Cyprus delivered a notable performance in the Innovators Business Environment Index 2026 (IBEI 2026), securing 15th place globally, 8th in Europe and 1st in Southern Europe, with the highest score in its sub-region. It is also the top-ranked Western European country for taxation conditions, highlighting its key advantage – its favourable tax framework.
According to the index, Cyprus offers the most competitive tax conditions in Western Europe, acting as a powerful magnet for investment, particularly in sectors such as technology, financial services and international corporate structures. The stability of the tax regime, combined with an extensive network of double taxation treaties, further enhances the country’s appeal as a regional business hub.
“Overall, Cyprus’ results reflect a business environment characterised by positively assessed tax conditions and incentive frameworks,” the index commentary states.
Europe accounts for 10 countries in the global Top 20 – more than any other geographic region – with Cyprus included not because of its size but due to the quality of its business environment.
Performance highlights
Cyprus ranks first in the EU and 10th globally in taxation, and second in the EU and sixth worldwide in business incentives (with Bulgaria ranked first in the EU).
“The higher ranking of Cyprus in the IBEI 2026 compared to the Global Startup Ecosystem Index 2025 highlights the strength of its underlying business environment conditions relative to the actual performance of its startup ecosystem,” the report notes.
In terms of specific metrics, Cyprus places in the top 25% of the index for criteria such as corporate tax rate, capital gains tax and dividend tax rates.
“Its Mediterranean location and historical role as a trade hub create an attractive base for entrepreneurs engaged in international activities. They benefit from consistent administrative and financial regulations within the European Union. In recent years, Cyprus has undergone significant economic transformation. This shift has reshaped its image and established it as one of the most attractive business centres in the region,” the commentary adds.
Competitive advantages
StartupBlink highlights several strengths:
- The corporate tax structure is among the most competitive in the EU, offering businesses clear long-term predictability and supporting operations serving both local and international markets.
- Additional measures facilitate compliance for smaller businesses, contributing to a structured and well-regulated environment for daily operations.
- Personal tax provisions enhance Cyprus’ attractiveness. The non-domiciled regime allows eligible residents to avoid certain taxes on dividends and interest income, making it a key tool for attracting globally mobile innovative entrepreneurs and investors with international income sources.
- The Startup Visa programme reinforces this strategy by providing entrepreneurs from outside the EU and EEA (European Economic Area: Iceland, Liechtenstein, Norway) with a clear framework for establishing technology-focused businesses, supporting Cyprus’ goal of strengthening knowledge-based industries.
- Institutional support further strengthens the ecosystem. The Research and Innovation Foundation (RIF) manages initiatives encouraging scientific and commercial ventures, while Invest Cyprus serves as the primary liaison for international investors, providing support during establishment and growth.
About the Index
The Innovators Business Environment Index (IBEI) 2026 is a global benchmark assessing how business-friendly each country is for innovative enterprises and entrepreneurs. Published by StartupBlink—a global startup ecosystem research and mapping platform—it tracks innovation across more than 125 countries and evaluates national business environments using over 30 measurable, parametric criteria.