Listen to the Article: Year-End Review of the Investment Attracting Action Plan in Cyprus

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In October 2021, the Council of Ministers of Cyprus approved the "Strategy for Attracting Businesses for Activities or/and Expansion of their Activities in Cyprus".

The strategy is designed to serve as a crucial undertaking to draw in both overseas investments as well as talent. To strengthen Cyprus' position as a global hub for high-growth company, the existing investment policy has been thoroughly examined, expanded, and simplified to encompass a number of actions and reforms in numerous areas.

Fazzaco published an article analyzing the new strategy at the end of 2021​. The strategy mainly consists of the preferential policies changes in the following aspects, including easing foreign business registration process, employment of foreign nationals and their family reunion in Cyprus, streamlining work permit, social insurance benefits, digital nomad visa, tax policies, Cypriot citizenship etc. Among them, the business registration process is the most prominent part for investment firms looking to start their business in the country.

Now one year has passed, let’s take a look at what the new strategy has brought to Cyprus so far in terms of attracting new businesses.

The FTBA-to-BFU Process Greatly Eased Foreign Business Registration

According to the new strategy, the "Fast Track Business Activation Mechanism" changed into the "Business Facilitation Unit (BFU)" in 2022. The Unit is currently the single point of contact for foreign businesses.

The processing of requests for the registration of a company in Cyprus or the extension of the operations of existing enterprises is reportedly made faster and more effective with the new BFU in place.

​Particularly, in addition to quicker issuance of residence and employment permits, eligible third-country expats may also bring their families to Cyprus for reunification, including visa application assistance. All of which have assisted the growth of the number of firms opening business in Cyprus throughout this year.

Firms that Started / Expanded Business in Cyprus during 2022

According to the coverage of Fazzaco, a number of financial services firms have either started or expanded their business in Cyprus this year. Respectively, they fall in the categories of fintechs (payment solutions, online trading tech etc), infrastructure (platform-as-a-service), cryptocurrency exchanges, online brokerages, etc. Here’s a brief look at some of those firms.

In January, Trust Payments, a fintech specializing in frictionless payments and value-added services for SMEs, announced the opening of its Cyprus office​.

In March, the London-based technology provider for Forex brokers, Your Bourse, announced that it opened their new office in Limassol, Cyprus​, which is claimed to be the first milestone in their global expansion plans.

In July, one of the world's fastest growing crypto platforms, and the Qatar World Cup official sponsors, Crypto.com, announced that it has received approval from CySEC that enabled the company to offer a suite of products and services to Cypriot customers.

In September, FTX Europe received approval from CySEC to operate as a Cyprus investment firm​ (CIF). Ironically, as FTX collapsed in early November​, and CySEC quickly took action and asked FTX EU to suspend its operations on Nov. 9. On the other hand, CySEC granted the Binance Class 3 registration as a Crypto Asset Services Provider (CASP) in October​.

In October, the Australia-based online brokerage firm, ThinkMarkets, obtained a license in Cyprus through the acquisition of a local licensed entity​.

Equiti Group, a leading provider of online trading technology and multi-asset financial products, secured a license from CySEC in October and one month later, it opened a new office in Limassol​.

And most recently in December, online broker Swissquote secured the Cyprus Investment Firm (CIF) license from CySEC​ via the broker's Cyprus-based subsidiary, Swissquote Capital Markets Ltd (CY).

New Strategy Boosted Strong GDP Growth in 2022

The GDP growth of Cyprus in the first half of 2022 was as high as 6.3%, the incredible growth index gradually levels off and stabilizes at 5.6%. However, following solid growth in the first half of 2022, economic activity in Cyprus slowed down considerably towards the end of the year due to global headwinds and persistent inflationary pressures.

Nevertheless, the GDP growth in 2023 is projected at 1.0%, much lower than that of 2022, which is 5.6%, and 6.6% in 2021. The unemployment rate, on the other hand, is expected to remain at 7.2% and hopefully come down to 6.9% in 2024.

On Nov 30, 2022, the Council of Ministers approved the Amendment of the Policy for the Registration of Companies in the Register of Foreign Interest Companies.

​The Decision alters the requirements for foreign interest company eligibility and explicitly adds the requirement that a firm must demonstrate an initial investment of at least €200,000 in Cyprus, which shall be demonstrated by submitting the relevant documents.

The Decision entered into force on December 12, 2022.

​Fazzaco believes that as the Cypriot government rolled out the new amendment regarding higher initial investment amount for foreign company registration, it will further standardize those foreign businesses who want to enter the market, and amplify their role in helping the economic growth of Cyprus. As the country where CySEC situates, an important regulator in the forex industry, Fazzaco will still closely monitor the economy, regulation, and policy changes of Cyprus.