Appeal to investors
On September 13 2016 Cabinet approved significant changes to the citizenship-through-investment programme, which has already attracted over €2 billion of direct investment into the Cypriot economy (for further details please see Overview of citizenship-through-investment programme).
The most significant changes include the following:
- The upper threshold of required investment for a single applicant has been reduced to €2 million;
- Applicants can obtain citizenship for dependent parents on the condition that the dependent parents own a private residence in Cyprus purchased for at least €500,000 plus value added tax (VAT);
- Applicants are issued a residence permit on submission of an application;
- The provision for a €5 million bank deposit as an investment option has been scrapped, while the purchase of a minimum of €500,000 in government bonds has been added as a supplementary criterion under the minimum investment requirement.
- A requirement to purchase €2 million in government bonds has been added as a supplementary criterion.
The citizenship-through-investment programme's main advantages include the following:
- A qualified investor can be granted Cypriot citizenship within three months;
- The application is simple and straightforward;
- Applicants can obtain citizenship for dependent parents;
- Applicants are issued a residence permit on submission of an application until they secure their passport;
- There is no requirement to reside in Cyprus before, during or after the approval of a citizenship application;
- An applicant must retain an investment for three years, after which he or she is free to realise it.
- The programme provides successful applicants with visa-free travel to 157 countries, including all EU countries, Canada and Australia, among others;
- Successful applicants can obtain travel visas cost effectively and quickly, where required;
- Dual-citizenship is permitted and the acquisition of citizenship in Cyprus is not reported to other countries;
- Successful applicants are afforded all rights of EU citizens and are protected by EU legislation and regulations, including freedom to reside, work, do business, study and travel in the European Union, Switzerland, Liechtenstein, Norway and Iceland;
- Citizenship is granted to an applicant's family (ie, spouses, financially dependent children up to the age of 28 and dependent parents);
- The application process has no history or language proficiency tests;
- The wide choice of investment means that applicants can invest directly in the assets of their choice or combine allowable investments;
- The government fees for filing an application are low;
- Successful applicants have access to the best healthcare and education institutions in the European Union;
- Applicants have access to world banks and free trade within the European Union from the date of submission, due to the issue of a residence permit; and
- Cyprus has low tax rates.
In order to qualify for the programme, an applicant must:
- invest a minimum of €2 million;
- own a private residence in Cyprus purchased for at least €500,000 plus VAT. If investments are made into the purchase and development of real estate projects that include housing units with a minimum value of €500,000 plus VAT, the applicant is not required to purchase another €500,000 plus VAT residence;
- retain investments for a three-year minimum;
- hold a valid passport; and
- have a clean criminal record (this also applies to spouses and adult children).
Investment options for foreign nationals who wish to take part in the citizenship-through-investment programme include the following:
- Applicants must invest €2 million in the purchase and development of real estate, development projects (residential, commercial or in the tourist sector) or other infrastructure projects. Investment in land under development is included in this criterion, provided that an investment plan for the development of the purchased land is included in the application. It is understood that investment in land that is situated in a building zone of zero development is excluded.
- Applicants can invest in the financial assets of Cypriot companies or organisations (ie, bonds, securities and debentures) or organisations established and operating in Cyprus with investment costs of at least €2 million. The invested funds shall be channelled towards the financing of the investment objectives of these companies exclusively in Cyprus, based on a specific investment plan. The applications shall be evaluated to verify that the companies or organisations have a proven physical presence in Cyprus (with significant activity and turnover) and employ at least five Cypriot or EU citizens. The minimum number of employees will increase if more than one applicant invests simultaneously, or almost simultaneously, in the same business or company. Further, company employees must have legally and continuously resided in Cyprus during the five years preceding the application submission date.
- Applicants must invest in alternative investment funds (AIFs) or the financial assets of Cypriot organisations licensed by CySec:
- Applicants must purchase at least €2 million from AIFs:
- established in Cyprus;
- licensed and supervised by the Cyprus Securities and Exchange Commission (CySec); and
- whose investments are made exclusively in Cyprus and meet the scheme's criteria or in areas approved by the minister of finance.
- Applicants must purchase at least €2 million from AIFs:
In order to confirm that the investments which meet the scheme's criteria will be kept for at least three years, the manager or auditor of the fund must report, in writing and on an annual basis, the Ministries of Finance and the Interior with reference to the value of the initial investment.
- The purchase of financial assets of Cypriot companies or organisations of at least €2 million – such as bonds, bills and securities – issued with CySec's approval, by companies that have proven their physical presence and substantial economic activity in Cyprus, and that aim to finance the investment plans of the companies or organisations exclusively in Cyprus, based on an investment plan, fall under this criterion. An AIF's purchase of units of other AIFs is not considered eligible.
- Applicants may choose a combination of the above investments, provided that the total investment will amount to at least €2 million. Within this criterion an applicant can purchase special government bonds of up to €500,000, which will be issued by the Ministry of Finance's Public Debt Management Office on the condition that the investor will retain the bonds for three years. The characteristics and terms of these special bonds will be determined by the General and Special Issue Terms of Government Bonds. Investments in government bonds through the secondary market are not considered eligible.
Cyprus is a popular choice for foreign investors who wish to avail of the citizenship-through-investment programme, due to its:
- multi-ethnic population and culture;(1)
- mild Mediterranean climate, which makes the island an ideal holiday destination;
- safe and stable location, which is ideal for raising families due to the low crime rate, excellent education system and first-rate healthcare system;
- strategic geographic location for business and travel between the European Union, the Middle East and North Africa;
- direct access to the Mediterranean's numerous business and investment opportunities; and
- low-cost and high-quality business services supported by the Cypriot workforce, which is young, mobile, dynamic and well educated.
For further information on this topic please contact Georgia Georgalla at G Georgalla Law Firm by telephone (+357 22 35 32 90) or email ([email protected]). The G Georgalla Law Firm website can be accessed at www.georgallalaw.com.
(1) The Cypriot population is approximately 80.9% Greek, 0.2% Turkish, 4.1% English, 2.9% Romanian, 2.5% Russian, 2.2% Bulgarian, 1.2% Arabic, 1.1% Filipino and 4.3% other nationalities.