Cyprus and foreign direct investment

In a world marked by economic uncertainty and rapid transformation, investors are increasingly seeking destinations that offer both opportunity and stability. Cyprus is emerging as just that – an agile and resilient economy with a long-term vision for growth. While its natural beauty and strategic location have always drawn attention, it is the country’s ongoing commitment to reform, innovation and international engagement that is redefining its role on the global investment map.

Cyprus’ advantages are manifold: a competitive corporate tax rate of 12.5%, a robust network of over 65 double taxation agreements, a legal system based on English Common Law, and full EU membership. Combined, these elements make the island not just attractive but exceptionally accessible to international investment.

Strategically located, Cyprus serves as a vital gateway to the Middle East, North Africa and beyond. Ports, airports and a modern telecoms network create seamless connections, enabling global businesses to establish regional headquarters and service lines with ease. Yet it is not just geography or policy that makes Cyprus a compelling investment case. It is the island’s resilience and capacity for reinvention. Following the 2013 financial crisis, Cyprus undertook necessary reforms, enhancing regulatory compliance and investor confidence. The result is a streamlined business ecosystem committed to quality, not just quantity. The island has consistently demonstrated an ability to adapt swiftly to evolving global dynamics – a key factor that has allowed the local economy to maintain an ongoing healthy influx of foreign capital to support economic growth.

Historically, Foreign Direct Investment (FDI) has concentrated on financial services, real estate and ICT– natural for a service-based economy with mature and well-developed sectors. Between 2021 and 2023, the real estate sector saw FDI inflows triple, while technology began to emerge as a transformative force. Indeed, sectoral diversification has become a cornerstone of Cyprus’ investment strategy. By mid-2024, more than 270 companies, including 70 international tech firms, had relocated their operations to Cyprus via the Ministry of Energy, Commerce & Industry’s Business Facilitation Unit. Today, the tech sector contributes over 10% to Cyprus’s €32 billion GDP and employs approximately 17,000 people. During the COVID-19 pandemic, this digital infrastructure proved critical to economic resilience, laying the groundwork for a future-ready economy.

Traditional strengths such as professional services and shipping remain vital pillars of the economy but momentum is also being driven by fintech, ICT, higher education and renewable energy. Offshore natural gas discoveries and major infrastructure projects, such as the Great Sea Interconnector, are positioning Cyprus as a potential regional energy hub. In support of innovation, the country has introduced tax incentives for R&D and IP development, launched the Digital Nomad Visa and is actively cultivating a start-up ecosystem culture. The Cyprus Equity Fund is the latest initiative aimed at pre-seed and seed-stage ventures, with €27 million in government and EU funds and more to be raised.

Real estate, a perennial draw for foreign investors, continues to evolve. Demand remains strong for luxury residential and commercial developments, while growth in high-end tourism and education-led investment offers further long-term potential. According to data from Invest Cyprus, investment in 2024 was distributed across key sectors as follows: 35% (high-tech), 25% (business and financial services) and 38% (sustainable projects). In terms of GDP growth by sector (2022–2023), the figures are equally telling: 18% in information and communications technology, 14% in financial and insurance services, 3% in education and 1% in shipping. Cyprus’ investment appeal is further enhanced by its highly educated, multilingual workforce, with many professionals having trained in the UK, the US and Europe. In recent years, over 10,000 foreign professionals have relocated to Cyprus – many with their families – drawn by the island’s safety, quality of life and cosmopolitan outlook. This influx has also stimulated growth in private education and associated service sectors.

Despite global headwinds, Cyprus attracted €3.2 billion in foreign direct investment, in 2023 – on a per capita basis, this ranked Cyprus second in the EU and among the top ten globally. The island’s message to the world is growing clearer by the day: it is open for business, open to innovation and ready to claim its place as a modern investment hub. In a world shaped by unpredictability, Cyprus offers something rare – clarity, connection and long-term commitment. Growth may not always be flashy but it is measured, meaningful and enduring.

This article was first published in the special publication Doing Business in Cyprus. To view it, click here. To read the entire publication, click here.