Cyprus, the third-largest island of the Mediterranean after Sicily and Sardinia, is located in the Eastern Mediterranean, where the trade routes of the three continents intersect. The island’s total surface area is 9,251 square kilometers, and the surface area of the Turkish Republic of Northern Cyprus is 3,242 square kilometers. The nearest neighbor to the island of Cyprus is Turkey, located 65 km north of the island. The island is also located 100 km west of Syria and 420 km north of Egypt.

Lefkoşa is the largest city in the Turkish Republic of Northern Cyprus(TRNC), while Gazimağusa and Girne are important coastal cities. Because of the political status of Northern Cyprus, all international flights are done through Turkey.

In the Turkish Republic of Northern Cyprus, multiparty democracy is implemented. The President is the head of state and is elected by a general election every five years. The official currency in the TRNC is the Turkish Lira (TL). It is free for natural and legal persons to hold foreign currency, make savings in foreign currency, use foreign currency as a means of exchange, and express the figures in payment orders and contracts in foreign currency. The TRNC has an advanced banking system, and in addition to the Central Bank and the Development Bank, there are 21 commercial banks and 7 International Banking Units (IBUs).

The Economy of Northern Cyprus

Despite the lack of international recognition, the TRNC economy has impressive performance. Northern Cyprus GDP per capita income was $15,109 in 2014. As of 2011, approximately 400 million dollars is earned from tourism and another 400 million dollars from the education sector. There is also a robust real estate sector with North European homebuyers investing in holiday villas to rent or to retire to. Over 10,000 British people visit Northern Cyprus during the summer months, and another 10,000 Brits reside in Northern Cyprus permanently.

Main export goods are dairy products, raw and processed citrus, rakı, scrap, chicken, and potatoes. In 2014 exports of Northern Cyprus were at $130 million.

Tourism is the fast-growing industry in Northern Cyprus. Improving the tourism industry is also the agenda of the economic targets that the “Five Year Development Plans have set” (FYDP) in North Cyprus since 1978. Because of the island’s location, tourism activities are considered vital for the economy of Northern Cyprus.

Investment Policy of Northern Cyprus

The main objective of the TRNC investment policy is to accelerate economic development, increase the competitiveness of the economy, mobilize potential resources, increase the efficiency of private enterprise in the economy and encourage foreign capital to invest in the country.

TRNC has many opportunities for start-up companies and foreign investments. The improved banking system, increasing tourist and students population, trained employees, and tax-exempt company opportunities have given many advantages to the entrepreneurs.

For those who would like to incorporate a business in Northern Cyprus, there are four options, each for different purposes and with different attached tax liabilities:

• Local Company
• Foreign Branch Company
• Free Trade Zone Company
• International Business Company (Offshore Company)

Investments in the form of joint ventures are actively supported between foreign and local firms with many advantages and incentives, including the full protection of private property rights. There is no distinction between citizens and foreign nationals with regards to such rights, which are guaranteed by the constitution.

Additional Reasons to Invest in North Cyprus

Thanks to governmental support in the form of several incentives, the attractiveness of Northern Cyprus to investors has increased reasonably over the years. Especially free trade zone companies and offshore companies are increasingly being preferred for the advantages they present to investors. For example, they are both VAT exempt. Also, the capital requirements for these company types are much lower than in many other countries.

Investment activities significantly increased in the last ten years. Government of the Northern Cyprus passing big milestones for ten years in the area of economy and politics. Right now, Northern Cyprus is an emerging market for property and banking, and business investments. The education sector offers significant investment opportunities for housing with a student base of 60,000 from over 100 countries. Targeting this sizeable market presents a huge potential for investors. Similarly, North Cyprus is increasingly preferred by internet companies for the tax benefits for such business structures.