Economy of Cyprus

Exports and Imports

In 2022, Cyprus exported around $4.3 billion worth of goods, while imports reached $12 billion. Ships, boats, and mineral fuels were Cyprus's top exports, while consumer and capital goods dominated imports. This significant gap between import and export values contributes to a negative trade balance.

Balance of Trade

a trade deficit exceeding $7.7 billion in 2022, Cyprus imports more than it exports. This could be due to a reliance on imported goods for domestic consumption and a focus on specific export sectors like maritime.

Infrastructure Development

As of 2023, Cyprus boasts a well-developed road network exceeding 11,000 kilometers. The government continues to invest in infrastructure projects, including upgrades to ports and airports, alongside the development of renewable energy facilities.

Fiscal Policy

The Cypriot government strives for a balanced budget through managing spending and taxation. However, past economic challenges led to periods of increased spending and government debt.

Monetary Policy

Since Cyprus is part of the Eurozone, it doesn't have its own central bank. The European Central Bank (ECB) dictates monetary policy, focusing on controlling inflation and maintaining financial stability across the Eurozone.

Trade Agreements

Cyprus leverages trade agreements with the European Union and other countries. These agreements, by reducing trade barriers and promoting economic cooperation, play a vital role in Cypriot trade.

Environmental Regulations

Cyprus has adopted various environmental regulations to align with EU standards and protect its natural resources. These regulations address air and water pollution, waste management, and nature conservation.

Tax System in Cyprus

Capital gains tax: In Cyprus, capital gains are generally taxed at a rate of 20%. However, there are some exceptions, such as for gains on the sale of a primary residence.
Corporate tax rate: Cyprus boasts one of the lowest corporate tax rates in Europe, at a flat 12.5%. This makes it an attractive location for businesses looking to incorporate.
Sales tax (VAT): The standard Value Added Tax (VAT) rate in Cyprus is 19%. However, there are also reduced rates of 5% and 9% for certain goods and services, and some items are exempt altogether.
Property tax: Property tax in Cyprus varies depending on the value and location of the property. Generally, rates are fairly low.
Payroll tax: Both employers and employees contribute to social security in Cyprus. The employer contribution rate is 6.8%, and the employee contribution rate is 7.8%.
Tax deductions and credits: Cyprus offers a number of tax deductions and credits that can help reduce your tax liability. These include deductions for medical expenses, charitable donations, and interest payments on mortgages.
Tax compliance: Cyprus is considered to have a relatively efficient tax collection system.
Tax burden: Compared to other European countries, the overall tax burden in Cyprus is considered moderate. This is due to the low corporate tax rate and relatively few taxes on individuals.