Cyprus is a member of the European Union, the United Nations, the Council of Europe, the World Trade Organization, the World Bank, the Commonwealth and the International Monetary Fund. It is also well represented by diplomatic missions in foreign countries.
Non Tariff Barriers
In accordance with its European Union membership since May, 1st of 2004, Cyprus applies the European Union trade policy like antidumping or anti-subsidy measures. The European Union import regime applies to Cyprus. If Cyprus has adopted the main part of the EU regulations on May, 1st of 2004, some transitional measures have been granted to the country regarding some EU rules like the freedom of movement for workers or cabotage inside some countries. While the European Union has a rather liberal foreign trade policy, some products need import licenses. There are some restrictions, especially on farm products, following the implementation of the CAP (Common Agricultural Policy): the application of compensations on import and export of farm products, aimed at favouring the development of agriculture within the EU, implies a certain number of control and regulation systems for the goods entering the EU territory. Some products entering Cyprus must be "CE" marked in respect of the European Directives adopted on the basis of the New Approach and the Global Approach. For further information, please consult the Guide to the Implementation of Directives based on New Approach and Global Approach.
Customs Duties and Taxes on Imports
Trade with Cyprus is totally free from customs duties, provided that the country of origin of the goods is one of the other 25 EU Member States. For the non-European countries, the applicable rate should be checked at the following website about EU Customs. You can also consult the Cyprus Integrated Tariff System. The duties for non-European countries are relatively low, especially for manufactured goods (4.2% on average for the general rate), however textile, clothing items (high duties and quota system) and food-processing industry sectors (average duties of a 17.3% and numerous tariff quotas, PAC) still have protective measures.
Since its accession to the European Union on May, 1st of 2004, Cyprus has adopted the EU Common External Tariff. When the country of origin of the goods exported to Cyprus is not part of the European Union, customs duties are calculated Ad valorem on the CIF value of the goods, in accordance with the Common Customs Tariff (CCT). In order to get exhaustive regulations and customs tariffs regarding their products, exporters shall refer to the TARIC code and its database, which includes all applicable customs duties and all customs trade policy measures for all the goods. For further information, please consult the information document published by the European Commission about the impact of EU enlargement on customs policy.
Written declaration should be made for imports. The official document is the "Single Administrative Document". Goods presented to the customs are covered by a summary declaration. The procedure is different for agricultural products as phytosanitary certificates are required.
When industrial goods and agricultural products originating of one of the 27 Member States arrive on the Cyprus market, there are no customs duties. Trade between the EU and Cyprus consist of communautary exchanges (acquisitions and deliveries). Only the VAT must be paid in the country of consumption of the product. Systematic controls of the goods at the borders are removed and carried outside the border if the country is concerned, subject to the rules applicable to certain sensitive goods. It is important to remember that the application of the european legal framework is suspended in the north part of the country.
However, when intra-origin goods are coming in the Cyprus market, the exporter must necessarily fill a Trade of Goods Statement (DEB) or Intrastat declaration. The customs declaration (SAD) remains in force for the exchange of goods between Cyprus and third countries.
As part of the "SAFE" standards advocated by the World Customs Organization (WCO), the European Union has set up a new system of import controls, the "Import Control System" (ICS), which aims to secure the flow of goods at the time of their entry into the customs territory of the EU. This control system, part of the Community Program eCustomer, has been in effect since January 1, 2011. Since then, operators are required to pass an Entry Summary Declaration (ENS) to the customs of the country of entry, prior to the introduction of goods into the customs territory of the European Union.
Goods transiting Cyprus are not subject to duties. It is possible to obtain a temporary duty exemption for items such as commercial samples and for goods intended for public displays at exhibitions or trade fairs.
Consumer behaviour in Cyprus is quite traditional and still subject to changes due to the introduction of the Euro in 2008. Indeed, consumers should be accustomed to prices in Euro and this can have an impact on their purchasing behavior. Many companies are family owned and Cypriots are attached to local based products although international brand names have successfully entered the market.
Consumer Profile and Purchasing Power
The Cypriot consumer is attached to traditional and local based products but among young generations foreign brand names are appealing.
Large scale distribution is still in the developing phase in Cyprus, retail trade is more dominant. According to one of the principal distribution companies of Cyprus, CAP, there are 3,000 distribution outlets (from grocery shops to superstores) in Cyprus. 60% of these distribution outlets are retail shops and they achieve only 23% of the turnover. On the other hand, the 30 superstores of the island alone achieve more than 40% of the sales. 2 types of distribution channels seem to be developing in Cyprus: Chains of shops (mainly foreign companies) and franchise shops have been quite successful for the last few years: big fast food shops from America, international car rent companies and big brands of the clothing sector have all set up their franchises in Cyprus.
The main mean of transport used for the traffic of goods in the country is the sea. The multi-purpose ports of Limassol and Larnaca are the country's main sea gateways for seaborne cargo and passenger traffic. Both ports have become important regional warehouse and distribution centres.
The industry accounts for less than 20% of GDP. Cyprus has gradually moved from being an exporter of minerals and agricultural products in the seventies to an exporter of manufactured products in the eighties and finally to an international business centre nowadays. Oil and gas exploration and all the energy sector is an interesting field of the economy where tenders are organized. The health sector is also developing as many projects are currently under way to modernize the system.