Social Economy in Europe: Cyprus
Table of contents
Note: The data presented in this table derive from the OECD country fact sheets and the European Commission DG GROW studies. Variations in scope, methodology and most recent available years may lead to differences in the headline figures across countries and with other sources.
Source: Data for Cyprus relates to 2021 (CIRIEC; Euricse; European Innovation Council and SMEs Executive Agency (European Commission); Spatial Foresight, 2024[1]); (OECD CFS, 2023[2]), except data on the involvement with any social economy organisation as a volunteer relating to 2020-2025 (European Commission, 2025[3]).
Cyprus does not have a single definition of the social economy; instead, different entity types are regulated through separate laws. The Social Enterprise Law (Law 207(I)/2020), the Co-operative Societies Laws (1985, as amended) and the Law on Associations and Foundations (104(I)/2017) provide the main frameworks. Charitable entities may also obtain tax benefits under Article 9(1)(f) of the Income Tax Law (2002).
The Authority of Co-operative Societies (CSSDA) functions as the national agency for co-operatives and social enterprises, headed by the Commissioner of Co-operative Societies and Social Enterprises. The Commissioner is appointed by the Council of Ministers. The Authority has a Unit for Promotion and Development of Co-operative Institutions and Social Entrepreneurship. It also drafts regulations, manages both the Co-operatives and Social Enterprises’ Registers, issues guidelines for legal compliance, and conducts supervision to ensure that requirements are met. Other ministries also play a role depending on sectoral focus, including the Ministry of Finance; the Ministry of Energy, Commerce and Industry; the Deputy Ministry of Research, Innovation and Digital Policy and the Deputy Ministry of Social Welfare.
Institutions
The Authority of Co-operative Societies (CSSDA) is the national agency that registers, promotes and supervises co-operatives and social enterprises. It is headed by the Commissioner of Co-operative Societies and Social Enterprises. The Commissioner of Co-operative Societies and Social Enterprises oversees the compliance of all registered co-operative societies and social enterprises with the respective legislations. Other Ministries, as mentioned above, play complementary roles in supporting social economy entities within their respective sectors by providing targeted support measures. Associations and foundations are regulated by the Ministry of Interior.
Competence
In 2018, Cyprus introduced a National Action Plan for the Development of the Social Enterprise Ecosystem, which proposed measures and incentives for activating and expanding social enterprises. While not legally binding, it has guided subsequent strategies and funding and laid the groundwork for significant legislative change. The Law 207(I)/2020 on Social Enterprises, amended in 2023, establishes:
A twofold definition distinguishing between general-purpose and social enterprises of inclusion;
The power to the Cabinet to approve benefits for registered entities, such as exemptions from certain fees, taxes, and licences;
Eligibility for five legal forms: private companies limited by shares, private companies limited by guarantee, co-operative societies (under the Co-operative Societies Laws of 1985), and general or limited partnerships (under the Partnerships Law of 2015).
The Authority of Co-operative Societies oversees co-operatives and social enterprises. The Authority drafts norms for co-operative societies and regulations on social enterprises for their approval by the House of Representatives. According to the Co-operatives Law 1985 and the Social Enterprises Law 2020, the Commissioner is empowered to set up and maintain both Co-operatives and Social Enterprises Registers as well as to issue guidelines for compliance with the laws. The Commissioner is also able to carry out supervision to assert whether the requirements for setting up a co-operative society or a social enterprise are maintained.
These legislative developments are encouraged by continuing national policy statements and frameworks. In October 2015, the National Policy Statement for the Enhancement of the Entrepreneurial Ecosystem in Cyprus was adopted. The statement promoted policy action on the cultivation of entrepreneurial culture, improvement of business environment and access to markets, enhancement of entrepreneurial innovation, and facilitation of access to finance (Poutziouris and Kontakos, 2019[4]).
Institutions
Cyprus is a unitary presidential republic. The President appoints a Council of Ministers, which exercises executive power. Legislation is the sole competence of a unicameral parliament. The country is divided into six administrative districts (five of which are under government control), but social economy frameworks are exclusively developed and monitored at the national level.
Local authorities, municipalities and communities in rural areas, hold limited powers, mainly issuing permits and licences. There are no municipal frameworks relevant to the social economy.
Across public authorities and/or levels of government
Social economy legislation, strategies, and regulation are centralised at the national level, with few formal co-operation mechanisms across levels of government.
With social economy representatives
Several networks and centres support collaboration, capacity building, and knowledge sharing:
SYNTHESIS Centre for Research and Education develops projects, conducts research, and runs “Hub Nicosia,” a co-working and civic engagement hub;
Centre of Social Innovation Cyprus offers training, events, and stakeholder-driven strategies.
Cyprus has started to develop a framework to support social enterprises, integrating strategic planning, legal structures, and collaborative initiatives to foster sector growth. The 2018 National Action Plan laid the groundwork for developing the social enterprise ecosystem, emphasising measures such as grants, loans, and access to infrastructure to activate and expand social enterprises. This was further solidified by the enactment of the Social Enterprises Law in 2020. In December 2023, an amendment to the 2020 law was approved. On the finance side, public-sector mechanisms include targeted grant schemes for social economy SMEs (e.g. capacity-building calls under the Single Market Programme in 2024). In addition, a major 2025 transaction by the European Investment Bank (EIB) Group and Eurobank Ltd has channelled up to EUR 62.5 million of EU-backed financing for Cypriot SMEs and start-ups, improving access to loans, lowering collateral requirements and offering longer maturities (European Investment Bank, 2025[5]). These initiatives reflect a shift toward more diversified and scalable support to enhance access to finance for SMEs and social economy entities. Private sector contributions promote social entrepreneurship and provide technical support. Research centres also play a pivotal role by supporting projects that develop ecosystems of social enterprises.
Strategies, plans and legal framework
The National Action Plan for the Development of the Social Enterprise Ecosystem is Cyprus’ main strategy for supporting social enterprises. Published by the Unit for Administrative Reform, the Plan includes incentives and objectives for expanding the social economy sector nationwide.
Social enterprises are currently regulated by the Social Enterprises Law of 2020, which distinguishes between those with a general purpose and those focused on social inclusion (Republic of Cyprus, 2020[6]). It also provides the power to the Cabinet to approve benefits for registered social enterprises, such as exemptions from fees, taxes and licences (Republic of Cyprus, 2020[6]). The Law categorises social enterprises as private companies limited by shares, private companies limited by guarantee, co-operative societies and general or limited partnerships as social enterprises, provided that they meet the requirements of the Law. Other social economy entities are regulated through the Law on Associations and Foundations (Republic of Cyprus, 1985[7]; Republic of Cyprus, 2017[8]).
Support from the public sector
The Authority of Co-operative Societies is the government body primarily responsible for promoting social entrepreneurship. It regulates social enterprises and co-operatives, manages both the Co-operatives and Social Enterprises’ Registers and monitors the compliance of all registered co-operatives and social enterprises with the respective laws.
Various financial mechanisms are in place at the national level to also support social entrepreneurship. The Cyprus Entrepreneurship Fund (CYPEF) is administered by the European Investment Fund (EIF) and overseen by the Ministry of Finance. The CYPEF aims to enhance access to finance for small and medium-sized enterprises (SMEs) (EIF, 2024[9]). More specifically, the Funded Risk-Sharing Loan Product is available to SMEs. Other initiatives for which social economy entities are eligible include the Research and Innovation Programme 2021-27, which supports innovative entrepreneurship with a positive impact on the national economy through grants (Ministry of Finance, 2025[10]).
Support from the private sector
Cyprus’ private sector comprises an active network of organisations and initiatives that support the development of the social economy. The Cyprus Network for Social Entrepreneurship promotes social entrepreneurship and connects social entrepreneurs. Other organisations include the Cyprus Circular Economy Network, which aims to accelerate the transition to the circular economy by providing technical support, certification support and business transformation services (The Cyprus Circular Economy Network, 2025[11]).
Various research and independent centres contribute to raising the profile of social economy entities and increasing their outreach. The Synthesis Centre for Research and Education, for example, supports projects that aim to develop ecosystems of social enterprises. One of these projects is the “Hub Nicosia Incubator”, which focuses on identifying innovative business ideas and supporting their commercialisation. The Centre also conducts significant research in the field of social innovation (SYNTHESIS Centre for Research and Education, n.d.[12]). Other centres, such as the Centre for Social Innovation Cyprus, offer service-learning and volunteering programmes focused on social innovation (Centre for Social Innovation, n.d.[13]).
Several non-profit organisations offer training, mentorship and networking opportunities on social entrepreneurship. Future Worlds Centre is a non-profit organisation for social entrepreneurs. Its main objective is to use new technologies to accelerate positive social change. It provides training, youth leadership workshops, as well as capacity-building activities focusing on social innovation and social entrepreneurship (Future Worlds Centre, 2025[14]). SEAL is another initiative that promotes research and social innovation through customised education, training and capacity-building initiatives mainly aimed at young people (SEAL, n.d.[15]).
Definition of public interest
Cypriot law does not provide a single, consolidated definition of “public interest” for all social economy entities. However, under Article 9(1)(f) of the Income Tax Law, institutions must be approved as charitable by the Council of Ministers or the Minister of Finance to be eligible for tax exemptions (Republic of Cyprus, 2002[16]). To be approved, an entity must:
Be incorporated solely for the promotion of arts, sciences or sports;
Not pursue profit for itself or its members;
Restrict its activities to the above-mentioned causes (Article 9(1)(f), Income Tax Law);
Under Law No. 207(I)/2020 on the Registry for Social Enterprises, a social enterprise is categorised as either:
A social enterprise of general purpose, or
A social enterprise of inclusion.
Entities in both categories must pursue their main purpose, respectively, and carry forward at least 80% (for social enterprises of general purpose) or at least 40% (for social enterprises of inclusion) of profits after tax to non-distributable reserves.
Economic activities
According to the Income Tax Law and the Social Enterprises Law (No. 207(I)/2020):
Charitable institutions, once approved by the Minister of Finance or Council of Ministers, are not allowed to engage in economic or trading activities (Republic of Cyprus, 2002[16]) (Republic of Cyprus, 2020[17]).
Social enterprises, depending on their legal form, are permitted to carry out economic activities. There is no statutory ceiling on such activities, but they must serve the main purpose, respectively and carry forward at least 80% (for social enterprises of general purpose) or at least 40% (for social enterprises of inclusion) of profits after tax to non-distributable reserves.
Source: Information received from Authority of Co-operative Societies
According to the Law on Associations and Foundations (No. 104(I)/2017), associations and foundations are required to ensure transparency, integrity, and accountability in their operations. This is achieved through internal or external financial reporting. However, there is no legal requirement to publicly disclose these reports (Republic of Cyprus, 2017[22]).
Approved charitable institutions and registered social enterprises are required to submit audited financial statements to the competent authority. The nature of these audited reports includes income and expenditure statements, balance sheets and compliance reporting (Republic of Cyprus, 2020[17]).
References
[13] Centre for Social Innovation (n.d.), Centre for Social Innovation - About us, https://csicy.com/service-learning-experience/.
[1] CIRIEC; Euricse; European Innovation Council and SMEs Executive Agency (European Commission); Spatial Foresight (2024), Benchmarking the socio-economic performance of the EU social economy, https://doi.org/10.2826/880860.
[18] CYLAW (2000), Ο περί Φόρου Προστιθέμενης Αξίας Νόμος του 2000 (95(I)/2000, https://www.cylaw.org/nomoi/enop/ind/2000_1_95/appendix-ap587b5d75-c804-b04a-a64c-92e5d0e776b1.html.
[9] EIF (2024), The Cyprus Entrepreneurship Fund (CYPEF), https://www.eif.org/what_we_do/resources/cypef/index.htm.
[3] European Commission (2025), “Social economy in the life of Europeans - Κύπρος”, https://europa.eu/eurobarometer/surveys/detail/3356.
[19] European Commission (2023), Relevant taxation frameworks for Social Economy Entities.
[21] European Commission (2023), “Relevant taxation frameworks for Social Economy Entities”.
[20] European Commission (2020), Social enterprises and their ecosystems in Europe. Comparative synthesis report, https://social-economy-gateway.ec.europa.eu/document/download/36c89e9b-63e9-41a4-aa41-4f3fc89a24c8_en?filename=Thematic_discussion_paper_WS1_0.pdf.
[5] European Investment Bank (2025), “Cyprus: The EIB Group and Eurobank join forces to channel €62.5 million in new financing to SMEs and start-ups”, https://www.eib.org/en/press/all/2025-343-eif-and-eurobank-join-forces-to-channel-eur62-5-million-in-new-financing-to-cypriot-smes-and-start-ups.
[14] Future Worlds Centre (2025), Future Worlds Centre - About Us, https://www.futureworldscenter.org/.
[10] Ministry of Finance (2025), “Research and Innovation Programme 2021-2027”, https://www.fundingprogrammesportal.gov.cy/en/programs/research-and-innovation-foundation-programmes/.
[2] OECD CFS (2023), Cyprus - Country Fact Sheet, https://www.oecd.org/content/dam/oecd/en/topics/policy-sub-issues/social-economy-and-social-innovation/country-fact-sheets/country-fact-sheet-cyprus.pdf.
[4] Poutziouris, P. and P. Kontakos (2019), Inclusive Entrepreneurship Policies - Country Assessment Notes: Cyprus 2018, European Union, https://www.oecd.org/content/dam/oecd/en/publications/reports/2024/11/inclusive-entrepreneurship-2018-country-notes_bf2c7290/cyprus_c7d15cc1/c226739b-en.pdf.
[6] Republic of Cyprus (2020), Social Enterprise Law, https://www.cylaw.org/nomoi/indexes/2020_1_207.html.
[17] Republic of Cyprus (2020), Social Enterprises Law, https://www.cylaw.org/nomoi/enop/non-ind/2020_1_207/division-dddc6f0f3e-0a15-4148-ab89-055d34d3334f.html (accessed on 11 June 2025).
[22] Republic of Cyprus (2017), Law on Associations and Foundations, https://www.gov.cy/media/sites/21/2024/06/The-Societies-law-English-translation.pdf (accessed on 11 June 2025).
[8] Republic of Cyprus (2017), Law on Associations and Foundations and Other Related Issues, https://www.cylaw.org/nomoi/arith/2017_1_104.pdf.
[16] Republic of Cyprus (2002), Income Tax Law, https://www.fbscyprus.com/docs/income-tax-law-2002.pdf (accessed on 11 June 2025).
[7] Republic of Cyprus (1985), Cooperative Societies Law, https://www.cylaw.org/nomoi/arith/1985_1_022.pdf.
[15] SEAL (n.d.), SEAL Cyprus - About us, https://sealcyprus.org/about-us/.
[12] SYNTHESIS Centre for Research and Education (n.d.), SYNTHESIS Centre for Research and Education - What we do, https://www.synthesis-center.org/what-we-do.
[11] The Cyprus Circular Economy Network (2025), Network Actions and Services, https://cypruscircular.org.cy/network-actions-and-services/.
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Note by the Republic of Türkiye
The information in this document with reference to “Cyprus” relates to the southern part of the Island. There is no single authority representing both Turkish and Greek Cypriot people on the Island. Türkiye recognises the Turkish Republic of Northern Cyprus (TRNC). Until a lasting and equitable solution is found within the context of the United Nations, Türkiye shall preserve its position concerning the “Cyprus issue”.
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The Republic of Cyprus is recognised by all members of the United Nations with the exception of Türkiye. The information in this document relates to the area under the effective control of the Government of the Republic of Cyprus.
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← 1. There are no exemptions or reduced rates specific to social economy entities. However, transactions related to medical treatment, associations’ services to their members, services related to social welfare and insurance, including those supplied by nursing homes or non-profit associations, among others, are exempt from VAT (CYLAW, 2000[18]).