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Financing, investment and government support
Does the government provide any incentives or support programmes to promote fintech innovation in your jurisdiction (e.g. tax incentives, grants and regulatory sandboxes)?
The government provides income tax relief of up to 50% of taxable income for natural persons investing in qualifying start-ups. The upper limit is €150,000 per year. Investors can claim tax relief within five years from the time of the investment
Further, as per the new IP box regime, qualifying taxpayers will be eligible to claim a tax deduction of 80% on qualifying profits resulting from the business use of the qualifying assets. Patents and software copyrights are considered qualifying IP assets.
Has the government concluded any international cooperation agreements to promote and facilitate the cross-border expansion of fintech businesses?
Cyprus will likely sign the relevant declaration and join the European Blockchain Partnership.
Financing and investment
What private financing and investment schemes are available and commonly used for fintech start-ups in your jurisdiction?
Several financing options and routes are available for fintech start-ups and small businesses in Cyprus. Generally speaking, they include:
- personal savings or funding from family, fools and friends;
- EU funding;
- venture capital;
- angel investors;
- crowdfunding; and
- grants and subsidies.
The convertible loan note is a popular method of financing start-ups used at the early stage when conducting a proper valuation of the business may seem difficult or inaccurate. The loan is converted into equity (eg, shares) when the prescribed conditions are met or certain events have occurred.
Grants and subsidies are generally focused on specific types of activity. The normal process for obtaining approval for these grants or subsidies, provided that the conditions are met, is an application to the relevant government or EU department, together with a detailed analysis of the suggested project or activity.
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