CRITERIA AND CONDITIONS FOR THE CYPRUS INVESTMENT PROGRAMME
Cyprus is prominently featured as one of the best countries to operate, live, work or retire in. Key factors that make Cyprus an attractive destination for investment, is the highly specialized human capital, the reliable legislative and regulatory framework, the stable tax system and the safety and stability conditions prevailing in the country. Consequently, a foreign investor or businessman may consider the Cyprus investment programme so as to enjoy the following benefits amongst others:
Having the right to free movement, residence, work and study within the EU;
Having a safe and stable permanent alternative to their current country of residence;
Owning unlimited immovable property in a Mediterranean destination;
As a stepping stone to operations in mainland Europe.
On the 13.09.2016, and as subsequently amended, the Council of Ministers of the Republic of Cyprus issued a decision whereby certain criteria and conditions with regards to the naturalization by exemption of foreign investors and businessmen as well as the qualifying members of their families, according to the new clause 111 A (2) of the Civil Registry legislation 2002-2013, have been significantly relaxed and broadened, making it even more easier to benefit from the Cyprus investment programme. In 2018 an annual quota of 700 applications pursuant to the Cyprus investment programme has been introduced, applicable as from 2018. A further amendment introduced in 2018 is an obligation to submit to the Ministry of Interior, along with the relevant application, a due diligence report on the applicant from an internationally recognized and accredited firm (i.e World Check, LexisNexis, Regulatory DataCorp Inc. etc), such report not older than 30 days from the date of its submission to the Ministry of Interior.
Also, in February 2019, the Council of Ministers of the Republic of Cyprus approved a series of changes as part of its efforts to further improve the Cyprus investment programme, aiming to make the programme even more credible, targeted and trustworthy.
This publication sets out the criteria applicable for the submission of an application pursuant to the Cyprus investment programme effective as from the 15.05.2019.
B. THE CYPRUS INVESTMENT PROGRAMME
I. ELIGIBLE INVESTORS
An investor, in order to benefit from the advantages of the Cyprus investment programme he/she must be:
A non – Cypriot citizen , who meets one of the financial criteria described in Section III, either a) ,personally, b) as a shareholder of a company/companies in proportion to his/her shareholding, c) through investments made by his/her spouse, d) through investments made jointly with his/her spouse or e) as a high ranking manager of a company/companies. A high-ranking manager is deemed to qualify if such manager receives such remuneration that tax revenue for the Republic of at least €100.000 (One Hundred Thousand Euro) is generated, and such tax has already been paid or prepaid.
It must be stressed that the spouse/cohabitee, the underage children, as well as the financially dependent adult children of the qualifying applicant also qualify automatically without any further financial requirements.
The definition of financially dependent adult children are undergraduate and postgraduate university students of up to 28 years of age that are undertaking their undergraduate or postgraduate degree and are not studying to acquire a professional title (such as ACA, ACCA, barrister). Students of foundation university courses the duration of which does not exceed two academic semesters may also qualify. Legally incapacitated dependants also qualify under this category.
The parents of the investor may also qualify to apply under this programme provided they own a residence in the Republic of Cyprus of minimum price €500.000 plus VAT.
Before setting out the ways of investment qualifying for application under the Cyprus investment programme it is important to note that such applicant must also fulfill the following four prerequisites whatever the mode of investment:
i. Clear criminal record
The investor must be of a clear criminal record in his/her country of origin, and the country of his/her residence if it differs from his/her country of origin. Further, any persons sanctioned by the EU are not qualified to apply.
Moreover, investors who have applied for the acquisition of citizenship in any other member state of the European Union and have been rejected, are not eligible to apply for the acquisition of the Cypriot citizenship under this programme.
ii. Holder of Schengen Visa
The investor must possess a valid Schengen visa. EU citizens and third country nationals that are not obliged to obtain an entry visa for travelling in the member-states of the European Union are exempted from the obligation to hold a valid Schengen visa.
Family members of the investor who are eligible to apply for the acquisition of the Cypriot citizenship must also fulfil the above mentioned two prerequisites (i.e. clean criminal record and possession of a valid Schengen visa).
iii. Possession of residence in the Republic of Cyprus
The investor must own a private residence in the Republic of Cyprus, the net price of which must be at least of €500.000 (Five Hundred Thousand Euro). The investor may own several residential properties in Cyprus of a cumulative net value of €500.000.
Members of the same family who file separate applications as investors (not dependants) may acquire one residence in the Republic of Cyprus, provided the total price of the residence covers the amount of €500.000 per applicant.
Where the price of the residence to be acquired in the Republic of Cyprus exceeds the minimum amount of €500.000, any amount paid in excess of €500.000 may be partly used for the satisfaction of the economic criteria mentioned in section III below.
The ministry of interior or the ministry of finance may (at their discretion) request to be submitted with a valuation report for the residence from an independent qualified valuator.
Moreover, in the case of the permanent privately-owned residence and where the investment relates to the acquisition of real estate (section III, criterion (ii) below) the following is required (if applicable): -
Town-planning permit, provided that it is required under the Town and Country Planning Law;
Project completion certificate signed by the architect of the project. For real estate projects under construction, an amount equal to 5% (five per cent) of the purchase value must be retained in a special account or a performance bank guarantee of an equal value will need to be issued from the seller in favour of the purchaser.
iv. Possession of Residence permit in the Republic of Cyprus
The applicant must be holder of a residence permit in the Republic of Cyprus for a period of at least 6 (six) months. An application for a residence permit may be filed simultaneously with the application under the Cyprus investment programme.
In the event that any of the four prerequisites are circumvented or breached at any time during or after the naturalization of the investor, then the naturalisation may be revoked.
Further it must be stressed that ultimately, the granting of naturalisation, following an approved application under the Cyprus investment programme, is a prerogative of the Council of Ministers. The Council of Ministers has the right to refuse any application and such refusal is not subject to judicial review.
III.MODES OF QUALIFICATION UNDER THE CYPRUS INVESTMENT PROGRAMME
Once an investor fulfils the above mentioned prerequisites, there are several ways by which an investor may qualify under the Cyprus investment programme:
i. Donation to the Research and Innovation Foundation and the Cyprus Land Development Corporation
The applicant must donate at least €75.000 (seventy-five thousand euro) to the Research and Innovation Foundation. Any amount to be donated in excess of the €75.000 may be partly used for the satisfaction of the economic criteria mentioned in this section III.
The obligation to donate to the Research and Innovation Foundation is lifted in the following instances: -
If the applicant has invested at least €75.000 in a certified innovative enterprise, which has obtained the relevant certificate by the Ministry of Finance or a certified social enterprise; or
If the applicant has invested under the criterion (iii) below an amount of at least €400.000 (four hundred thousand euro) in a company whose operations fall within the primary sector of the economy, or the secondary sector of the economy (excluding constructions), or in the sectors of research and development, education, health and renewable energy sources.
The applicant must further donate at least €75.000 (seventy-five thousand euro) to the Cyprus Land Development Corporation. Again, any amount to be donated in excess of the €75.000 may be partly used for the satisfaction of the economic criteria mentioned in this section III.
Additional alternative investments:
ii. Application by reason of investment in immovable property, developments and infrastructure projects
The applicant can make an investment of at least €2 million (two million euro), excluding VAT, for the acquisition or construction or development of real estate projects such as residential or commercial developments, developments in the tourist sector or other development projects.
This criterion also includes investment in undeveloped land provided the applicant also provides the ministry of interior with an investment plan for its development. Undeveloped land situated in zero development town planning zones do not qualify under this criterion.
An investor who has invested exclusively in residential properties under this criterion and provided that such residential properties have not been used already under the Cyprus investment programme, he/she is not obliged to purchase a further private residence in the Republic of Cyprus under the prerequisite II (iii) above, provided one of the residential properties he/she has acquired under this economic criterion is of minimum value €500.000 plus any VAT and he/she will maintain ownership of this specific residential property during his/her lifetime. If the investor will invest in residential properties which have already been used under the Cyprus investment programme, the investment threshold of €2 million is increased by €500.000 reaching the amount of €2,5 million (two million five hundred thousand euro).
iii. Application by reason of acquiring, incorporating or participating in Cyprus Businesses or Companies
The applicant can invest a minimum of €2 million (two Million Euro) in acquiring, incorporating or participating in Cyprus businesses or companies that have physical presence and activities in Cyprus. The investment effected must be used for the financing of investment targets or the specific businesses or companies exclusively in Cyprus on the basis of an investment plan. In addition, investments in the shipping sector are considered as eligible on the basis of measurable criteria to be jointly defined by the Ministry of Finance and the Shipping Deputy Ministry.
In order to qualify, such businesses or companies must employ at least five (5) Cypriot nationals or European citizens.
Where more than one investor invest simultaneously or almost simultaneously in the same business/company, the minimum required number of Cypriot or European citizen employees of such business/company increases.
iv. Application by reason of investment in alternative investment funds (AIFs) or registered alternative investment funds (RAIFs) or financial assets of Cypriot businesses or Cypriot organizations licensed by the Cyprus Securities and Exchange Commission (CySec)
The applicant can acquire units of a minimum value of €2 million (two Million Euro) in alternative investment funds (AIFs) or registered alternative investment funds (RAIFs) which are registered in the Republic of Cyprus and are licensed and supervised by the Cyprus Securities and Exchange Commission. The AIFs or RAIFs must invest exclusively in the Republic of Cyprus and in investments qualifying under the Cyprus investment programme or in sectors approved by the Minister of Finance. These AIFs or RAIFs are permitted to invest up to €200.000 (two hundred thousand euro) in secondary market stock-market values of the Cyprus Stock Exchange.
The administrator or the auditor of the fund must annually notify in writing the Ministry of Finance and refer to the value of the initial investment effected. This is to ensure that the investments effected are retained for the minimum period of five years.
Financial assets of Cypriot businesses or Cypriot organizations of a minimum value of €2 million (two Million Euro) like bonds or debentures which were issued with the approval of the Cyprus Securities and Exchange Commission also qualify under this criterion. The specific Cypriot businesses or organizations must have physical presence and substantive economic activity in the Republic of Cyprus and the financing acquired through their financial assets concerns the exclusive investment in the Republic of Cyprus on the basis of an investment plan.
v. Application by reason of a combination of the above criteria (ii-iv)
The applicant may also use a combination of the above financial criteria (ii-iv) amounting to at least €2 million (Two Million Euro), and qualify under the Cyprus investment programme.
IV. IMPORTANT NOTES
An investor, prior to applying under the Cyprus investment programme must have concluded the necessary investments during the three years preceding the submission date of the application. In addition, the investor is obliged to retain the investment for at least five years after the date of the acquisition of the Cypriot Citizenship. Within this five-year period the investor has the option to replace his/her investments provided that the prior approval of the Ministry of Finance is obtained.
V. TIME NEEDED FOR THE EXAMINATION OF THE APPLICATION
The examination of the application takes approximately 6 (six) months.
C.HOW KINANIS LLC CAN ASSIST YOU
Our firm is able to help you with the following:
Preparation, completion and submission of the application and relevant supporting documentation.
Renew and drafting of contract of purchase or agreements regarding immovable property in Cyprus.
Setting up of companies in Cyprus and abroad, and assistance in regards to entrepreneurial activities.
International Tax Planning.
Opening of Bank Accounts in Cyprus.
Assistance with regards to insurance.
Introduction to real estate agents in Cyprus.
Business Consulting and Business Development Assistance
Assistance with Property Valuations.
D. DEDICATED PUBLICATIONS
Our firm regularly publishes dedicated publications regarding subjects of interest to the International Investors. Please visit www.kinanis.com for an exhaustive list of our publications.
Relevant publications regarding the subject are:
Permanent Residence Permits; and
Acquisition of Immovable Property in Cyprus.
This publication has been prepared as a general guide and for information purposes only. It is not a substitution for professional advice. One must not rely on it without receiving independent advice based on the particular facts of his/her own case. No responsibility can be accepted by the authors or the publishers for any loss occasioned by acting or refraining from acting on the basis of this publication.
Senior Associate Lawyer
We are a Law Firm with offices in Cyprus and Malta and a representative office in Shanghai China comprising of more than 80 lawyers, accountants and other professionals who advise, international and local clients.
The Firm has been offering legal and consulting services since 1983 evolving from a traditional law firm to an innovative cutting-edge multidisciplinary law firm combining exceptional expertise in law, tax, vat and accounting.
From its establishment the Firm’s focus has been heavily business oriented and always abreast with the latest global developments and innovations. Drawing from our pool of experienced professionals we provide our clients’ businesses full legal and accounting support on an everyday basis as well as customized solutions in today’s global financial and legal challenges.
We consider ourselves as ‘traditional pioneers’ and our motto is to foresee and anticipate any issues that may potentially impact our clients’ business and to offer effective advice and solutions proactively.
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