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Cyprus’ burgeoning startup ecosystem

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In recent years, Cyprus has emerged as a promising destination for businesses seeking to innovate and thrive within the dynamic landscape of the European Union

The island has not only positioned itself as an attractive location for setting up headquarters, regional offices, and development centres but has also cultivated a burgeoning startup ecosystem. Cyprus, with its strategic geographic location and commitment to fostering innovation, is on a trajectory to become a premier tech hub in the European Union. With a focus on innovation and the burgeoning startup ecosystem, this article delves into the factors that have made Cyprus an appealing choice for tech companies from around the globe.

We will explore the milestones achieved, hear compelling testimonies, examine relevant statistics, and uncover the vital elements that are propelling Cyprus towards its ambitious goal of creating an environment conducive to world-class research, technology, and innovation.

What makes Cyprus attractive to foreign companies?
Cyprus’ journey to becoming a tech hub in the EU is marked by a number of milestones, supported by national strategies, and reinforced by the contributions of established global ICT companies.

It has been well established that Cyprus’ geographical location at the confluence of Europe, Africa, and Asia offers an advantageous strategic position for businesses.

This unique vantage point grants easy access to multiple markets, paving the way for companies to serve a wide customer base across the three continents.

Moreover, Cyprus is a member of the European Union, providing tech companies with an entry point to the robust European Single Market.

With over 40 EU trade agreements and a proclivity for innovative solutions, Cyprus stands as an ideal testing ground for tech companies seeking to reach high-growth markets.

What is more, Cyprus has fostered a thriving tech ecosystem, with a robust business environment and an array of professional services that stand ready to provide support.

The island boasts an extensive network of financial and professional services, including over 3,900 registered accountants and 700 accounting firms, as well as more than 2,700 registered lawyers and 160 law firms.

Importantly, the island’s tax regime is another key attraction. With a corporate tax rate of just 12.5 per cent, Cyprus offers one of the lowest corporate tax rates in the EU.

The country also boasts a growing network of Double Tax Treaties with over 65 countries, ensuring favourable conditions for international business.

Furthermore, Cyprus has implemented an enticing IP regime, aligning with the Nexus approach, which provides notable benefits for businesses engaged in intellectual property activities.

There is no withholding tax on outgoing dividends, interest, or royalty payments, making it an attractive destination for multinational companies.

“The convergence of technology and intellectual property is reshaping industries and providing tailored support to technology-driven enterprises. Cyprus has positioned itself as a leading destination for global companies seeking to capitalise on the transformative power of technology,” Cyprus-based Yotam Werzansky-Orland, CEO of KWO Strategy Ltd and globally recognised IP strategist, recently stated.

“Cyprus provides unparalleled incentives and a supportive ecosystem for startups and technology companies,” he added, noting that “these include favourable tax structures to access funding and top-notch infrastructure, the country offers a nurturing environment that fosters innovation and propels businesses to new heights.”

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Indeed, the European Innovation Scoreboard 2023, published earlier this year, revealed that Cyprus has showcased robust innovation performance, positioning it as a strong innovator and above the EU average.

The report emphasised the country’s commitment to fostering a culture of innovation and its dedication to enhancing competitiveness and excellence.

Cyprus, along with Austria, Germany, Luxembourg, Ireland, and France, was identified as a “strong innovator,” performing above the EU average.

Commenting on Cyprus’ performance, Theodoros Loukaidis, Director General of the Research and Innovation Foundation (Idek), expressed his satisfaction with the results and congratulated all stakeholders involved in the local system.

“Successes like this build the reputation of Cyprus as a regional research and innovation hub and open up new horizons,” he said.

“This is the result of the longstanding efforts of the local research and innovation ecosystem and the investments made by both the state and RIF,” he added.

In terms of attracting the necessary professionals, Cyprus stands as a hub for well-educated, multilingual talent with a keen aptitude for technology.

The island’s workforce includes professionals with international business experience, granting businesses access to a wealth of knowledge and expert skills.

Fast and easy access to the international talent pool and visa-free entry to the European labour market further augment its appeal. Bolstering this view is the fact that Cyprus has emerged as the leader in brain business job growth in Europe, with an impressive 62 per cent increase in the share of adults employed in such roles since 2014, according to a recent report titled “The Geography of Brain Business Jobs.”

The report revealed Cyprus’ growth rate in terms of knowledge intensive jobs is the highest across all of Europe, tied with Lithuania.

Meanwhile, in September of this year, President Nikos Christodoulides underscored the pivotal role of technology and innovation in the country’s governance programme and economic vision.

“The government is implementing specific actions for the branding of Cyprus in order to enhance the country’s appeal to investors and professionals,” the president said.

Praising the innovative and disruptive companies who call Cyprus their home, the president stressed that by recognising their contribution to economic growth, Cyprus not only encourages their entrepreneurial spirit but also provides them with opportunities to thrive and grow.

Additionally, the country’s regulatory structure aligns closely with the English Common Law legal system and fully complies with EU and international laws and regulations, ensuring strong protection for investments and intellectual property.

Cyprus has also been proactive in supporting the tech industry, implementing national strategies to promote innovation, and offering special incentives to attract modern, innovative companies from around the world.

The country has witnessed an influx of high-quality tech companies from the USA, Canada, France, Israel, and Lebanon, among others.

Among the many companies that have sought to establish a presence in Cyprus can be seen in gaming company Mundfish, based in Paphos.

The company developed the successful AAA game Atomic Heart, in collaboration with other studios located around the world. The game’s development was assisted by a Nicosia-based company, Kinx Gaming.

“While Cyprus may be a small gaming market, significant advancements are taking place, and these developments are not widely known,” Kinx Gaming CEO Lambros Myriantheas told Cyprus 4.0.

Elsewhere, this September, TechIsland, Cyprus’ leading tech business association, celebrated a significant milestone as it concluded the ‘Building Tech Islands: A Workshop on Attracting Foreign Tech Companies’.

“We’ve managed to attract global tech companies and international talent, resulting in economic growth and high-quality job opportunities,” Valentinos Polykarpou, Chairman of TechIsland, said at the time.

“However, our journey is far from over. Today, we are here to learn from Ireland’s success story and discuss how we can attract more tech companies and professionals, as well as retain those already here,” he added, signalling Cyprus’ intent on modelling itself on larger, technologically advanced nations.

Cyprus’ commitment to becoming a prominent, forward-looking technology centre was also echoed by Andreas Neocleous, a member of the Board of Directors of TechIsland and CEO of Cyta. Neocleous mentioned that “we are here because we are committed to shaping the future of our country and making Cyprus an internationally recognised TechIsland.”

Finally, Neocleous noted that in 2022, the island’s ICT sector achieved incredible results, contributing 13 per cent to Cyprus’ GDP, which translates to a €3 billion direct contribution.

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