Tax incentives to individuals to invest in innovative enterprises and startups

CONTEXT:

The main goal is the introduction of an effective tax incentive in order to boost and promote entrepreneurship and innovation and improve access to finance for innovative firms and startups.

SUPPORT MECHANISM:

Revision of the Income Tax Law in order to improve incentives that foster investment in startups and innovative companies in Cyprus.

The tax incentives given to private investors, investing either directly or through an Investment Fund provide for the following:

  • exemption of the investment from the investor's taxable income (up to a maximum amount of 50% of the taxable income);
  • deduction of up to €150,000 per year as well as the right of allocation and distribution of the discount in a 5 (five) year period. In other words, the beneficiary investor has the right to allocate the above proportionally in his/her tax returns.
  • Investment in shares, loans, or granting guarantees to innovative companies.
IMPLEMENTING AGENCIES:

Ministry of Finance, Tax Department

 

Timeline:

The revision of the Income Tax Law was approved by the House of Parliament on 2 December 2016 and entered into force on January 1, 2017.

KEY ADVISOR(S) OR LEADER(S):

The revision of the Income Tax Law in order to improve incentives that foster investment in startups and innovative companies was an action stipulated in the Policy Statement on Strengthening the Entrepreneurial Ecosystem. The revised tax incentives were prepared by the Presidency in cooperation with the Ministry of Finance, in close consultation with the private sector (Cyprus Association of Innovative Firms, Start Up Cyprus, Chartered Accountants Association).

 

CURATED BY

Cyprus
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