Cyprus is in the TOP countries for IT companies to relocate to. Startups from Eastern Europe and many other countries move to this location. Sergey Kartashov (Sergejs Kartasovs), CEO of the Cypriot IT asset management company Generation Partners, tells us why the island can be interesting for IT specialists.
According to him, you can determine how attractive a location is by dozens of factors, and the most important are the legislation, tax policy, infrastructure, cost of living, and whether there is a corresponding community. According to these parameters, countries can be divided into several categories. The first (most comfortable for IT) includes the USA, Germany, the Netherlands, Estonia, Lithuania, and Cyprus. In these countries, most of the factors converged. The second category includes Poland, the Czech Republic, Portugal, and a number of other countries. Here, the IT business feels comfortable yet when you compare the parameters to the countries from the first category, they take a back seat.
For companies from Eastern Europe, Cyprus has become the most popular relocation destination from this list.
Legislation and taxes
Sergey Kartashov (Sergejs Kartasovs) says that when advising on relocation projects that work with his company, first of all, they analyze legislation and tax policy. And Cyprus takes a very high position in this regard.
‘One of the main advantages is affordable and transparent conditions for registering companies. Another quite important aspect is a simplified reporting system. And the most famous benefit of Cyprus in the world is the flexible taxation system and the implemented IP-Box regime,’ says Kartashov.
The taxation on the island deserves special attention. Today, there is one of the lowest corporate tax rates on net income – 12.5%. An important factor is Double Taxation Agreements with a number of countries. The VAT is 19%, though you have to pay it only if a client is an EU resident.
The IP Box mode significantly simplifies the life of anyone who works with intellectual property. One has to pay taxes only for a part of the income that covers the product creation and its improvement. It is not uncommon for IT companies to pay the earnings tax about 2.5% or less.
Infrastructure and cost of living
When choosing a new location, one of the most serious aspects IT companies pay attention to is whether it is possible to get to their home country in a few hours. Therefore, Cyprus is ideally located for companies from Eastern Europe.
‘The average flight time to most of the Eastern European countries from Cyprus is three hours. It is quite convenient. Another plus is that a flight to almost any EU country lasts pretty much the same. It allows the company’s management and its employees to quickly get home and also to other countries to resolve business issues,’ says Sergey Kartashov.
Apart from that, Cyprus’ infrastructure is actively developing. And the reason for this is partly due to the economic injections that happen due to the relocation of foreign companies to the island.
The residential and business real estate market is actively developing here. Thus, the cost per square meter of class A office costs about $400 per year, and that is significantly lower than in other European countries. There is a similar situation with the lodging cost. Renting a two-room apartment in the city center here costs $1300-1400 per month.
‘There is quite a high level of security, affordable prices for English schools and kindergartens for those who move with their families, and good quality of healthcare. According to studies, the average cost of medical care in Cyprus is about $30 per month,’ says Sergey Kartashov.
Sometimes, this particular factor plays a decisive role in choosing a location. People tend to choose not only the places with favorable conditions but also the places where there are friends and a close-minded community.
‘Cyprus is one of the most popular locations for two categories: game developers and Russian-speaking developers. That is why here has been formed a solid professional community that speaks the same language and works in the same area. It allows us to hold specialized events and create specialized clubs where specialists can relax and solve work issues at the same time,’ says Sergey Kartashov.
Considering all the factors, it is not a wonder that Cyprus is becoming the best country for the relocation of IT companies from Eastern Europe. The legislation provides comfortable working conditions and low tax costs, the infrastructure allows you to get to almost any place in Europe in the shortest possible time, and the professional community provides specialists with a great number of opportunities for development and improvement. And as a pleasant bonus, CEO Generation Partners notes favorable climatic conditions: warm weather and the sea organically complement all the above-mentioned advantages of this location.