New AI initiative offers free advisory services to local businesses

State Aid Control Commissioner Stella Michaelidou has ruled that the grant scheme for financing the operation of the Cyprus AI Factory Antenna Pharos-CY is compatible with European Union state aid rules, clearing the way for the implementation of the artificial intelligence initiative.

The decision was issued on July 17, 2026, following the formal notification of the measure.

According to an announcement issued on Thursday, the Deputy Ministry of Research, Innovation and Digital Policy will be responsible for implementing and managing the scheme.

The announcement explained that small and medium-sized enterprises (SMEs) will be the principal beneficiaries of the aid.

It added that large companies, along with other beneficiaries such as semi-government organisations and government departments, will receive support either as de minimis aid or as assistance that does not constitute state aid under European Union law.

According to Michaelidou’s decision, the objective of Pharos-CY is to accelerate the development and adoption of trustworthy artificial intelligence applications in Cyprus, with a particular focus on health, sustainability, culture and language.

The Cyprus AI Factory Antenna will operate in close cooperation with the Greek AI Factory Pharos and the EuroHPC Joint Undertaking (JU).

Through this collaboration, the project will provide start-ups, SMEs, public sector bodies and researchers with access to advanced artificial intelligence tools, curated datasets and high-performance computing resources, including the Daedalus supercomputer.

In addition, the initiative will offer artificial intelligence services, secure data environments and specialised tools tailored to Cyprus’ national requirements.

The support will be provided in the form of free advisory and support services delivered by Pharos-CY to businesses, with the aim of strengthening innovation and increasing the use of artificial intelligence in productive economic activity.

According to the Office of the State Aid Control Commissioner, the project has a total budget of €6 million.

Of this amount, €3 million will be financed by the Deputy Ministry of Research, Innovation and Digital Policy, while the remaining €3 million will be provided through the Horizon Europe programme.

The programme is scheduled to conclude on March 31, 2029.

The measure had previously been approved by the Council of Ministers through decision No. 98.229, dated June 25, 2025.

It will enter into force from the date on which the relevant agreement is signed between the Deputy Ministry of Research, Innovation and Digital Policy and the AI Factory Antenna Pharos-CY.

In her decision, Michaelidou concluded that the measure is compatible with Regulation (EU) No. 651/2014, specifically Article 28, which governs innovation aid for small and medium-sized enterprises.

The ruling opens the way for the implementation of Cyprus’ artificial intelligence initiative, enabling the country to proceed with the Pharos-CY project under the European Union’s state aid framework.