The huge potential of ICT, the attraction of talent and an ‘x-ray’ of the FIC companies in Cyprus

The enormous dynamic that the information technology and telecommunications (ICT) sector is developing in Cyprus, through the arrival and activity of dozens of foreign companies and thousands of workers in the sector on the island, has been identified and reflected in the 3rd report on the competitiveness of the Cypriot economy published by the Cyprus Economy and Competitiveness Council.

As stated in the report, in 2022, the share of the ICT sector in new businesses was impressive, as 37% of newly registered FICs (Foreign Interest Companies) belonged to this sector.

The report highlights the fact that tens of thousands of high-income earners, estimated at around seventy to eighty thousand, have relocated to Cyprus in recent years, with the newcomers and the companies they work for expanding the country's production capacity, bringing in knowledge and expertise and having significant spending power to purchase goods and services, supporting the local economy.

The Council, in its report, makes a special reference to the Digital Nomad Visa project, which allows citizens from countries outside the EU and outside the European Economic Area (EEA) to reside in Cyprus provided that their work comes through IT technologies for companies or clients established abroad.

Pointing out that the purpose of the plan is to strengthen Cyprus as a centre for the provision of electronic services, the Economic and Competitiveness Council cites figures from the Interior Ministry, according to which the total number of new residents from this plan seems to be between 1,000-2,000.

The findings of the Council in relation to the attraction of talent through the adoption of the relevant strategy and the incentives granted from time to time by the state are extremely interesting.

It is recalled that in October 2021 the Council of Ministers approved the new strategy for attracting companies to operate and/or expand their activities in Cyprus, which came into effect on 2 January, 2022.

Regarding the performance of the strategy, which is noted to have been updated in November 2022, the report states that through the Business Facilitation Unit (BFU), a total of 1640 FICs were registered in 2022, while for 2023 (until October 31) the number dropped to 232.

The large number in 2022 appears to be due to external factors, such as the war in Ukraine.

In 2022, the majority of FICs (around 86%) registered in Cyprus fell under the criterion of "third country shareholders owning more than 50% of the company's total share capital."

Companies registered as "Economic" and "Hi-Tech" made up 7% and 4% of all registered companies respectively. The situation was similar in 2023.

In 2022, approximately 37% of the registered FICs were engaged in “Software and Video Games Development,” 17% in “Investment Holding and Financing” and 13% in “business advisory and legal consultation.”

In 2023, the proportion of FICs engaged in “Software and Video Games Development” declined, while an increase was seen in the “Investment Holding and Financing” category.

It is worth noting that last November, and with the aim of further attracting highly qualified people and their families to Cyprus for employment, the Parliament approved a law proposal submitted by Nicholas Papadopoulos, modernising the legislative framework regarding the qualifications and criteria for the naturalisation of foreigners.

(Source: InBusinessNews)