Authorities in Cyprus say that innovative businesses are thriving under new rules, as the country capitalises on European R&D funding.
Cypriot Finance Minister Harris Georgiades revealed that Cyprus ranked first in per capita absorption of Horizon 2020 funding, the EU’s €30 billion R&D funding scheme.
To date, over €88 million has been granted to 325 innovative businesses in Cyprus, with €27m designated to nearly a hundred small and medium size businesses. According to Georgiades, this represented a gain of 3 euros for every 1 euro invested by Cypriot businesses.
The Finance Minister also announced a new law designed to encourage further investment. The bill currently passing through Parliament would create a Secretariat for Development, aimed at restructuring the “framework of governance” for research and innovation.
This positive news for innovative businesses follows a momentous year for Cyprus. A major suite of changes to innovative businesses came into force in January and February 2017, concerning both investments and visas.
The January changes introduced tax incentives for risk-finance investments in innovative SMEs. Investors in an innovative business in Cyprus can deduct up to €150,000 of their investment from their taxable income, so long as the investment is not more than 50% of their total income that year.
An additional change broadened the scope of ‘innovative SME’ to include any business which does not presently operate in a market; had not done so for more than seven years following their first commercial sale; or requires an initial risk finance investment higher than its average annual turnover in the previous five years.
The February changes introduced a new Cyprus Startup Visa, designed for individuals from outside the EU hoping to start an innovative business. Qualifying business owners must have more than €50,000 in funding, hold an undergraduate degree or equivalent, and have a good knowledge of Greek or English.
To qualify as an innovative business for visa purposes, R&D costs must represent a minimum of 10% of total operating costs, and the business’ head office and tax domicile must be in Cyprus. Visa recipients gain the right to live and work in Cyprus for a year, with a possible year extension, and a pathway to permanent residency after two years.