Cyprus, a beautiful island in the eastern Mediterranean, is attracting more and more expats from all over the world. With its laid-back lifestyle, stunning coastal landscapes, endless sunshine and vibrant culture, Cyprus has an irresistible appeal. In this article, we will explore the pros and cons of living in Cyprus to help you decide if this Mediterranean island is the perfect destination for you.
Advantages of living in Cyprus
Attractive real estate prices in Cyprus
Property prices in Cyprus are extremely affordable compared to Western Europe. Monthly rents for modern city apartments are low, and property purchase prices are also very attractive for expats. On average, properties in Cyprus sell for €1,600 per square meter. In the main cities, average property prices are around €2,300 in Limassol, €1,750 in Nicosia, €1,350 in Larnaca and €2,000 in Paphos.
Affordable cost of living in Cyprus
The cost of living in Cyprus is around 10% cheaper than the EU average. Although the cost of living is low, the quality of life is high, as Cyprus is considered one of the safest countries in the world. The affordable cost of living contributes to the fact that the relaxed island lifestyle is particularly attractive for expats and enables a positive work-life balance.
Tax advantages in Cyprus
In Cyprus, residents enjoy significant tax advantages. The standard income tax rate here is 12.5%, which is the lowest in Europe. In addition, property owners can benefit from tax concessions for privately used properties: VAT can be reduced from 19% to 5%. An annual council tax of around €60 to €150 is all that property owners have to pay, as there is no annual property tax.
Good healthcare in Cyprus
The high quality of healthcare is one of the main reasons why Cyprus is so popular with expats. In vitro fertilization (IVF), dentistry, orthopedics and cardiology are some of the most popular medical fields for foreigners. In 2023, Cyprus’ healthcare system ranked 29th in the world, outperforming countries such as the UK, Canada, Greece and Portugal.
High economic growth rates
Cyprus’ economy is growing rapidly, with tourism alone accounting for more than 80 % of this growth. After a decline in GDP growth during the pandemic in 2020, the country’s economy recovered quickly with a GDP growth rate of 5.5% in 2021. The low tax rates have allowed many international companies to prosper.
Simple obtaining of a residence permit
For expats looking to move to Cyprus, the process of obtaining a residence permit is quick and efficient. The first step is to obtain a foreigner registration certificate, which takes about two weeks. Expats can then obtain a residence permit within 3 to 8 weeks. Investors can obtain a permanent residence permit in 3 to 6 months, allowing for a quick and easy transition.
Disadvantages of living in Cyprus
Political division in Cyprus
The Greek-Turkish split is an essential part of Cyprus’ history and has led to political instability. Simply put, the island is divided into two parts by the Green Line: the north for the Turkish Cypriots and the south for the Greek Cypriots. In recent years the situation has been stable, but it is something that newcomers should be aware of.
Rising electricity prices in Cyprus
Electricity tariffs in Cyprus are quite high and rose by 75 % in 2022 alone. This is mainly due to the high energy consumption in both the private and public sectors. Due to the hot weather on the island, air conditioning is needed in summer and heating and boilers in winter.
Natural hazards
The incidence of natural disasters such as earthquakes, floods and forest fires is quite high in Cyprus. Every year, the Geological Survey of Cyprus registers around 500 tremors, although no major earthquakes have occurred in recent years.
Slow pace of life in Cyprus
The relaxed lifestyle in Cyprus is very popular with expats. However, this also means that things that need to be done can take a while. Whether you’re organizing documents with a government agency or waiting for road work to be completed in the neighborhood, be prepared to wait longer than you’re used to at home.
Poor infrastructure in Cyprus
Cyprus is not easy to travel to in terms of accessibility. Despite the fact that it is an island, you will need a car. The road infrastructure leaves a lot to be desired and traffic jams are frequent. This is one of the biggest disadvantages of living in Cyprus. If you are looking for alternative travel options, there are buses, but they are not always reliable.
Limited work opportunities
The labor market in Cyprus is quite small. Although the unemployment rate fell to 4.8 % in the second quarter of 2023, the average in previous years was around 7 % overall and 17.6 % for young people. This means that expats seeking career opportunities in Cyprus may encounter certain difficulties.
Low urban development
Despite its appeal, Cyprus is largely a rural country. With the exception of a few harbor towns with medieval architecture, the buildings largely reflect the developing countries. There are also cultural events in Limassol. Elsewhere, however, expats may find that there is a lack of entertainment options.
Summary of advantages and disadvantages
Living in Cyprus can be an incredibly enriching experience. The island lifestyle, strong economy and healthcare system are some of the biggest advantages Cyprus has to offer. At the same time, however, there are certain disadvantages that you should consider before deciding whether this Mediterranean country is right for you.
The best cities to live in Cyprus
There are many beautiful towns and villages in Cyprus that attract expats from all over the world. No matter which lifestyle you prefer – whether active or relaxed – you will find the best place for you in Cyprus.
Expats typically choose four main destinations for their relocation: Limassol, Nicosia, Larnaca and Paphos.
Limassol
Limassol is the most popular place among immigrants. The city is located on the south coast of the island and offers a very modern and cosmopolitan atmosphere. Limassol offers numerous job and business opportunities and has a large expat community. The city has many attractions and offers endless possibilities for those who prefer an active lifestyle: you can go horseback riding, skiing, cycling and explore the city’s surroundings thanks to various nature trails.
Nicosia
Nicosia is the capital of Cyprus. As the city is located inland, it has no direct access to the sea. Therefore, it is not as crowded with tourists as the coastal cities, but has a large expat community. Nicosia is the business, financial, educational and cultural center of Cyprus. The country’s five leading universities are located here: the University of Cyprus, the University of Nicosia, the European University of Cyprus, the Open University of Cyprus and Frederick University. Nicosia is home to more than 45 foreign embassies, 58 consulates and offices of many international companies such as Deloitte, Microsoft, Oracle and Ernst & Young.
Larnaca
Larnaca is another popular destination for tourists and expats. One of Cyprus’ two international airports is located here. As a tourist attraction, Larnaca is very crowded in summer, but relatively quiet in winter. Larnaca offers a more relaxed lifestyle than Limassol and Nicosia and is also relatively cheaper.
Paphos
Paphos is a coastal town in the southwest of Cyprus. The country’s second international airport is located in Paphos. The town offers good infrastructure, picturesque views, resort facilities and easy access to the rest of the island. According to legend, Paphos is the birthplace of the Greek goddess of love and beauty, Aphrodite. Along with the Sanctuary of Aphrodite, Paphos has many other ancient ruins that make the city the historical center of Cyprus. The ancient city of Paphos has been declared a UNESCO World Heritage Site.
Larnaca or Paphos as an entrepreneur?
The big business question when moving to Cyprus is whether to settle in Larnaca or Paphos. Both cities offer great opportunities for entrepreneurs living in Cyprus.
Simply put, if you want hustle and bustle and a bit more action, we would recommend Larnaca. If you want to move to Cyprus to relax, live in a large villa and enjoy a slower pace of life, Paphos would be for you.
Larnaca
- Larnaca International Airport offers connections to Europe and the Middle East.
- Coworking space iDesk.Space.
- Lively nightlife and party scene, and close to Protaras and Ayia Napa.
- More concentrated, lively area with lots of activities.
Paphos
- Coworking space HustleSpace.
- Quieter area compared to Larnaca.
- More diverse nature.
- More culture and open spaces.
Internet access on the island
Good Internet access is a must for every online entrepreneur. Overall, the internet connection in Cyprus would not make it to the top of the list. But high speeds are widespread, and in certain areas there are fiber optic connections of up to 1 Gbit.
According to speed test results from November 2019, the average download speed on the island is 26.68 Mbit/s, while the upload speed is 6.67 Mbit/s. From a mobile perspective, the average download speed is 45.09 Mbit/s and the upload speed is 15.95 Mbit/s. Compared to Sweden or other European countries, the results are not great, but certainly useful.
It is reassuring to know that progress has been made since the last speed test in 2017 and that work is continuing to improve the internet connection on the island.
There are also many internet cafés on the island, and most restaurants and bars offer free wifi… ideal for digital nomads working in cafés!
Cyprus: An attractive location for entrepreneurs and business people
Cyprus has become an increasingly popular location for companies and business people in recent years. There are many reasons for this: low tax rates, a growing and dynamic business world and an excellent infrastructure.
Networking events for entrepreneurs in Cyprus
Cyprus offers some decisive advantages, especially for entrepreneurs. The island has developed into an attractive location for start-ups and offers favorable conditions for companies of all sizes. Regular network meetings, such as the weekly meetings in Larnaca and Paphos, enable entrepreneurs to exchange ideas with like-minded people and make new contacts.
Coworking in Cyprus
In addition to favorable tax conditions and networking opportunities, Cyprus also offers flexible work opportunities to suit every need. Coworking spaces that offer desks or even entire offices at affordable prices can be found in all major cities. In addition, office space is available for companies of all sizes to buy or rent in all major cities.
Conclusion: Cyprus offers more than just sun and sand
In recent years, Cyprus has developed into a serious location for companies and business people. The island offers a number of advantages that make it an attractive destination for start-ups and companies of all sizes.
Living permanently in Cyprus
EU citizens in Cyprus
All EU citizens can become tax residents in Cyprus relatively easily. Although the process can take some time, the requirements for EU citizens are relatively low. Since the introduction of the new non-domicile program, you only need to spend at least 60 days per year in Cyprus to be considered a tax resident. This promotes the attractiveness of the Cypriot tax system.
Third-country nationals in Cyprus
Third-country nationals can apply for different types of visas depending on why they wish to move to Cyprus. The most common are student visas and temporary residence permits. The country also offers a residency investment program through which foreign entrepreneurs can live in Cyprus when they invest. This can lead to a permanent residence permit or even citizenship. However, since November 2020, it is no longer possible to obtain a Cypriot passport through investment alone.
Important
Other countries are careful to ensure that taxpayers do not gain any tax advantages from a supposedly short-term absence. If someone spends 183 days in another country, this can be taken as an indication that the center of life has been relocated there. It is therefore important to consider not only the number of days of stay, but also to take measures that clearly define the center of life. This includes, for example, the re-registration of driving licenses, the use of local bank accounts and similar steps that document a clear connection to the new country of residence.
Application criteria in Cyprus
In order to be recognized as a tax resident in Cyprus, the following three criteria must be met:
- Individuals must spend at least 60 days a year in the Republic of Cyprus.
- The individual must have a permanent residence in Cyprus, which can either be owned or rented.
- The individual must carry on any type of business in Cyprus, be employed in Cyprus or hold a position as a director of a company that is tax resident in Cyprus. This must begin at some point during the tax year and continue until the end of the year.
In addition to these criteria, the former “183-day rule” continues to apply, according to which a person who lives in the Republic of Cyprus for at least 183 days in a tax year is automatically considered a tax resident without having to meet any other additional criteria. This regime applies retroactively from January 1, 2017.
What counts as a ‘resident’s day’ in Cyprus?
The legislation provides the following guidelines for arrivals and departures at airports:
- One day of arrival counts as a day of stay in Cyprus.
- A day of departure counts as a day of stay outside Cyprus.
- An arrival followed by a departure on the same day counts as a day of stay in Cyprus.
- A departure followed by an arrival on the same day counts as a day of stay outside Cyprus.
Setting up a company in Cyprus
As more and more entrepreneurs move to Cyprus, the number of start-ups in the country is increasing. Understandably so, as the tax pressure is very low and the costs of running a business are affordable.
Corporate taxation in Malta (5%) is slightly lower compared to Cyprus (12.5%), so it is still more advantageous in terms of tax pressure to own a Maltese company. However, Cyprus offers several other advantages and setting up a company in Cyprus is relatively easy.
Should you move to Cyprus?
Of course, this depends entirely on what is important to you in life. Cyprus is definitely not for everyone. Before you decide whether you want to live here, we strongly recommend that you spend a few weeks to a month on the island to get a feel for it. DW&P will be happy to assist you by evaluating in an initial meeting whether your company is suitable for incorporation in Cyprus: https://www.drwerner.com/de/weiteres/terminvereinbarung/
Cyprus is ranked as the third most popular destination for expats in the EU. Foreigners are attracted by the mild climate, the beautiful nature, the warm sea and the affordable cost of living. Cyprus is certainly not perfect, but it is an exotic little island that offers the stability of the EU, good networking opportunities, low tax pressure and incredible weather for all sun-seeking entrepreneurs.
Frequently asked questions about Cyprus
Can you really pay 0% tax?
Almost. As a non-domicile, you can apply for a special tax certificate that exempts you from tax on dividends.
Do the locals speak English?
By and large, yes. One of the advantages of Cyprus is that people here can speak English quite well. Not everyone is fluent, but most can communicate well enough for everyday conversations.
Is it easy to find like-minded people?
There are many expats, digital nomads, business owners and interesting people who moved here because they wanted more from life. If you have just arrived on the island and would like to get to know people, we recommend taking part in one of the many networking events and looking for corresponding Facebook groups.
