registrar abolishes annual company fee

Termination of annual company fee

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Termination of annual company fee

On the 21st of March the Department of the Cyprus Registrar of Companies and Intellectual Property announced that the annual levy of €350 is abolished from 2024 onwards. The annual fees for years 2011–2023 are still applicable.

It has also been clarified that the companies which have already settled their annual fee for 2024 will be refunded.

This measure will offer great relief and support to Cyprus companies and serves as a step to enhancing the local business environment.

Official Source