Government support for enterprises in Cyprus is a set of measures aimed at stimulating economic growth, supporting entrepreneurship and attracting foreign investment. These measures include tax incentives, subsidies, grants and special programs designed for different sectors of the economy.

Main types of state support:

1. Tax incentives and benefits:
   • Corporate Tax: Cyprus offers one of the lowest corporate tax rates in the European Union at 12.5%. This makes the country attractive to international companies seeking to optimize their tax liabilities.
   • Exemption from dividend and capital gains tax: Dividends received by Cypriot companies are exempt from taxation if certain conditions are met. In addition, capital gains from the sale of securities are not taxed, which encourages investment activity.
   • Double Taxation Agreements: Cyprus has concluded double taxation agreements with more than 60 countries, which allows businesses to avoid double taxation of income.​
2. Subsidy programs and grants:
   • Subsidies for small and medium-sized enterprises (SMEs): The Cypriot government provides financial support to SMEs through various programs aimed at innovation, technological development and expansion of export potential. For example, there are grants for the development of new products and services and for participation in international exhibitions.
   • Training and Employment Subsidies: To reduce unemployment and improve the skills of the labor force, subsidies are provided for employee training and job creation.
3. Special Economic Zones and Investment Programs:
   • IP Box scheme: Cyprus offers a favorable tax regime for income from the use of intellectual property. Companies engaged in the development of patents, copyrights and other IP may be taxed at a reduced rate.
   • Non-domiciled: Foreign entrepreneurs who become tax residents of Cyprus but are not domiciled in Cyprus are exempt from taxation on dividends, interest and royalties received outside Cyprus.

How to obtain state support for businesses in Cyprus

Government support in Cyprus is available to various categories of businesses, including start-ups, small and medium-sized enterprises (SMEs) and large corporations. The process of receiving assistance is strictly regulated by law and depends on the type of support: tax incentives, grants, subsidies or loan programs.

1. Analysis and selection of an appropriate support program

Before submitting an application, it is important to determine which type of state support is most suitable for a particular business. This may depend on the economic sector, number of employees, size of annual turnover and investment objectives. The main sources of information on support programs are:

• Cyprus Ministry of Energy, Commerce and Industry (MECI) – provides subsidies and grants.
• Cyprus Investment and Development Organization (Invest Cyprus) – supports investors and technology companies.
• European support programs (e.g. Horizon Europe) – funds innovative projects.
• Municipalities – offers incentives and subsidies for local businesses.

2. Preparing the application: key documents and selection criteria

Once a program has been selected, a package of documents must be collected and submitted. The standard list includes:

• Company registration documents (memorandum of incorporation, extract from the Register of Companies).
• A business plan, including a development strategy, calculation of financial sustainability and justification of the need for support.
• Financial statements for the last years, if the company has been operating for more than a year.
• Tax registration documents (proof of registration with the Cyprus Tax Authority).
• Proof of compliance with the program criteria (e.g. employment of Cypriot citizens, introduction of innovative technologies).

The programs have different selection criteria. For example:

• For innovation grants, the key criteria are the existence of patents, the degree of novelty of the product and its market potential.
• In employment subsidy programs, information on job creation and the social impact of the business is important.
• When applying for tax incentives, it is necessary to prove eligibility, such as having intellectual property that is used in the business.

3. Application process: electronic and paper formats

There are two main ways of filing applications in Cyprus:

• Through the electronic platforms of public authorities. For example, the Ministry of Energy, Commerce and Industry (MECI) portal accepts applications for subsidies online.
• Through paper forms. Some programs, especially European grants, require hard copy submission through official offices.

There are usually several steps in the application process:

1. Pre-approval. In some cases, you must first register your intent to participate in the program (Letter of Intent).
2. Final Submission. Once the application is approved, the entrepreneur submits a complete application package.
3. Evaluation and verification. State authorities analyze the documents, conduct interviews with applicants (if necessary).
4. Issuance of a decision. Final approval or denial of support.

Сроки рассмотрения заявок зависят от сложности программы:

• Grants can be processed from 1 to 6 months.
• Employment grants – 1 to 3 months.
• Tax benefits come into effect from the moment of submission of documents.

4. Inspections and compliance

After receiving government support, the business must strictly comply with the terms and conditions of the program. This includes:

• Financial controls. The funds received must be spent only within the framework of the purposes stated in the program. Otherwise, subsidies may be returned.
• Interim reports. For example, companies that have received innovation grants must report regularly on the progress of the project.
• Audits and inspections. Government agencies may conduct unannounced on-site inspections to ensure that the business is actually using the support for the intended purpose.

If a company violates the terms of the program (e.g., uses grant money for inappropriate expenditures), the Cypriot government can:

• Demand the return of the grants.
• Impose fines.
• Restrict access to future support programs.

5. Practical examples of successful receipt of state support

Case Study 1: IT company utilizing the IP Box tax incentive scheme

A Cypriot software technology company applied for the IP Box regime, which reduces the taxation of intellectual property income.

• The filing process took two months.
• The company proved that its products are innovative and patented.
• As a result, the firm reduced its effective income tax rate from 12.5% to 2.5%, significantly improving its competitiveness.

Example 2: Energy Efficiency Grant

A hospitality company received a grant to install solar panels up to 50% of the project cost.

• The business prepared a report on its electricity consumption and proposed a plan to switch to renewable sources.
• State authorities reviewed the application within 4 months.
• Once approved, the funds were allocated in two stages: 70% at the start of work and 30% after the project was completed.

Case Study 3: Supporting start-ups through the European Investment Fund

A young biotechnology company received a grant from the EU through the Cyprus Innovative Entrepreneurship Support Program.

• The application process included the submission of a business plan, product specifications and market analysis.
• The evaluation lasted 6 months, after which the startup received €200,000 in funding.
• For 2 years, the company committed to report annually to the fund on its progress.

The legislative framework of Cyprus in the field of business support is based on English common law and adapted to the requirements of the European Union. The main legislation is the Companies Law (Cap. 113), which regulates the registration, management and liquidation of companies. The tax legislation of Cyprus provides favorable conditions for business, including low tax rates and the existence of double taxation agreements.

The procedure for obtaining state support in Cyprus requires careful preparation of documents and compliance with all regulatory requirements. Important:

1. Study the available programs and choose the most suitable one.
2. Prepare a comprehensive package of documents.
3. Comply with the requirements established by the state during the entire period of support.
4. Report on the expenditure of the funds received to avoid sanctions.

Government support plays a key role in business development in Cyprus, especially in strategic sectors such as IT, renewable energy and innovative technologies. Companies that make good use of tax incentives, grants and subsidies can significantly reduce costs and increase their competitiveness in the international market.