No one can deny the importance of the internet, e-commerce and the huge impact it has on our daily lives. The current pandemic has also contributed significantly to increased web usage, pushing people to spend more time online for both personal and professional business.
What is e-commerce
The Internet has created a unified global marketplace where people can access any product or service regardless of their location. You can buy everything you need from the comfort of your home and have the goods delivered to your doorstep.
Cyprus is an ideal jurisdiction to establish your e-commerce business due to its advantageous tax regime. E-business owners are eligible for the 10% local tax scheme only if their business is based or permanently managed in Cyprus.
The corporate world recognized the potential of such a system and took a deep dive. Anyone can start an online business with minimal costs, especially a retail store for clothing, jewelry, crafts, or anything else. E-business owners can also benefit from online marketing, networking, and data collection to increase their revenue and profits.
Electronic commerce (e-commerce) laws have been created due to the technological developments and information and communication technologies (ICT) taking place. They regulate all commercial activity that takes place online applying to both business-to-business (B2B) and business-to-customer (B2C) transactions.
Status of e-commerce in Cyprus
Cypriot e-commerce, although relatively small, is growing rapidly, especially in recent years. Covid-19 has helped increase the use of online services and transactions. Cypriot consumers are becoming familiar with the idea of doing business on the web.
The Cypriot Ministry of Commerce has developed this modern business method, e-commerce. The majority of the country’s population uses the Internet for business transactions as well as for personal affairs.
The government is also improving its websites to encourage more people to settle their affairs easily and quickly. Things like banking, paying your utility bills, or transferring money are easily done online without wasting time in long queues and traffic.
The legal framework for e-commerce in Cyprus
The Electronic Commerce Act guarantees the free flow of information society services between Cyprus and other EU/EEA countries. These include service providers, commercial communications, electronic contracts, liability of intermediaries, alternative dispute resolution, legal protection and cooperation between Member States.
Cyprus has adopted new laws on the e-commerce industry to comply with European standards, mainly:
- The Electronic Commerce Act (156(I)/2004) (the Act on Certain Legal Aspects of Information Society Services, in particular Electronic Commerce and Related Matters of 2004)
- Directive 2000/31/EC of the European Parliament and of the Council of the European Union, 8 June 2000
The 2000 Directive applies provisions concerning the transparency of online service providers, information requirements, commercial communications, electronic contracts and limitations of liability of intermediary service providers. It “also improves commercial cooperation between Member States and reinforces the principles of self-regulation.
Activities regulated by the directive:
- Online news services (magazines and newspapers)
- Online advertising and marketing
- Online sale of products and services
- Online entertainment services
- Any other free or sponsored/funded service
The Cypriot legal system has also introduced the Electronic Money Law (81(I)/2012). It regulates the issuance of electronic money in Cyprus or another EU/EEA country; or a third country by a national or resident of Cyprus or a legal person; and licensing and prudential supervision of electronic money institutions (EMIs).
Taxation for e-commerce businesses
Cyprus is an ideal jurisdiction to establish your online store business due to its advantageous tax regime. E-business owners are eligible for the 10% local tax scheme only if their business is based or permanently managed in Cyprus.
A permanent establishment is defined as a fixed place where a legal person carries out its commercial activities.
The location of the island is also considered favorable, as it is a link between Europe, North Africa and the Middle East.
Ongoing technological developments in e-commerce and e-commerce law allow business owners to expand their audience to the world. A more inclusive customer base means a potential increase in sales. Nevertheless, e-commerce is a two-way street; this benefits business owners as well as customers. As long as we plan our online business activities carefully and are properly informed of the risks to consumers online, our business life will flourish.
How our law firm can help you
The Internet provides access to the international market; it requires knowledge and good planning of tax and legal affairs to ensure efficiency. Our expert lawyers can help you start a
e-commerce company based in Cyprus and make it work successfully.
Initially, you will need to register your business with the Cyprus Companies Registry and develop a website. Then you can advertise your company’s products or e-services. You need to make sure that you offer online payments.
E-commerce is a growing industry and we make sure to stay informed of new developments in the field. We provide you with modular solutions and sound advice on the following subjects:
- Online transactions and agreements
- Online Advertising
- Data protection and privacy
- Software Development and License Agreements
You can find more details about our e-commerce services here.
At the end of the line
The internet and ongoing technological developments allow business owners to expand their audience to the whole world. A more inclusive customer base means a potential increase in sales. Nevertheless, e-commerce is a two-way street; this benefits business owners as well as customers. As long as we plan our online business activities carefully and are properly informed of the risks to consumers online, our business life will flourish.
The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.