The Council of Ministers has approved on Wednesday, 13 February 2019 , a number of changes in regards to the popular “Cyprus Investment Programme” by which investors obtain the Cyprus citizenship. The logic behind such changes according to the Minister of Finance, is to target and encourage the creation of an eco-system of business innovation as well as to facilitate the creation of finance for affordable housing through the mandatory contribution to the Cyprus Land Development Corporation whilst such changes also aim to prevent any overgrowth of the real estate sector through such investments. The main changes, are as follows :
- A mandatory donation of € 75,000 to the Foundation for Research and Innovation to promote the creation of an entrepreneurial innovation ecosystem, an obligation that can be waived under certain conditions, ie where the investor shall invest in an innovative business (which has acquired a relevant certificate by the ministry of finance) or in a certified social company (πιστοποιημένη κοινωνική εταιρεία). The mandatory donation is also waived where the applicant has made an investment under the criterion “Purchase or Establishment or Participation in Cypriot Companies or Businesses” amounting to at least 20% of the investment cost of the prerequisite amount (ie € 400,000 ) to a company operating in the primary sector of the economy or in the secondary sector of the economy, or in one of the fields of research and technology, education, health, and renewable energy.
- A mandatory donation of € 75,000 to the Cyprus Land Development Corporation, aiming at the contribution to the integrated housing policy, specifically for the purpose of implementing affordable housing projects and the implementation of other housing plans / measures.
- The inclusion of investments in the shipping sector in the eligible investments, on the basis of specific measurable criteria.
- The inclusion of investment in Registered Alternative Investment Funds in the eligible investments, as well as the possibility for these Organizations to invest up to € 200,000 in Cyprus Stock Exchange’s secondary market.
- In the case of residential units already used for the purposes of the Investment programme and are now reused under the same Programme, the provision stipulating that if the applicant has made investments in a residential unit (s) on the basis of criterion “Investments in Real Estate, Development and Infrastructure Projects” is not required to purchase another permanent private dwelling in the Republic of Cyprus if at least one of these dwellings is worth at least € 500,000 will be valid provided that the 3 total investment, including privately owned, is at least € 2.5 million.
- The Obligation to maintain the required investments for a period of at least 5 years from the date of naturalization, instead of 3 years which was previously the case.
- A complete abolition of investment in government bonds as an acceptable investment within the Programme.
- Where the investment relates to the purchase of real estate or property as well as in the case of a property used as a permanent residency the following will be required:
- a planning permission issued by the Department of Town Planning and Housing in accordance with the Town and Planning Act (Ν. 90/1972)
- a completion certificate signed by the architect of the project. In the case of property under development, it shall be necessary to maintain an amount equal to 5% of the value in a designated account or the equivalent bank guarantee from the seller of the property to the buyer (Performance Bank Guarantee).
- and a bank waiver from the banking institution in case of a mortgaged property, confirming the waiver of any rights upon receipt of payment for the mortgage shall be required.
- The applicant must have a Schengen visa in order to be able to apply for naturalization.
- An applicant who has applied for the acquisition of citizenship in any other Member State of the European Union and has been rejected will not be entitled to acquire Cypriot citizenship within the framework of the Cyprus Investment Programme.
- Reaffirmation that thee applicant should be in possession of a residence permit in the Republic of Cyprus for at least six (6) months prior to naturalization as a Cypriot citizen.
If the applicant does not already hold a residence permit, he will be able to apply for an immigration permit, on the basis of Regulation 6 (2) of the Aliens and Immigration Laws, at the same time as submitting the application for Naturalization, but be a holder of an immigration permit for a period of at least six (6) months prior to naturalization as a Cypriot citizen.
- An Annual Implementation Report that includes the number of naturalizations, nationality of the applicants and the sector in which the investments were made will be prepared for the sake of transparency and correct information.
- Reaffirmation of the ban on the advertising of the Investment Programmes in public places and on the Internet, with particular emphasis on the visibility of the Cypriot passport and the symbols of the Republic and the EU.
- Publication of tender for purchase of services for enhanced due diligence procedures for the naturalization applicants from the Interior Ministry within two months from the date of the application.
The changes are expected to be implemented in the upcoming months by the Ministry of Interior. Reportedly points numbered 1,2,5 and 8 shall be applicable for all applications submitted starting 15/5/2019 and onwards.
The aim of the changes as a general matter points to enhancing trustworthiness and efficiency of the Cyprus Investment Programme as well as widening the investment opportunities with an ultimate goal of benefiting the economy and well being of Cyprus in general. What remains to be seen is whether such changes will be welcomed by interested investors and if the above measures will meet the test.