Cyprus has quietly become one of the most compelling places to hire tech talent in Europe. Between 2014 and 2024, the country recorded a 9.2% average annual growth rate in ICT specialist roles. That is the highest in the entire European Union.
The tech sector now contributes over €8 billion to the economy and accounts for 13% of GDP. Nearly 21,000 residence permits were issued to tech employees and their families in just under two years. The government doubled its Digital Nomad Visa quota to 1,000 slots because demand kept outpacing availability.
This is not about chasing a tax break or opening a satellite office in some coastal city with decent Wi-Fii. Cyprus has positioned itself as a genuine hub for remote professionals and distributed workforces. Tech companies from across the globe have relocated operations there, bringing specialized talent with them. For companies scaling internationally, Cyprus represents something rare: a workforce that blends European standards with Mediterranean flexibility and a government that actually wants foreign employers to succeed.
Whether or not hiring in Cyprus was already on your radar, chances are it will be by the end of this guide.
Cyprus’s labor market
The numbers tell a story that most emerging markets cannot. According to a 2025 labor market report from Konnekt, Cyprus achieved an average annual GDP growth of 4.96% between 2015 and 2024. That is three times the EU average of 1.66%. The economy is expanding fast, and companies need people to keep up.
Unemployment sits at just 4.3% as of Q2 2025. The labor market is tight. Cyprus posted a 3.1% job vacancy rate in 2024, ranking sixth highest across Europe. Businesses are actively competing for talent, and open roles are piling up faster than candidates can fill them.
One reason for this demand is the education level. Around 43.1% of Cyprus’s population holds tertiary education qualifications. That places the country third in Europe, just behind Luxembourg and Ireland. These are not entry-level workers. These are professionals equipped with specialized knowledge and skills that tech companies actively seek.
The workforce itself has transformed, as indicated in the Konnekt report. Between 2015 and 2024, the labor force grew from 350,000 to 470,600 people. Nearly half of that growth came from foreign nationals: 12.4% from other EU countries and 35.6% from third-country nationals. The proportion of Cypriot nationals in the workforce dropped from 80.1% to 72.9% over the same period. Cyprus is not just tolerating international workers. It is structurally dependent on them.
How to hire employees in Cyprus
Foreign companies have two main paths when hiring in Cyprus. The route depends on how much control is needed and how fast the company wants to move. Both approaches come with specific requirements and tradeoffs worth understanding before making the first hire.
Setting up a local entity
This option gives complete control over operations but requires investment and patience. To employ non-EU nationals, a company must register as a Company of Foreign Interest with the Business Facilitation Unit (BFU). That registration requires depositing at least €200,000 in a Cyprus bank account or proving equivalent investments in office space or equipment.
Once registered, the company can sponsor work and residence permits for foreign employees earning at least €2,500 per month gross. These highly paid employees skip the labor market test entirely and can bring their families to Cyprus with full access to healthcare and education. The main catch is the 70:30 staffing ratio. At least 30% of the workforce must be Cypriot or EU nationals, though this requirement can be phased out over five years.
There is also the branch option. A foreign company can establish a Cyprus branch through the Registrar of Companies without creating a separate legal entity. Branches can hire Cypriot and EU nationals, but cannot employ third-country nationals. No €200,000 investment is needed, but the hiring flexibility is limited.
Hiring through an employer of record (EOR)
Partnering with a Cyprus-based EOR eliminates the need to establish a legal entity. The EOR becomes the legal employer on paper while the company directs the work. This setup handles payroll, tax withholding, social insurance contributions, and compliance with Cyprus labor law.
The process is faster and simpler than entity formation and avoids the ambiguous costs associated with it. EOR providers must be registered with the Cyprus authorities to sponsor foreign workers, and work permits typically take four to six weeks. For companies testing the Cyprus market or hiring just a handful of people, an EOR offers speed without the upfront capital requirements or administrative burden of running a local entity.
Navigating the country’s employment contracts
Written employment contracts are not strictly mandatory in Cyprus, but employers must provide written statements detailing essential terms. “Employers must provide to employees in writing and keep a relevant record of delivery of the essential aspects of the employment relationship,” write Nadia Tryfonidou and Andria Panayiotou, senior employment attorneys at George Z. Georgiou & Associates in Cyprus.
Details may include “The identity of parties and place of work, title/category of work or description of work, commencement date, salary and all component elements, each of which should be indicated separately, frequency and method of payment, duration and conditions of any probation period, hours of work and overtime/shifts arrangements, etc.,” advise the attorneys.
These statements must be delivered within seven days of the employment start date for core information and within one month for additional details. The requirement applies to all employees without exception. Probationary periods are capped at six months for most positions. Senior roles like directors or advisors can extend probation up to two years. During probation, either party can terminate the relationship with limited notice.
As of early 2025, all employers must register essential employment terms through the ERGANI information system. This electronic filing includes job descriptions, remuneration details, working hours, and leave entitlements. The system exists to reduce undeclared work and verify compliance with local labor laws.
Cyprus working hours, holidays, and leave
The standard working week in Cyprus is 40 hours. Overtime is permitted but regulated, and employees typically receive additional compensation for hours worked beyond the standard schedule. Most employment sectors follow a five-day work week, though specific industries may have different arrangements based on operational needs.
Employees earn a minimum of 20 days of paid annual leave after completing one year of service. Cyprus also observes around 15 public holidays each year. These include religious holidays like Easter and Christmas, as well as national celebrations like Independence Day and Greek National Day.
Additional leave entitlements include sick leave, maternity leave, and paternity leave. Maternity leave provides 18 weeks of paid leave, with provisions split before and after childbirth. Paternity leave offers two weeks for new fathers. Employees can also take unpaid leave for personal reasons, subject to employer approval and specific circumstances outlined in their contracts.
Employee benefits and social contributions
Social insurance is mandatory for all employees in Cyprus. Both employers and employees contribute to the system based on gross salary. The social insurance fund covers pensions, unemployment benefits, sickness benefits, and maternity allowances.
Employer contributions typically include:
- Social insurance contributions (approximately 8.3% of gross salary)
- Social cohesion fund (2% of gross salary)
- Redundancy fund (1.2% of gross salary)
- Industrial training fund (0.5% of gross salary)
- Holiday fund contributions (8% for specific sectors)
Employee contributions stand at 8.8% of salary for social insurance purposes. Many employers also offer supplementary benefits beyond statutory requirements. These can include private medical insurance, provident funds, and a 13th-month salary payment. The 13th-month salary is not legally mandated but has become standard practice across many industries and is often specified in employment contracts or collective agreements.
Cyprus taxation and payroll compliance
Cyprus operates a progressive personal income tax system with rates ranging from 0% to 35%. The first €19,500 of annual income is tax-free. Income between €19,501 and €28,000 is taxed at 20%, with higher brackets reaching 25%, 30%, and ultimately 35% for income exceeding €60,000.
The minimum wage sits at €1,000 per month as of January 2025. Employers must withhold income tax and social insurance contributions from employee salaries and remit them to the relevant authorities. Tax residents face taxation on worldwide income, while non-residents pay tax only on Cyprus-sourced income. Tax residency is determined by spending at least 183 days physically in Cyprus during a tax year.
Cyprus offers attractive tax incentives for certain workers. The 50% exemption applies to employees earning above €55,000 annually for their first 17 years of Cyprus tax residency. There is also a 20% exemption for employees earning above €55,000 who were not Cyprus tax residents before employment. These incentives make Cyprus particularly appealing for highly skilled professionals and executives relocating from abroad.
Employee vs. contractor classification
The difference between an employee and a contractor is not determined by what the contract says. Cyprus authorities examine the substance of the working relationship itself. Control is the first factor. Does the business dictate how, when, and where the work happens, or does the individual have autonomy?
Other factors matter just as much. Financial dependence plays a role. A contractor with multiple clients looks different from someone relying solely on one company for income. Equipment provision is considered. Employees typically use company tools while contractors use their own. Integration into core business operations versus project-specific work also signals classification.
Misclassification carries real consequences. Companies face fines, back payments for social insurance contributions (both employer and employee portions), unpaid income tax, and liability for employee benefits like holiday pay and redundancy payments. There is also permanent establishment risk. Misclassifying workers can inadvertently create a taxable presence in Cyprus and subject the company to corporate taxes and regulatory scrutiny. The penalties vary based on the duration of misclassification and the number of workers involved.
Termination and severance in Cyprus
Notice periods in Cyprus scale with tenure. Employees who have worked between 26 and 51 weeks receive one week of notice. This increases gradually: two weeks for 52 to 103 weeks of service, four weeks for 104 to 155 weeks, and continues climbing to eight weeks for employees with 312 weeks or longer. All termination notices must be delivered in writing.
Severance pay applies to employees with at least 104 weeks of continuous service, provided termination is not due to serious misconduct. The calculation depends on tenure:
- Up to 4 years. 2 weeks’ wages per year of service
- 4 to 10 years. 2.5 weeks’ wages per year
- 10 to 15 years. 3 weeks’ wages per year
- 15 to 20 years. 3.5 weeks’ wages per year
- 20+ years. 4 weeks’ wages per year
Severance is capped at 104 weeks’ wages total. Employers may dismiss employees without notice or severance in cases of serious misconduct, including criminal offenses committed during employment, serious breach of discipline, or intentional damage to company property.
Immigration and work authorization
EU and EEA citizens do not need work permits to work in Cyprus. They must register their residence with local authorities if staying beyond 90 days, but the process is straightforward. Non-EU nationals face different requirements.
Third-country nationals need both work permits and residence permits before starting employment. Employers must sponsor the application through the Civil Registry and Migration Department and obtain approval from the Department of Labor. The employer must demonstrate that the role could not be filled by a local or EU citizen.
Required documentation includes a valid passport with at least two years of validity, an employment contract signed by both parties, proof of academic and professional qualifications, a criminal background check from the country of origin, a medical certificate, and proof of health insurance. Work permits typically take four to six weeks to process.
Cyprus also offers an EU Blue Card for highly skilled non-EU workers with binding job offers and relevant qualifications. The Digital Nomad Visa allows third-country nationals to work remotely in Cyprus for employers or clients outside the country.
Why hire in Cyprus with Pebl?
Pebl operates in 185+ countries, including Cyprus, with a complete service designed to handle payroll, benefits, and compliance without requiring local entity setup. Our global EOR services can streamline hiring Cypriot talent significantly faster and with less friction compared to establishing a legal presence. Whether hiring one person in Limassol or building an entire distributed team across Europe, Pebl handles the legal complexity so companies can focus on the work that actually matters. Get in touch to learn more.
FAQs: Hiring in Cyprus
Some questions come up repeatedly when companies consider hiring in Cyprus. Here are answers to the most common ones.
What is the work culture in Cyprus?
Cypriot work culture blends traditional values with modern business practices. Strong interpersonal relationships, respect for hierarchy, and teamwork define the workplace environment. Cyprus also recorded one of the highest proportions of employees working long hours in the EU during Q2 2025, reflecting a hardworking culture.
What is a good salary in Cyprus?
The average gross monthly salary in Cyprus is approximately €2,500 as of 2025, with the median sitting around €2,200. Technology roles average €3,350 per month, while finance positions hover around €3,020. A salary above €2,500 is considered competitive, though highly skilled professionals in tech and finance regularly earn above €3,500.
Can I hire in Cyprus without a local business entity?
Yes, you can hire in Cyprus through an employer of record. The EOR becomes the legal employer while the company directs the work. This eliminates the need to establish a legal entity and handles payroll, tax withholding, and compliance with Cyprus labor law.
Which job is most demanding in Cyprus?
IT and FinTech roles dominate demand, with the tech sector experiencing 25% annual growth. Companies need developers, data scientists, cybersecurity specialists, and product managers. Healthcare is also critical, with shortages of 450 to 500 nurses across hospitals and private clinics. Construction needs approximately 5,000 skilled workers to meet infrastructure demands.
This information does not, and is not intended to, constitute legal or tax advice and is for general informational purposes only. The intent of this document is solely to provide general and preliminary information for private use. Do not rely on it as an alternative to legal, financial, taxation, or accountancy advice from an appropriately qualified professional. The content in this guide is provided “as is,” and no representations are made that the content is error-free.
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