The U.S. Department of State’s Investment Climate Statements provide information on the business climates of more than 170 economies and are prepared by economic officers stationed in embassies and posts around the world. They analyze a variety of economies that are or could be markets for U.S. businesses. The Investment Climate Statements are also references for working with partner governments to create enabling business environments that are not only economically sound, but address issues of labor, human rights, responsible business conduct, and steps taken to combat corruption. The reports cover topics including Openness to Investment, Legal and Regulatory Systems, Protection of Real and Intellectual Property Rights, Financial Sector, State-Owned Enterprises, Responsible Business Conduct, and Corruption.
To access ICS reports, visit the U.S. Department of State Investment Climate Statements website.
Executive Summary
Republic of Cyprus
Situated at the crossroads of three continents – Europe, Africa, and Asia – Cyprus occupies a strategic place in the Eastern Mediterranean region.
The Republic of Cyprus (ROC), the eastern-most member of the European Union (EU), actively seeks and eagerly welcomes foreign direct investment (FDI). The ROC is a member of the eurozone. English is widely spoken. The legal system is based on UK common law. Legal and accounting services for foreign investors are highly developed. Invest Cyprus, an independent, government-funded entity, aggressively promotes investment in the traditional shipping, tourism, banking, and financial and professional services sectors. Newer sectors for FDI include energy, film production, investment funds, education, research & development, information technology, and regional headquartering. The discovery of significant hydrocarbon deposits in the ROC’s claimed Exclusive Economic Zone (and in the surrounding Eastern Mediterranean region) has driven major new FDI by multinational companies in recent years.
The Government of the ROC is the only internationally recognized government on the island, but since 1974 the northern third of Cyprus has been administered by Turkish Cypriots. This area proclaimed itself the “Turkish Republic of Northern Cyprus” (“TRNC”) in 1983. The United States does not recognize the “TRNC” as a legitimate government, nor does any country other than Türkiye (Turkey). A substantial number of Turkish troops remain in the northern part of the island. A Buffer Zone, or “green line,” patrolled by the UN Peacekeeping Force in Cyprus (UNFICYP), separates the two parts. The ROC and the area administered by Turkish Cypriots are addressed separately below.
The ROC economy performed well in 2022 compared to other EU members, but is facing headwinds in 2023, due to high energy prices and a general weakening of the global economy. Russia’s continuing war of aggression in Ukraine also poses significant downside risks to the growth outlook. ROC GDP growth in 2022 reached 5.6 percent but is expected to slow to 1.0-2.5 percent in 2023. Inflation hit 8.0 percent in 2022 and is forecast to drop to around 4.0 percent in 2023.
The ROC has demonstrated commitment to promoting green investments, with significant funding allocated to securing a green transition (see Section 8).
Area Administered by Turkish Cypriots
U.S. companies can invest in the north but should be aware of legal complications and risks due to the lack of international recognition, tensions between the two communities, and isolation of the north from the eurozone. Turkish Cypriot businesses are interested in working with American companies in the fields of agriculture, hospitality, renewable energy, and retail franchising. Significant Turkish aid and investment flows to the area administered by Turkish Cypriots. A political settlement between the communities would be a powerful catalyst for island-wide Cypriot economic growth and prosperity.