Figures on Foreign Direct Investment

Cyprus has been placed among the top locations for foreign direct investment due to its quick economic turnaround and favorable corporate operating environment. According to UNCTAD’s 2020 World Investment Report, FDI inward flows reached USD 24 billion in 2019, up from USD 6 billion the previous year. The overall stock of FDI reached USD 445 billion in 2019, an increase of USD 185 billion from the previous year. Financial and insurance operations, transportation and storage, real estate, tourism, pharmaceuticals, and energy are the sectors that have received the greatest FDI, according to the Central Bank of Cyprus. The Russian Federation, the Netherlands, Luxembourg, the United Kingdom, and Germany are the primary FDI partners. Nonetheless, following the breakout of the COVID-19 pandemic (which resulted in a 42 percent increase in worldwide FDIs), Cyprus witnessed a decline in inflows: according to the latest data from the country’s Central Bank, FDI inflows totaled just EUR 1 billion in the first three quarters of 2020.

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Government measures helped sectors such as financial intermediation, and Cyprus began attracting substantial sums of FDI on an annual basis. Large-scale projects, tourism infrastructure, privatizations, and a thriving oil and gas industry are also attracting FDI. An additional advantage is the country’s safe and stable EU environment in a volatile area, which makes it an excellent site for regional headquarters or auxiliary and support services for investors with clientele in the wider eastern Mediterranean region. However, the country has a limited domestic market, and the banking system is currently recuperating from the 2009 financial crisis. Furthermore, tensions persist between the Turks and Cypriots on the island. In the World Bank’s 2020 Doing Business report, the country ranks 54th out of 190 economies, up three spots from 2019.

Foreign Direct Investment201720182019
FDI Inward Flow (million USD)15,3606,46924,248
FDI Stock (million USD)436,657428,428445,091
Number of Greenfield Investments*61111
Value of Greenfield Investments (million USD)82970225
Note: *Greenfield Investments are a type of Foreign Direct Investment in which a parent firm establishes a new business in a foreign country by building new operational facilities from the ground up.

What to think about if you’re thinking about investing in Cyprus

Points to Consider

The following are the country’s strong points:

One of Europe’s most business-friendly environments, having one of the lowest corporation tax rates (12.5 percent , the lowest in Europe together with Ireland)

The eurozone and membership in the European Union

A favourable geographic location at the crossroads of three continents, with access to markets in Europe, the Middle East, and the Maghreb.

A staff that is bilingual, experienced, and low-cost

Infrastructure for high-quality transportation and telecommunications, notably in the port sector

Tourism, international business and financial services, marine transport, and other tertiary industries are especially developed.

A desirable way of life in a safe, clean, and healthy environment with a high level of living

A business-friendly climate, sound regulation, and a legal system based on British common law are all advantages.


The following are the country’s major flaws:

With a population of approximately 1.2 million people, its internal market has a low appeal (World Bank, 2019 latest data available)

High governmental debt (IMF: 118.4% of GDP in 2020) and substantial external debt related to numerous non-residents’ bank deposits

Despite various changes enforced by the EU, the IMF, and the ECB, the banking system remains damaged by the 2009 crisis.

Russia and the United Kingdom are heavily reliant on each other as export markets and finance sources.

The island’s partition since 1974, as well as the difficulty in reaching a deal between the Turks and the Cypriots, may have a long-term detrimental influence on the country’s appeal.

Over-reliance on the service industry (which accounts for 84 percent of overall production), particularly tourism, banking, and housing

Government Policies to Encourage or Restrict Foreign Direct Investment

The Cypriot government has established a favourable business climate, as seen by its rating of 54th in the 2020 Doing Business index of nations where doing business is simple. The government’s liberal policies have aided in the development of investment. The following are some major aspects of the country’s appeal:

Almost all sectors of the economy have the potential for 100 percent foreign ownership.

One of the European Union’s lowest corporation tax rates (12.5 percent )

A tax environment that is appealing (Cyprus has signed double-taxation treaties with over 50 countries)

For businesses, the cost of establishing and growing a firm is highly competitive.

By bolstering its economy’s vulnerabilities, the government is able to create an appealing environment for investors. The government, for example, has been reforming the country’s banking system since 2013. This, along with the recapitalization, allowed it to escape bankruptcy and enhance its financial stability. Similarly, progress has been achieved in modernising and improving the efficiency of its legal, accounting, and financial services.

Cyprus has signed a number of bilateral investment treaties.

Around ten nations have signed bilateral conventions with Cyprus. The 26 additional European Union nations must be added to this total. Cyprus has only negotiated bilateral agreements with Egypt and Lebanon in the Mediterranean basin, outside of the EU. The UNCTAD website lists seven conventions. For each signatory nation, they outline the framework for FDI protection in Cyprus.

Procedures for Investing in a Foreign Country

Establishment Freedom

Establishment freedom is protected.

Holdings acquisition

Foreign investors from the European Union can buy shares in Cypriot firms with no restrictions on the percentage of stock they can buy or the amount of money they can invest. Furthermore, investors from the European Union can own up to 100% of the capital of firms listed on the Cyprus Stock Exchange, with the exception of the banking industry, where such ownership is limited to 50%.

Declaratory Obligation

When working in some industries, such as construction, licenses are necessary.

For the Declaration, the Competent Organization is

Cyprus Investment Promotion Agency (CIPA)

Specific Authorization Requests

Aside from the licensing processes, no other authorizations are required.