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Cyprus Competitiveness Report 2025 Calls For Higher Productivity And Better Investment

by THEFUTURE.TEAM

June 16, 2026

Introduction

The Cyprus Economy and Competitiveness Council has published the Cyprus Competitiveness Report 2025, highlighting the importance of attracting investments that generate economic activity, create jobs and contribute to the transfer of knowledge and expertise. According to the report, competitiveness should be assessed not only through growth indicators but also through the economy’s ability to deliver long-term prosperity.

Redefining Competitiveness For Sustainable Prosperity

Sofronis Clerides, professor of economics at the University of Cyprus and head of the research team behind the report, said competitiveness is increasingly linked to the capacity to generate sustainable prosperity. Beyond economic performance and a favorable business environment, the report points to the importance of social and environmental factors in supporting long-term development.

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Productivity And The Role Of ICT

Productivity remains one of Cyprus’ main structural challenges, despite relatively low unemployment and a continued inflow of skilled workers. Among the sectors examined, information and communication technologies (ICT) emerged as a notable exception. Strong performance and signs of productivity gains have positioned the industry as an important contributor to economic value creation.

Strategic Priorities And Vision 2035

Drawing comparisons with countries including Greece, Malta, Israel and several European economies, the report identifies three priorities: improving productivity, creating conditions that support business growth and scalability, and strengthening the state’s ability to implement reforms. Researchers also emphasized the need to maintain and regularly update Vision 2035, proposing the establishment of a dedicated implementation mechanism capable of ensuring continuity beyond electoral cycles.

Investment Quality And Local Integration

Speaking during the report’s presentation in Nicosia, Council Vice-President George Syrichas stressed that the quality of investment matters as much as the volume of capital entering the country. According to Syrichas, investments that generate employment, develop local expertise and strengthen links with the domestic economy deliver greater benefits than transactions limited to asset transfers.

Challenges And Opportunities

High electricity prices and delays in the green transition were identified as major challenges for competitiveness. At the same time, Syrichas noted that Cyprus’ climate provides favorable conditions for expanding renewable energy production. Human capital was highlighted as another area requiring attention. The report points to weaknesses in educational outcomes, skills mismatches and limited cooperation between academia and industry. Greater emphasis on practical and laboratory-based training was recommended to better align education with labor market needs.

Policy Coordination And Long-Term Planning

Another issue identified in the report concerns fragmentation in public policy implementation across areas such as justice, energy and infrastructure. Council President Demetris Georgiades and other participants argued in favor of a more coordinated approach to strategic planning to improve continuity in long-term initiatives, including Vision 2035.

Conclusion

Findings contained in the Cyprus Competitiveness Report 2025 outline several structural challenges facing the economy, while also highlighting areas with growth potential. Productive investment, improvements in productivity and effective policy implementation were identified as key factors supporting the country’s long-term competitiveness.

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Cyprus Introduces 8% Crypto Tax As European Rules Diverge

Fragmented Crypto Tax Rules Across Europe

Although the European Union has introduced a common regulatory framework for digital assets through the Markets in Crypto-Assets Regulation (MiCA), taxation remains under the jurisdiction of individual member states. As a result, crypto investors face a wide range of tax regimes across Europe.

Cyprus Introduces Dedicated Crypto Tax Framework

Beginning January 1, 2026, Cyprus will implement a dedicated taxation regime for digital assets. The new framework imposes an 8% flat tax on net gains from cryptocurrencies such as Bitcoin and Ethereum, making it one of the lowest rates within the European Union. Taxable events will include the sale, exchange, or use of cryptocurrencies for payments and donations. Losses will only be offset against gains generated from crypto transactions within the same tax year, with no provision allowing losses to be carried forward.

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Diverging Approaches Across Europe

Several European countries have adopted markedly different policies. Greece is preparing legislation that would introduce a 15% capital gains tax on cryptocurrency profits, with the first €500 of gains exempt from taxation. Germany classifies cryptocurrencies as private assets. Gains are generally exempt from tax if the assets have been held for more than one year, distinguishing the country from many other European jurisdictions.

Other Key Jurisdictions

Portugal continues to offer favorable conditions for long-term investors, with private individuals generally exempt from taxation if digital assets are held for more than 12 months. Switzerland treats cryptocurrencies as part of personal wealth, subject to annual cantonal wealth taxes, while capital gains realized by individual investors are typically exempt. France applies a flat tax of 31.4% on cryptocurrency gains, combining income tax and social contributions. Italy recently increased the tax rate on crypto gains for individuals to 33%, up from 26%, while Spain applies progressive rates ranging from 19% to 30%, depending on the amount of profit realized.

The Netherlands And The Baltic States

The Netherlands uses a different model, taxing presumed returns on assets regardless of whether they have actually been sold. Tax treatment in the Baltic region varies. Lithuania generally imposes a 15% rate, rising to 20% for very high non-salary income. Latvia applies a 25.5% capital gains tax, while Estonia taxes cryptocurrency gains at the standard personal income tax rate of 22%, without exemptions for long-term holdings.

A Diverse Tax Landscape

Approaches to cryptocurrency taxation continue to differ significantly across Europe. Cyprus’ upcoming framework places the country among jurisdictions offering relatively low rates and dedicated rules for digital assets, while investors operating across borders continue to navigate a patchwork of national tax regimes.