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Everything you need to know about the new rules of Cyprus citizenship by investment

Posted by admin on July 26, 2019
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Cyprus offers many key benefits to foreign investors and their dependent family members who are looking for a jurisdiction that offers a gateway to Europe, high quality standards of living, exceptional professional services and a safe and secure living environment.

The main advantages and benefits of Cyprus and its Citizenship are:

  • The acquisition of Cypriot Citizenship by Investment provides full EU Citizenship to an investor, their dependents and their descendants
  • The acquisition of the EU passport provides the right of travelling, working, studying and residing with no restrictions within the EU member states
  • Cyprus also provides a favorable tax regime in comparison to other EU member countries
  • The island has an advanced economy and a high human development index (HDI) with regards to living and quality of life
  • The private English-speaking schools in Cyprus are well known for their high-quality teaching and standards
  • Cyprus offers an enviable combination of perfect climate, business environment and culture
  • It is the third largest island in the Mediterranean Sea and is cited as one of the most popular tourist destinations in the region

The Cyprus Government, in its efforts to further encourage foreign investment and attract high net worth individuals into doing business in Cyprus, has amended the criteria for the acquisition of the Cypriot Citizenship. Specifically, a non-Cypriot citizen will be eligible to apply for the acquisition of the Cypriot Citizenship, provided condition 1 plus any of the alternative investment options 2 to 5 are met:

  1. The applicant must have made the following donations:
  2. a) €75.000 to the Cyprus Land Development Corporation; and
  3. b) €75.000 to the Research & Innovation Foundation

Exemption from the abovementioned requirement (b) is granted if:

1a. The applicant has invested at least 20% of the minimum required investment amount (i.e. €400.000) in Cypriot companies operating in the primary or secondary sectors of the economy (excluding the construction sector) or in the sectors of research and technology, education, health and renewable energy; or

1b.   The applicant invested at least €75.000 in a certified innovative or social enterprise

 

  1. Investment in real estate, land development and infrastructure projects

The applicant must have made an investment of at least €2 million (excluding VAT) for the purchase or construction of buildings or for the construction of other land development projects (residential or commercial developments, developments in the tourism sector) or other infrastructure projects.

Included in this criterion is also the investment in land which can be developed provided that the application will be supported with an investment plan for the development of the purchased land.

Investment in real estate, land development and Infrastructure projects can only be considered as eligible provided the following are met:

  • The property has been granted the planning permit (in cases where the title deed has not been issued);
  • A certificate of completion has been issued by the architect of the property;
  • In cases where the relevant property is under construction the seller must deposit in a special account, in favour of the investor, an amount equal to 5% of the purchase price.

Alternatively, the seller may issue a bank guarantee for the same amount in favor of the investor;

  • In cases where the property is mortgaged the applicant must be given a written declaration by the mortgage lender undertaking to waive the mortgage when the investor or the seller will pay to the lender the amount stated in the relevant declaration.
  1. Purchase of or creation of or participation in Cypriot businesses and companies

The applicant must have made an investment of at least €2 million (excluding VAT) in purchasing or creating or participating in businesses or companies that are based and operating in the Republic of Cyprus. This amount must be used for financing the investment plan of the relevant businesses or companies. The investments must be made exclusively and only in Cyprus and should be supported by a comprehensive investment plan.

It should be noted, that these companies must have proven physical presence and significant activity in Cyprus with substantial turnover and employ at least five Cypriot or European Union citizens. The minimum number of employees of the specific company increases in the event that more than one applicant invests in the same business or company.

  1. 4. Investment in Alternative Investment Funds (AIF’s) or in Registered Alternative Investment Funds (RAIF’s) or financial assets of Cypriot businesses or Cypriot companies licensed by the Cyprus Securities and Exchange Commission (CySec)

The applicant must have purchased units from AIF’s or RAIF’s which are established in Cyprus and are licensed and supervised by the CySec, amounting to at least €2 million (excluding VAT). The investments of the AIF’s / RAIF’s must be made exclusively in the Republic of Cyprus and fulfil the criteria of the present scheme.

In order to confirm that the investments made, under this criterion, are retained for at least a five-year period, the manager or the auditor of the Fund should provide on a yearly basis to the Ministry of Finance a confirmation report stating amongst other the  initial value of the investment.

An investor may acquire financial assets of Cypriot companies or other organisations such as bonds, bills and securities amounting to at least €2 million (excluding VAT), issued with the approval of the CySec, by companies that have proven physical presence and substantial economic activity in the Cyprus Republic. The purpose of the financial assets should be to finance the investment plans of these companies exclusively in Cyprus. The investments to be made in this respect, should be supported by a comprehensive investment plan

  1. Combination of the aforementioned criteria 2 to 4 and other eligibility

The applicant may proceed in investing at least €2 million (excluding VAT), in a combination of the abovementioned investment criteria. A high-ranking senior manager may apply for the acquisition of the Cypriot Citizenship, provided that he/she receives such a remuneration that generates for the Cyprus Republic tax revenues of at least €100,000 over a three-year period and provided that this tax has already been paid or prepaid. In addition, the company in which the high-ranking senior manager works for, needs to fulfil one of the abovementioned investment criteria.

Additional conditions & requirements

In all investment options 2 to 5 listed above the applicant must own a permanent residence in Cyprus with a market value of at least €0, 5 million (excluding VAT). In case members of the same family apply separately as investors they can collectively purchase a residential property provided its total purchase price covers the amount of €0.5 million (excluding VAT) for each applicant.

  • In the event that the amount of the residential property exceeds €0, 5 million (excluding VAT), then the additional amount paid can be considered as part of the total amount of the main investment.
  • In the event that the applicant will invest under Criterion 2 – ‘Investment in real estate, land development and infrastructure projects’, by purchasing a residential property amounting to at least €0,5 million (excluding VAT), then they will not have to purchase another residential property of €0,5 million provided that one of the residential units is worth at least €0.5 million (excluding VAT) and provided that they will keep in their possession the said permanent residential property for life.
  • The parents of the investor may apply for the acquisition of the Cypriot Citizenship, as soon as the main applicant will acquire the Citizenship, provided that they will purchase another permanent residential property amounting to at least €0, 5 million (excluding VAT).

The applicant needs to be a holder of a residence permit in Cyprus for 6 months prior to his / her application for the acquisition of the Cypriot Citizenship.

  • In the event that the applicant does not hold a residence permit, then he / she may apply for a Permanent Residence Permit – Regulation 6(2) simultaneously with the application for the Citizenship.

In cases where the applicant is investing in residential property/ies which was/were previously used for the purposes of fulfilling the criteria of the Cyprus Investment Programme, the total investment must be €2.500.000 (not €2.000.000)

The applicants should also be in possession of a valid Schengen Visa. Exempted from this requirement are citizens of countries for which a visa is not required for entering the EU member states.

The applicant should not have been rejected from obtaining the citizenship of any other EU member state.

In this respect, the applicant should provide a sworn affidavit.

In addition to the above, it should be clarified that any interested Individual who is included in the “Consolidated list of Persons, Groups and Entities subject to Financial Sanctions” issued and updated by the EU, is not eligible to apply.

Other important information

  • The applicant is required to make the required investment during the three years preceding the date of application and should ensure that the said investment is retained for a period of at least five years from the date of acquiring the Citizenship
  • Notwithstanding compliance with the above conditions, the decision to grant Cyprus Citizenship remains at the absolute discretion of the Council of Ministers.

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