Cyprus and Israel: Natural partners

When Israeli companies think about global expansion or international investment, the ‘usual suspects’ often come to mind – the United States, Europe, the Gulf states or Asia.

But just 45 minutes away by air, across the Eastern Mediterranean, sits a dynamic, business-friendly country that is increasingly positioning itself as a strategic hub for international business: Cyprus. While the cultural, historical and geographical ties between Israel and Cyprus are well-established, in my opinion many Israeli entrepreneurs and investors still underestimate the scale of opportunity and significant potential advantages that Cyprus offers for Israeli businesses seeking growth, diversification and regional partnerships.

Why Cyprus Makes Sense for Israeli Investors

Cyprus and Israel already enjoy strong diplomatic and economic relations. With shared interests in energy, tourism, technology and security, the two nations have laid a solid foundation for cooperation. But beyond the political goodwill, the practical advantages for Israeli businesses are clear: proximity and convenience, EU membership and a business-friendly environment. Less than an hour’s flight from Tel Aviv to Larnaca means easy access for business meetings and operations. The time zone alignment also allows seamless communication. As a full member of the European Union and the eurozone, Cyprus provides Israeli businesses with direct access to EU’s single market of over 400 million consumers – a significant advantage for companies seeking to scale operations across Europe without the complexities of operating directly from Israel. Whether your business is in shipping, fintech, real estate or renewable energy, Cyprus serves as a strategic platform for reaching European clients and partners. Cyprus operates under an English common law system, offering transparency, legal certainty and investor protection. As an added advantage, at 12.5%, Cyprus has one of the lowest corporate tax rates in the EU.

Key Sectors Where Cyprus Offers Strategic Value

For Israeli companies, especially those looking for regional bases or EU entry points, Cyprus offers sector-specific opportunities that align well with Israeli expertise and global ambitions.

Shipping and Maritime: A Natural Alliance

Israel has a thriving shipping and logistics sector and Cyprus ranks among the world’s leading ship management centres. The island’s tonnage tax system, approved by the EU, offers highly competitive conditions for shipowners and managers. There is significant potential for Israeli shipping companies, maritime tech startups and logistics firms to partner with or establish operations in Cyprus to leverage its infrastructure and access to global maritime activities. As maritime regulations evolve toward greener operations and digital transformation, Cyprus is well-placed to collaborate with Israeli innovation in areas like cybersecurity, A.I. and maritime analytics.

Energy and Renewables: A Joint Growth Story

Energy cooperation between Israel and Cyprus has deepened significantly in recent years, particularly in natural gas exploration. But there’s more on the horizon. Cyprus is pushing forward with its renewable energy plans, especially in solar power, wind energy and energy efficiency projects – sectors where Israeli technology and expertise excel. For Israeli investors focused on green energy, cleantech or environmental technologies, Cyprus offers both market access and joint project opportunities in line with the EU’s Green Deal and climate goals.

Fund Management and Financial Services: Scale into Europe with Confidence

The investment fund sector in Cyprus is growing rapidly. With well-regulated Alternative Investment Funds (AIFs) and UCITS-compliant funds, Cyprus offers flexible and cost-efficient fund structures that allow managers to market across Europe using EU passporting rights. For Israeli asset managers, family offices and investment funds looking to scale internationally, Cyprus provides an ideal jurisdiction to set up funds, manage assets and operate financial services within a fully regulated EU framework without the high operating costs of places like Luxembourg or Dublin.

Real Estate and Tourism

Cyprus continues to attract foreign investment in real estate, especially in commercial properties, luxury resorts and tourism-related infrastructure. Israeli investors are no strangers to the Cypriot property market but there is still untapped potential in emerging areas like year-round tourism, wellness tourism, retirement communities and sustainable real estate developments. As Cyprus promotes year-round tourism and diversifies beyond traditional beach holidays, Israeli investors and hospitality operators have a prime opportunity to be part of this growth story.

Innovation, Startups and ICT

Cyprus is actively fostering a startup and innovation ecosystem with government incentives for R&D, digital nomad programmes and tax benefits for intellectual property (IP) development. The country has seen growth in fintech, blockchain, cybersecurity and healthtech – all areas where Israeli companies excel. Setting up an R&D or regional sales office in Cyprus can help Israeli startups access the EU market, recruit international talent and enjoy IP tax benefits, while remaining close to home.

Strategic Positioning with Cultural Synergies

Beyond business logic, there is a human element as to why Cyprus and Israel make such natural partners. The cultural compatibility between the two nations is strong – with shared Mediterranean values, a direct communication style and mutual respect for entrepreneurship. With English being the predominant business language in Cyprus, doing business here is straightforward and relationship-driven. This cultural compatibility lowers barriers and creates smoother pathways for Israeli businesses entering the market. The growing number of direct flights, business conferences and networking initiatives between the two countries further support this natural synergy.

Navigating Challenges, Unlocking Opportunities

Of course, no investment decision comes without considerations. Cyprus’ small domestic market means that most ventures need to be regionally or internationally focused to achieve scale. Compliance with EU and international standards on anti-money laundering (AML) and know-your-customer (KYC) regulations is strict, though this actually enhances Cyprus’ credibility as a serious jurisdiction, not a tax haven. For Israeli investors already accustomed to working in highly regulated environments, these factors should be seen as strengths, not obstacles.

Cyprus and Israel – Stronger Together

In today’s fast-changing global economy, agility, proximity and strategic alliances matter more than ever. For Israeli businesses, Cyprus represents more than just a neighbour – it is a gateway to Europe, a partner in energy and innovation and a stable platform for global growth. Whether through maritime ventures, clean energy investments, fund management, real estate or tech collaborations, just across the water, Cyprus offers Israeli investors the tools and environment to expand internationally. For those willing to explore beyond the usual routes, Cyprus remains one of the most promising destinations – especially for Israeli entrepreneurs ready to take their next step on the international stage.

• By Christakis P. Papavassiliou, President, Cyprus-Israel Business Association

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.