Judicial overhaul in Israel pushes companies to Cyprus
07:00 - 04 August 2023
Cyprus is anticipated to be a prime choice for Israeli companies looking to relocate following their country’s parliament recently passing in law a key part of judicial overhaul.
The new legislation effectively abolishes a “reasonableness” clause that allows Israel’s unelected supreme court to overrule government decisions.
Several significant Israeli companies have already been successfully operating in Cyprus for a number of years, including but not limited to eToro, Plus500 and Globe lnvest. And, speaking to CBN, Nick Nicolaou, Partner, Assurance, EY Cyprus, who has extensive experience of the Israeli business scene, believes that the recent developments will prompt more to follow.
“There seems to be a sense of concern within the business community in Israel due to the new changes that have been passed in legislation and I think it will impact Cyprus positively,” Nick Nicolaou observed.
He continued that, particularly since Cyprus was already laying the groundwork for the island to become a “tech valley”, it was in an excellent position to attract Israeli businesses seeking to establish presence in Cyprus. And, according to Nicolaou, this interest is not limited to just tech companies.
He noted that, as well as already positioning itself as a tech hub, Cyprus offered many other benefits to potential Israeli businesses, including the two countries’ geographical proximity and a gateway to Europe.
“Cyprus is an easy destination for their families. It is only 40 minutes away. They can stay here for four or five days a week and visit Israel on the weekend,” Nick Nicolaou said.
“Also of crucial importance is the solid cooperation Cyprus and Israel have developed, particularly over the last few years. A healthy political relationship and close cultural ties also play a key role in making Cyprus an excellent choice.”
While declining to reveal particular names at this time, Nicolaou said that he had already heard about tech companies from Israel that had expressed a desire to expand their operations in Cyprus.
He has become aware of interest from at least one company in the sports technology sector while other companies in sectors from agritech to medical tech, may also be interested in establishing presence in Cyprus. “Yes, they have other options, they may consider Greece or Portugal, but I think Cyprus is perfect. I would say it is the first choice,” the expert suggested.
With protests continuing in Israel, the bill was passed into law by a final vote of 64-0 in the Israeli parliament with every member of the coalition voting in favour. Opposition lawmakers had abandoned the Knesset plenum in protest.
The country’s Prime Minister, Benjamin Netanyahu, has described the bill as “a necessary democratic act” that would “return a measure of balance between the branches of government”. The country’s Supreme Court, however, has also agreed to discuss, on 12 September, petitions to strike down the recently ratified bill.
However, even before the bill was passed into law, a number of startups and other companies in Israel had already begun exploring relocation options, with Cyprus emerging as a popular choice.
As reported by Reuters, Start-Up Nation Central, which describes itself as a non-profit organisation that connects Israeli innovation to the world to help international entities solve global challenges, carried out a relevant survey. The survey found that, by late July, nearly 70% of Israeli startups had already taken action to relocate parts of their business outside Israel.
The study, completed by professionals representing 521 companies, said 68% of Israeli startup companies "have begun taking active legal and financial steps, like withdrawing cash reserves, changing HQ location outside Israel, relocation of employees and conducting layoffs," Reuters reported.
Additionally, 22% of companies said they had diversified cash reserves outside Israel and 37% of investors say companies in their portfolios have withdrawn some of their cash reserves and moved them abroad, all before the legislation was even passed into law.
A popular destination for company relocation from abroad, Cyprus appears to have attracted the attention of more Israeli companies looking to move their businesses.