Start-ups and Technology Companies in Cyprus

Cyprus is an attractive destination for intellectual property companies such as software development due to its favourable tax, legal, and regulatory regime. Tax can be as low as 3% for qualifying companies, and you can protect your intellectual property rights locally, European-wide, and globally with simple registrations.

Frequently, individuals involved in technology companies relocate to Cyprus to take advantage of the non-domiciled tax resident scheme under which they can pay 0% tax on dividends. Therefore, the benefit of planning the development of your business through Cyprus can be enormous.

We can take care of all of the legal, accounting, tax, administrative, and regulatory issues so you can focus on bringing your vision to life without worrying about tedious tasks. For start-ups, we can offer flexible low-cost agreements with discounted fees tied to future benefits if the start-up is successful.

Intellectual Property Taxation in Cyprus

A technology company in Cyprus (such as a software development company), whether mature or a start-up, can enjoy an effective taxation rate of only 3%. In addition, there are no capital gains taxes on the disposal of shares (for example, if and when exiting), including mergers and acquisitions, and there is no capital gains tax on the disposal of capital assets that do not include land in Cyprus (source-code could be such an asset). This, amongst others, applies to software development companies.

Other tax benefits include the notional interest deduction for capital invested in the company. This allows for the deduction as an expense of a certain notional percentage of the capital invested, representing commercial interest rates (therefore, the 3% effective taxation can be further reduced).

If you already have an existing company abroad, you can transfer the software to a new Cypriot company or make it a subsidiary of a Cypriot company. You may also decide to develop new software or products in a new Cypriot company. The key is to find the right solution to take advantage of the very favourable taxation in Cyprus without disruption to your business.

Intellectual Property Protection

Cyprus protects the following:

1. Trademarks – for our trademark registration guide, click here
2. Tradenames – for our tradenames guide, click here
3. Patents – for our patent protection guide, click here
4. Copyrights – for our copyrights guide, [click here]

All the above and any software that has been created can be transferred via assignment and can be licensed and sub-licensed if the agreements between the parties permit it.

Work Permits and Immigration

EU citizens can live and work in Cyprus with a very simple registration. Non-EU individuals who are start-up or technology business owners may be able to live and work in Cyprus under the following schemes:

1. Specialized work in a company whose third-country employees will not be more than 30% of its total number of employees.
2. Under an entrepreneur’s visa, for which you can read our guide here
3. As the director, management executive, or specialist staff (such as software developers, AI experts, etc.) of a Cypriot company in which there was foreign direct investment of €200,000 (in which case the family of the work permit holder can get a residence permit too).

Nothing prohibits the use of freelancers, whether in Cyprus or abroad, the cost of which will be deductible as an expense from the company.

Office Space, Internet, and Incubators

Cyprus offers low-cost office spaces (long-term, short-term, or per day) to develop your business. In the ‘work from anywhere’ era, it is important to know that Cyprus offers cheap high-speed internet and has already started offering 5G internet speeds. Paphos in particular, is becoming a ‘smart city’ where free wireless internet will be readily available to the public. This means you can easily work from the beach most of the year.

In addition to the above, several incubators and accelerators can assist you with funding, tech, start-up, and business consulting. We can happily connect you to such consultants.

Employment

At a certain point, you may need to employ local staff. The cost of employing a Cypriot employee is low in relation to EU standards and, in certain cities, such as Paphos, lower than the rest of Cyprus. The law clearly references notice periods for termination, payment in lieu of notice, and annual leave. While in some areas there may be a minimum salary, in most professions, there is no minimum pay.

If you are considering relocating employees from another country, you should keep in mind that there is no restriction for European Union citizens who can get a work permit in Cyprus easily with a simple registration.