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 2.5% for qualifying companies while you can protect your intellectual property rights, locally, European-wide and globally with simple registrations.
Frequently, individuals involved in technology companies relocate to Cyprus as well to take into 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 concerns for any tedious tasks.
For start-ups, we can offer flexible low-cost agreements with discounted fees tied to future benefit if the start-up is successful.
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 2.5%. 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 other applies for companies in software development.
There are other tax benefits, such as 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, which represents commercial interest rates (therefore the 2.5% effective taxation can be further reduced).
If you already have an existing company abroad, you can either 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.
For our general taxation guide you can click here.
Cyprus protects the following:
- Trademarks – for our trademark registration guide click here
- Tradenames – for our tradenames guide click here.
- Patents – for our patents protection guide click here
- 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.
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:
- For specialized work in a company whose third country employees will not be more than 30% of its total number of employees for which you can read more details in our guide here; or
- Under an entrepreneur’s visa for which you can read our guide here; or
- 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). For more information click for our guide here;
There is nothing prohibiting the use of freelancers whether in Cyprus or abroad the cost of which will be deductible as an expense from the company.
Cyprus offers low-cost office spaces (long-term, short-term or per day) for the development of 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 that you can easily work from the beach most of the year.
In addition to the above, there are several incubators and accelerators that can assist you with funding, tech, start-up and business consulting. We can happily connect you to such consultante.
At a certain point you may need to employ local staff. The cost of employing a Cypriot employee is low in relation to the EU standards and in certain cities, such as Paphos, lower than the rest of Cyprus. The law makes clear references to notice periods for termination, payment in lieu of notice as well as 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. For non-EU employees you can read our guide here.
The above information is for information purposes only, accurate only on the date given and should not be relied upon without advice.