Cyprus faces test of turning technology investment into locally scaled businesses

Nicosia, Cyprus. Cyprus must build on its success in attracting overseas technology businesses by helping companies founded locally expand while retaining their headquarters on the island, an interviewee said in a discussion of the sector. The respondent identified research, intellectual property, exports and founders’ reinvestment as further tests of its development into an innovation-led economy.

Technology’s economic contribution

According to the interviewee, attracting international businesses had been a priority that delivered results: technology’s direct contribution to GDP now exceeds €4 billion, equivalent to approximately 15 per cent of the economy. Employment supported by the sector, including indirect jobs, totals almost 70,000.

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The respondent said Cyprus achieved the EU’s fastest growth in information and communication technology (ICT) between 2016 and 2025. Startups with links to Cyprus secured over €112 million during this year’s first ten months, approaching the amount raised throughout 2025.

Rather than treating overseas firms and domestic startups as distinct groups, the interviewee described a connection between them. Employees gaining experience at international companies could subsequently establish businesses, join startups as early senior recruits or provide angel investment. Those firms also purchase services locally and collaborate with universities in Cyprus, the respondent said.

EU access and regional connections

Asked about advantages beyond taxation and lifestyle, the interviewee pointed to Cyprus’ full membership of both the EU and the eurozone. Businesses established there operate within EU law and can access a market comprising 450 million consumers, the respondent said, adding that licences issued in Cyprus for regulated activities such as financial services are recognised across all member states.

The interviewee said startups from India, Saudi Arabia, the UAE, Brazil and elsewhere had been invited to make Cyprus their base for EU expansion, supported by the incentives available.

Cyprus’ position between Europe, the Middle East and North Africa was another advantage, according to the respondent. The interviewee argued that its stability, standing as a trusted European state and established regional relationships enabled it to connect those regions in ways that bigger, more distant centres could not.

Professional services and regulatory support

The respondent also highlighted expertise in legal services, accounting, funds and shipping, describing that breadth as unusual for a country of Cyprus’ size. Regulatory support for innovation included sandboxes where new products could be tested, alongside the Central Bank’s Innovation Hub, the interviewee said.

According to the respondent, the combination of those strengths was difficult to replicate. Cyprus’ small size also allowed investors to contact decision-makers promptly, with speed, access and trust forming the basis of its competitive position.

The discussion concluded by asking whether company arrivals and relocations remained appropriate indicators of success, or whether Cyprus should adopt more demanding benchmarks.