Doing Business in Cyprus

Do you want to expand your business into Cyprus or hire employees there? Here are some key things you need to know about a Cyprus expansion.

Cyprus Economy Overview

Currency

Euro

Working hours

40 hours/week

Public/bank holidays

14 public holidays

Capital

Nicosia

Languages

Greek and Turkish

Population

1.2 million

Minimum hourly salary

5-6 Euros

Tax year

1st Jan – 31st Dec

Date format

YYYY/MM/DD

Misclassification penalties

Employers who misclassify employees as independent contractors may face back taxes, fines, and interest. These cases can be audited by labor authorities to ensure proper worker classification and compliance with social insurance regulations.

Fun fact

Cyprus is known as the legendary birthplace of Aphrodite, the Greek goddess of love and beauty. The island’s rich history and cultural heritage make it a popular tourist destination.

Cyprus is a financial and business hub in Europe and the Mediterranean and has been a part of the EU since 2004. The country’s economy has been growing for decades and reached a GDP of $34.79 billion in 2024. The population of the country also grew to 929,000 but this growth hasn’t kept pace with the economy, leading the nominal per capita GDP to reach $37,700 in 2024 and make this a high-income country.

If you’re considering doing business in Europe and in Cyprus in particular, this guide will take you through the opportunity the economy presents and the many possible ways to get into this market.

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Overview of Cyprus' Economy

As an EU member, Cyprus has used the Euro (EUR) as its currency since 2008. The country experienced incredible growth for decades, with its GDP rising from just $2.31 billion in 1980 to $27.96 billion in 2009. It went through a financial crisis after that which slowed and reversed growth to reduce GDP to $19.91 billion in 2015. However, since restructuring, growth has returned, and even after a slowdown during the global pandemic, the country’s GDP reached $34.79 billion in 2024. In 2025, growth is expected at a further 3.1%.

Sector	Contribution to GDP	Key Highlights
Services	86.8%	Dominated by tourism, financial services, and shipping.
Industry	6.8%	Includes manufacturing and mining.
Construction	5.0%	Driven by real estate and infrastructure projects.
Agriculture	1.4%	Focuses on citrus fruits, vegetables, and olives.

Services dominate the Cypriot economy. Of a labor force of around 516,000 workers, roughly 80.5% are employed in the services sector, with finance, tourism, shipping, and technology as the most significant employers. Around 17.2% of workers are employed in industry and 2.3% in agriculture. Services contribute 72.44% of GDP, while industry contributes 13.47% and agriculture just 1.65%. In terms of manufactured products, Cyprus exports ships, petroleum, medications, and cheese largely to Hong Kong, Greece, Lebanon, the UK, and Liberia. However, it also imports refined petroleum, ships, cars, and medications from Greece, Turkey, Italy, China and Israel.

With an expected per capita GDP of $40,500 expected in 2025, Cyprus is a high-income country. It also has a very high human development index (HDI) of 0.907, ranking it as the 29th highest country in the world. Workers have been protected by a fairly high minimum wage of 1000 EUR/month (about 1020 USD) since January 2024. Employers also have to pay 23.4% in addition to their employees’ salaries which adds to the cost of Cypriot employees.

Taxes

Employer tax: 15% – 20%

Social Insurance

8.3% of employee’s gross salary

Unemployment insurance

0.5% to 2%

Medical insurance

2.9%

Redundancy Fund

1.2%

Industrial Training Fund

0.5%

Social Cohesion Fund

2% (calculated on total emoluments, with no upper limit)

Employee tax: 10% – 12%

Social Insurance

8.3%

General Healthcare System (GHS)

2.65%

Medical insurance

Around 2% plus a fixed additional fee

Gross income

- Up to 19,500
- 19,501 – 28,000
- 28,001 – 36,300
- 36,301 – 60,000
- 60,001 and above

Progressive tax rate

Business Regulation in Cyprus

Cyprus is very welcoming to foreign investment and seeks it out actively. There are several different ways to enter the Cyprus market or hire employees in the country and when doing so, there are some key regulations to be aware of, including the following:

Business registration and tax compliance in Cyprus

Newcomers to the Cypriot market generally choose to set up either limited liability companies (LLCs), public limited companies (PLCs), or free zone companies (FZCs). To open up an LLC, you need only one shareholder with no minimum paid-in capital and one director of any nationality, as well as a secretary who must be resident in Cyprus. For a PLC, requirements are more stringent. You’ll need seven shareholders two directors of any nationality, and a secretary who must be resident in Cyprus. You’ll also need 25,000 EUR of minimum share capital, 25% of which must be paid in for incorporation. Cyprus has one free zone where foreign investors can set up FZCs and take advantage of VAT exemptions on non-EU goods in transit and deferred payments of VAT for merchandise from the EU. This zone also offers subsidized industrial infrastructure.

Taxation in Cyprus

CIT, or corporate income tax, is assessed at only 12.5%, making it one of the lowest rates in the EU. The standard rate for VAT in Cyprus is 19%, though special reduced rates of 9%, 5%, and 3% exist for certain goods and services. While there are no payroll taxes in Cyprus, rates for social schemes are significant as these total 23.4% of employees’ salaries. These contributions go toward the state social insurance fund, redundancy fund, training development fund, social cohesion fund, holiday fund, and the General Healthcare System (GHS). Employers are also required to withhold personal income tax for their employees at rates from 0% to 35%, depending on income levels.

Employment laws in Cyprus

The rights of workers and their employers are enumerated in the Constitution of Cyprus 1960 (amended 2013) and many other laws and acts. Cypriots normally work 38-40 hours per week and can’t work more than 10 hours a day or 48 hours per week, including overtime. Overtime hours must be paid at the rate of 150% of normal wages or be compensated by paid time off. Employees who work five days per week are entitled to 20 working days of annual leave, while those working six days per week get 24 working days. All workers are entitled to 14 paid public holidays per year as well. Eleven weeks of maternity leave are compulsory for expecting mothers though they’re entitled to a total of 18 weeks fully paid by social security. Fathers are entitled to two weeks of leave on the birth or adoption of a child which is paid at 72% of their normal salaries by social security.

What Are the Benefits of Doing Business in Cyprus?

Doing business in Cyprus can produce some clear benefits for foreign investors. These include:

Favorable Tax Regime

Cyprus offers one of the lowest corporate tax rates in the European Union, making it highly attractive for international companies looking to optimize their tax structures. Additionally, the island has extensive double-taxation treaties with many countries, which helps businesses avoid being taxed twice on the same income. This advantageous environment extends to various tax exemptions and benefits, such as those on dividends and capital gains. As a result, companies can often reinvest more of their profits back into their operations and growth.

Strategic Geographic Location

Situated at the crossroads of Europe, Asia, and Africa, Cyprus provides businesses with convenient access to diverse markets in the region. This position is particularly useful for companies looking to bridge Eastern and Western economies. With modern ports and international airports, Cyprus serves as a major shipping and logistics hub, enabling efficient distribution of goods. Its proximity to emerging markets in the Middle East also gives companies a competitive edge in regional trade.

Incentives for Foreign Investment

To attract international investors, Cyprus offers a range of incentives and supportive policies, such as grants, tax breaks, and funding schemes. Specific programs target innovation and research, encouraging businesses to base their development activities on the island. Furthermore, the government’s emphasis on modernizing key sectors—like technology, finance, and tourism—creates a conducive environment for strategic partnerships. These incentives, combined with the other advantages Cyprus has to offer, foster a robust climate for business growth and success.

Fast and Easy Entity Set Up

Establishing a business in Cyprus is relatively straightforward, thanks to efficient bureaucratic processes and supportive government initiatives. Registration procedures and licensing requirements have been streamlined over the years, reducing red tape for entrepreneurs and investors. With the help of local professional services like law firms and corporate service providers, setting up a new entity can be completed in a matter of days. This ease of doing business encourages foreign direct investment and speeds up market entry.

Business Expansion Options in Cyprus

Hiring employees in Cyprus or entering the market in this country can be an excellent business decision. There are many ways to expand into Cyprus and several different types of service providers to help you do so.

Cyprus Employer of Record

Similar to a PEO, a Cyprus Employer of Record can also manage your workers’ HR needs. However, it also hires these employees on your behalf when you don’t have your own entity in Cyprus.

Learn more about EOR in Cyprus

Recruitment Agency

Professional recruiters can help you source talent in Cyprus quickly. They use pre-vetted talent pools and targeted external advertising to help you find qualified candidates to fill your hiring needs. These agencies work on commission, earning their fee when you hire one of the candidates they put forward.

Learn more about Recruitment Agencies in Cyprus

Cyprus Professional Employer Organization

If you own an entity in Cyprus, you can outsource your HR functions to a Professional Employer Organization (PEO). It will take care of payroll, taxes, benefits, and maintaining compliance with local laws.

Subsidiary Incorporation

If you want to hire local workers on your own and participate actively in the Cyprus market, incorporating your own entity may make the most sense. Investors usually choose to set up LLCs, PLCs, and FZCs in this country, and all can be registered relatively quickly and easily.

For example, an LLC can take only six days to set up. The following five steps are necessary in this case:

Reserving a company name and having it approved by the Registrar of Companies
Preparing a memorandum and articles of association
Officially registering the company with the Registrar of Companies and Official Receiver
Obtaining a tax identification number and registering for VAT with the Inland Revenue Department
Registering as an employer with the Ministry of Labor, Welfare, and Social Insurance

Branch Office

Branch and representative offices are considered the same in Cyprus. Foreign companies registered abroad can open branch offices and need one resident representative to do so. The parent company has unlimited liability for the debts and losses of its branch.

Staffing Agency

A staffing agency can help you fill your short-term talent-sourcing needs. If your company requires workers to replace employees on leave or to add to your workforce when you need to scale, these agencies can fill staffing orders as quickly as the next day.

Business Opportunities in Cyprus

Cyprus has positioned itself as an attractive destination for business, thanks to its strategic location, favorable tax regime, and robust financial sector. As a member of the EU and a gateway between Europe, the Middle East, and North Africa, the country provides unique opportunities across multiple industries. With low corporate tax rates, investor-friendly policies, and a highly skilled workforce, Cyprus continues to draw international entrepreneurs and investors.

Business Opportunity	Reason
Financial Services & FinTech	Cyprus is a major offshore banking and FinTech hub, benefiting from EU regulations and investor-friendly policies.
Tourism & Hospitality	A top Mediterranean destination with strong demand for hotels, resorts, and sustainable tourism ventures.
Shipping & Maritime	One of the world’s largest ship management centers, with tax incentives and strategic trade positioning.
Real Estate & Property Development	High demand for luxury real estate and commercial projects, driven by foreign investors and residency programs.
Technology & Startups	A growing tech ecosystem with government support, startup funding, and digital transformation initiatives.

Cyprus offers a business-friendly environment with one of the lowest corporate tax rates in the EU (12.5%), making it an attractive base for global operations. The stable economy, skilled workforce, and extensive trade agreements position it as an ideal location for businesses looking to expand into European, Middle Eastern, and African markets.

With strong government incentives, infrastructure, and financial support for various industries, entrepreneurs and investors can leverage Cyprus’s strategic advantages to build profitable ventures.

Expand Your Business to Cyprus, with Remote People

Cyprus offers a robust platform for international businesses. Partner with Remote People for smooth market entry and workforce management. To learn more about our Cyprus expansion and hiring options, get in touch with our Cyprus experts.