Many people dream of running their own business, when they retire from their day-to-day jobs, especially so, when that dream incorporates moving to warmer climes. However, if they chose a business in a sector they have not previously experienced, such as running a B&B for example, there can be a "rude awakening" to the facts of business life in a foreign country. If you are thinking of buying an existing business or starting one from scratch such as a restaurant, health spa, B&B, guest-house or shop in Cyprus, there are a few important things to consider:
1. New Business versus existing Establishment
The idea of starting a business in Cyprus can be very appealing. You won't have to deal with somebody else's administration system, employees or potentially irritating network of accountants, lawyers and bankers. However, lack of experience in the business sector, or simply lack of experience in how to run such a business, can soon end all your dreams in tears. Buying an existing business has the advantage that you can see what the cash flow is going to be like over a period of time. Newly-minted businessmen- and women often overestimate what cash will come in. As a result, most new businesses fail in the first three years of opening.
If you are buying an existing Cyprus business, have the due diligence process carried out by at least two independent experts, such as a lawyer and accountant. It's not all about the money coming in and going out either - you don't want to be dealing with difficult situations on the employee front in your first year at the helm of your business or find that your supply chain is about to collapse.
2. Funding your Business
Cypriot banks are notoriously conservative and are unlikely to lend anything to a business in what they deem is a "saturated activity" sector. This is likely to include restaurants, bars, cafes and holiday accommodation generally. For this reason, you must have sufficient funds arranged either through savings and investments or via lenders outside of Cyprus. Even when buying an established, well-run business that has a steady cashflow you will need to dip into extra funds from time to time: for expansion plans for example, or to redecorate your restaurant to bring it up-to-date, or to train staff up to new industry standards. If you business activity depends on tourism, any number of things can affect a season. Air traffic controllers going on strike means less tourists might arrive.
3. Taxation, personal and corporate
Although corporation tax in Cyprus is one of the lowest in the EU, there are still plenty of loopholes that allow the taxman to take your hard-earned cash. It's essential to get good ongoing taxation advice, either through a law firm that deals in tax planning, or via an accountant. If you are planning to start a business in Cyprus rather than buying an existing one, make sure you hire a law firm that can deal with business incorporation as well as understand the daily management of a business. Legislation changed constantly, whether you are running a food-related business or a spa. You may also need to comply with regulations concerning licensing, when you run a business in Cyprus.
4. What type of business to run in Cyprus?
The most important thing to consider will be to have a unique selling point. Other people have already set up B&Bs, guest-houses, holiday villas and apartments - so what makes your establishment different from the rest of the crowded market? If you are planning to open a spa or health retreat, tennis courts or a golf course, if you are hoping to open a shop, restaurant, bar or cafe, estate agency or language school, your business must have something that others don't, or customers won't bother coming through the door.
Doing in-depth research is vital - don't just visit Cyprus once in summer and allow yourself to be convinced by crowds of tourists. How are you going to pay for electricity and rent during winter, how are you going to run your employees' payroll, when cashflow is ebbing away after the tourists have gone home?
Cyprus is popular with retirees from many different countries. If you do your research and marketing right, you could have a year-round business that supports you in the new life you have chosen. Here are some useful websites for running a business in Cyprus:
For up-to-date taxation advice, please download this PDF; https://www2.deloitte.com/cy/en/pages/tax/articles/cyprus-tax-facts-2018.html
For help with accountancy and tax planning issues, tryAlliott Partellas Kiliaris Ltd
Nicosia-based Certified Public Accountants
357 22875 111
Dionysiou & Partners LLC
Nicosia-based law firm
00357 222 72360