Elias Neocleous: The key trends and challenges in the legal world – What our main concern should be

The incorporation of new laws and regulations in the field of taxation must be done consciously and carefully, so that the tax-competitive community of Cyprus becomes more attractive, Elias Neocleous, Managing Partner of Elias Neocleous & Co LLC, has said.

In an interview for the "IN Business Forecasting 2025" series, he added that changes, such as the introduction of a 15% corporate tax on large multinational enterprises from pillar 2 of the Organisation for Economic Cooperation and Development (OECD), must be introduced into our local system in ways that will not cause flight, but will attract more companies to Cyprus.

He also said that Elias Neocleous & Co LLC, like all other major service providers, go hand in hand with the economy and growth of Cyprus.

As for his expectations for the new year, Neocleous states that in 2025 the legal world will face significant trends and challenges, while he anticipates acquisitions of law firms.

In Neocleous’ view, for the country’s economy to stay on track, it must focus on investments in sustainable infrastructure to support sustainable agriculture and promote renewable energy sources, limiting its dependence on fossil fuels.

At the same time, he adds that the digital reform of the economy, as well as the development of technological infrastructure and the promotion of innovation, will enhance its competitiveness and make the country more attractive for investment.

How do you think the Cypriot economy will perform in the new year? How optimistic are you about its prospects?

The Cypriot economy has shown resilience in recent years, despite the challenges it has faced. Its course for the new year will depend on a number of factors, both domestically and internationally.

It is clear that a series of events in recent years, starting with the pandemic and continuing with the wars in Ukraine and the Middle East, have had serious impacts on the global economy, such as extremely high energy prices, rising interest rates, supply chain problems and other difficulties, both at the economic and geopolitical level. As a small economy, Cyprus is significantly affected by these exogenous factors.

Nevertheless, the prospects for the Cypriot economy for the new year can be considered optimistic, provided that international economic conditions stabilise and there are no serious disruptions in the key sectors of the economy.

Cyprus has kept its international relations at a healthy level, is investing in digitalisation and, through a series of measures and incentives, is promoting itself as a technology centre, making the country a pole of attraction for foreign companies and boosting employment in the services sector.

Who do you see as the biggest threats to our country's economy? What should be considered in order to ensure its growth trajectory?

Our economy is faced with various risks and challenges, which can affect its development path if they are not addressed promptly and effectively.

The high dependence on tourism makes it vulnerable to external factors, such as international tensions, economic fluctuations and changes in visitor travel trends.

In addition, climate change and environmental risks affect tourism, agriculture and the overall sustainability of the environment.

The uncertainty created by geopolitical instability in the Eastern Mediterranean could have serious repercussions on the economy and the investment climate in Cyprus in general if appropriate measures are not taken, within the framework of the country's capabilities, in order to create the necessary resistance but also to explore any opportunities that arise.

It is important that Cyprus can present itself as a pillar of stability, investment opportunities and growth, in sectors that go beyond the classic triptych of services, construction and tourism.

What should Cyprus do to become an even more attractive destination for foreign investments? And how important, in your opinion, are they for its economy?

Cyprus has already made progress as an attractive destination for foreign investment, however there are several opportunities that could strengthen this upward trajectory and promote the diversification of our economy.

To maintain its growth trajectory, our country must focus on investments in sustainable infrastructure to support sustainable agriculture and promote renewable energy sources, limiting its dependence on fossil fuels.

At the same time, the digital reform of the economy, as well as the development of technological infrastructure and the promotion of innovation, will enhance its competitiveness and make the country more attractive for investment.

Global competitiveness in the technology sector and the need for digital transformation are vital for Cyprus to remain competitive in the global market. Strengthening investments in digital infrastructure, such as fast internet connections and the development of “smart cities”, could be particularly beneficial.

One of the most important parts, however, is the role that the public service plays, and must play, in our country. With the public economy and services working in excellent condition, as befits 21st century government services, we can react to the corresponding market demands.

An effective public service system will actively favour and assist in the sectors of Education and Health, and yet, show high growth in the relevant social cohesion indicators beyond the economic sector, which are a large part of a country's attractiveness.

In the area of ​​reforms, improving the already favourable tax system with more transparent and simpler procedures, as well as adjustments to strengthen specific sectors, such as renewable energy sources and new technologies, within the framework of a more favourable policy for "green" investments, could also bring significant benefits.

For these benefits to continue, however, the incorporation of new laws and regulations in the field of taxation must be done consciously and carefully, so that the tax-competitive community of Cyprus becomes more attractive.

Changes such as the introduction of a 15% corporate tax on large multinational enterprises from Pillar 2 of the Organisation for Economic Cooperation and Development (OECD) must be introduced into our local system in ways that will not cause flight, but will attract more companies to Cyprus.

Initiatives that promote sustainable practices create conditions capable of making Cyprus an attractive destination for investors interested in adding sustainable standards to their investment portfolios.

In general, foreign investment is a vital element for the long-term sustainability of the Cypriot economy, contributing to growth and stability, increasing economic activity and improving living standards, so it would be ideal if the country could focus on actions revolving around this sector.

Regarding your company's sector of activity, how do you estimate it will develop in 2025? Are there any issues that concern you?

Based on our forecasts for 2025, we believe that our expectations are based on a strong strategy and insight that guide our efforts to achieve realistic goals, which are guided by our values ​​embedded in our corporate philosophy.

Our law firm, like other major service providers, follows the same course as the economy and growth of Cyprus, to which we are inextricably linked.

The overall picture and recent developments, such as the upgrades of the Cypriot economy by international rating agencies and the stability of the financial system, contribute to our positive and ambitious view of the economic development of the country and the services sector as a whole.

More specifically, for Elias Neocleous & LLC, our leading position in the field of legal services is safeguarded by the principles that we have followed for many years and we will continue to pursue them with unwavering consistency.

The quality of our human resources, the continuous upgrading of their skills, our dedication to providing high-quality services, the genuine interest in the success of our clients and the ability to cover every area of ​​legal expertise are daily goals for us.

Combined with our commitment to innovation and the utilisation of the latest technological developments that are now at the service of legal science, in which we are pioneers, are the characteristics that constitute our advantages for success and addressing the challenges of the future.

We have invested extensively in this area, and the existence of Neolaw.ai, our in-house artificial intelligence tool that is constantly evolving to support our daily activities, is living proof of our corporate direction towards enhanced efficiency and creativity.

However, there are always concerns about the ability to achieve goals, as continuous adaptation to market conditions and accurate data analysis are required, as well as an approach based on the risks and hazards we face.

Technological progress is important but it is also uncertain, while continuous innovation requires resources and investments, which are not always guaranteed to be efficient or immediately usable.

Continuous technological changes pose risks to the return on investment, while we must pay constant attention to our cybersecurity areas. At the same time, retaining and developing human resources requires a supportive work environment, as the difficulty of finding competent executives can affect the effectiveness of our corporate strategy.

The legal world will face significant trends and challenges

What are the biggest trends/changes you expect to occur in your sector and what are the most significant challenges?

In 2025, the legal world will face significant trends and challenges. Law firms in Cyprus face significant challenges due to technological innovations, increasing demands for environmental, social and corporate governance (ESG), and changing client preferences.

The need to adapt to these new trends is imperative to maintain their competitiveness and meet expectations not only in terms of the quality of the service provided but also its delivery time.

External challenges are equally important, especially with regard to the geopolitical developments taking place around us. It is a fact that the growth of the Cypriot economy is mainly based on the services sector and foreign investment.

As the growth rates of the two occur, regulatory changes such as the EU Regulation on the control of foreign direct investments and the introduction of a 15% corporate tax on large multinational companies by the OECD's 2nd pillar can affect our economy, depending on the approach we take in their integration and implementation.

Our first concern must be the correct implementation and procedural processing when international European regulatory changes are incorporated, which must at all times have the development of Cyprus' competitiveness as a priority.

A strong trend that seems to be taking hold in Cypriot business is that of acquisitions and mergers. Will we see it strongly in your sector as well?

The trend for acquisitions and mergers is indeed evident and is a healthy indicator of growth in the business sector, since it allows for synergy between different companies, while at the same time helping to maximise the benefits that can arise from corporate governance and administrative processes.

If done the right way, I believe they have the potential to create better quality services by introducing healthy competition into the market. Although we have not seen it to a large extent so far in Cyprus, the area of ​​mergers and acquisitions is one that we should also pay attention to in law firms.

Digital upgrading is pushing law firms to invest in technological infrastructure, such as case management software and data protection systems, to remain competitive.

Furthermore, new compliance requirements with European standards and international regulations, such as the General Data Protection Regulation (GDPR), increase operational costs and complexity for law firms.

The costs involved are significant, and mergers facilitate cost sharing. It would be a sign of future growth and an indicator of a more mature economic society if, and when, large law firms from abroad start to be interested in mergers and other partnerships to have a presence in the Cyprus market.

Our prospects for 2025 as a company

What can we expect in terms of your organisation's plans and development strategy in 2025? What moves do you intend to make in this direction?

Regarding our prospects for 2025, as a company, we believe that our goals are well-founded thanks to the methodical planning we adopt, elements that have characterised our philosophy over time.

We intend to continue to move forward based on our strategy, which revolves around the axes of investing in excellent human resources, providing professional services at the highest level, and the process of continuous improvement and evolution, through which we can grow day by day, especially in innovative areas such as technology and artificial intelligence.

At the same time, we remain aware and humble about the unexpected challenges that may arise and that may require our response and resources.

We place particular importance on developing and cultivating our local and international relationships, on continuous education which allows us to stay abreast of updates in the changing legal regulatory environment, and on promoting our services according to market demands, which we always try to anticipate.

Through these pillars of our corporate governance and philosophy, we hope to continue to pioneer and lead in the legal services sector.