Cyprus: A Hub for Innovation and Growth

Strategic Insights -

President Nikos Christodoulides emphasized the significant role tourism plays in Cyprus' economy and the country's sustainable development strategy. The upcoming EU presidency in 2026 is expected to bring benefits to the hotel and tourism sector, with Deputy Minister for European Affairs Marilena Raouna highlighting the importance of professionalism and high service standards. Meanwhile, the Cyprus Land Development Corporation launched an affordable housing scheme, and the Tax Department clarified VAT regulations on cultural events. The country also made strides in maritime cooperation with Egypt, and interest rates remained stable for household deposits. Industrial production in Cyprus outperformed the euro area and EU, and family businesses face significant challenges in succession planning.

Key Takeaways:

  • The President of Cyprus highlighted the crucial role of tourism in the country's economy and sustainable development strategy.
  • The upcoming EU presidency in 2026 is expected to bring benefits to the hotel and tourism sector.
  • Deputy Minister Marilena Raouna emphasized the importance of professionalism and high service standards in promoting the country's tourism industry.
  • The Cyprus Land Development Corporation launched an affordable housing scheme with 0% interest rates for eligible applicants, including Cypriot citizens and EU nationals.
  • The Tax Department clarified VAT regulations on cultural events, including a reduced VAT rate of 5% for tickets to concerts, performances, and exhibitions.
  • Cyprus and Egypt strengthened maritime cooperation, with a Joint Maritime Committee established to promote the long-term development of their bilateral relationship.
  • Interest rates for household deposits remained unchanged in August, while rates for business deposits decreased.
  • Industrial production in Cyprus outperformed the euro area and EU, with an annual increase of 2.4% in August 2025.
  • Succession remains a significant challenge for family businesses in Cyprus, with fewer than three in ten managing to transition successfully to the second generation.
  • Freedom Holding Corp. celebrates six years since its listing on the Nasdaq exchange, with a market capitalisation of 11 billion US dollars in 2025.
  • Group CEO of payabl. Ugne Buraciene was appointed as a non-executive director to the board of the CYENS Centre of Excellence, Cyprus' leading research and innovation hub.
  • Invest Cyprus welcomed US-based technology company TKI to Cyprus following the merger between Hybrid ConsulTech and TKI, a leading provider of enterprise-grade artificial intelligence solutions.

Statistics:

  • Cyprus spent €213.6 million on research and development in 2023, equivalent to 0.68% of GDP.
  • The country's R&D expenditure has grown steadily over the past decade, with an annual average growth rate of 9.96% between 2000 and 2023.
  • Cyprus still lags behind the EU average of 2.26% in R&D spending, placing among the lowest performers alongside Malta (0.64%) and Romania (0.52%).
  • The country's R&D expenditure increased by 3.2% in 2023 compared to 2022, when expenditure stood at €207 million (0.70% of GDP).

Sources:

  • Entrepreneurial Limassol
  • Philenews
  • KPMG Cyprus
  • Freedom Holding Corp.
  • CYENS Centre of Excellence
  • Invest Cyprus
  • Cyprus Mail