Introduction

In 2014 Cyprus was ranked the fifth-best relocation destination in the world by an international lifestyle review.(1) Cyprus was the only European location alongside Switzerland to make it into the top five – ahead of London, Madrid and Monaco. Coupled with what most international tax advisers agree is the most favourable onshore personal tax regime in the world, Cyprus provides an attractive destination for investment-based immigration.

Cyprus's immigration policy and legal framework enable EU and non-EU applicants to obtain Cypriot citizenship on an expedited basis. There are a number of reasons that Cyprus's citizenship-by-investment (CBI) programme is considered to be the most attractive in Europe, including the following:

  • There is no requirement to make a donation to the local government in contrast to many other CBI programmes worldwide (eg, Malta).
  • Cyprus does not require applicants to live on the island prior, during or after the application process, unlike all other EU countries whose citizenship programmes impose some form of residency requirement.
  • The application process takes six months and approval is granted within three to four months. As a result, the Cyprus's CBI programme is the fastest route to EU citizenship.
  • The application process is simple and straightforward with no requirements to disclose sources of wealth, no medical tests and no language requirements.
  • Cyprus's CBI programme is one of only two EU-approved programmes.

Legal framework

The recent amendments to the Naturalisation of Investors in Cyprus by Exception Scheme, based on Sub-section 2 of Section 111A of the Civil Registry Laws 2002, was approved by the Council of Ministers on September 13 2016. The government has formulated a fast-track citizenship scheme aimed at high-net-worth individuals, investors and entrepreneurs. This allows successful applicants and their families to hold a Cypriot passport and enjoy all of the benefits afforded to Cyprus and EU nationals.

Free movement of people Cypriot citizens can freely travel, reside, study and work in any of the 28 EU member states, as well as Switzerland, Norway, Iceland and Liechtenstein. An entire family can obtain Cyprus citizenship and the children of EU nationals have the right to lower tuition fees within the European Union.

Free movement of services Individual citizens and their companies can offer services within the EU member states without any obstacles.

Free movement of capital Cypriot citizens can transfer funds between EU member states, purchase of property in any EU member state and invest in any type of activity.

Free movement of goods All goods produced in EU member states can be freely transferred inside the European Union.

No requirement to physically reside in Cyprus There is no requirement for applicants to physically reside in Cyprus either before filing an application or after obtaining Cypriot citizenship.

Attractive tax system Cyprus is an attractive financial centre due to its favourable tax system and strategic location at the crossroads of Europe, Africa and Asia. The Cypriot taxation system is consistently voted by EU tax professionals as the most attractive in Europe. Further, the newly introduced non-domicile regime means zero taxation of worldwide dividends and interest income for 17 years.

High standard of living Cyprus offers:

  • political stability;
  • a high standard of living with access to reputable state and private schools and medical facilities; and
  • among the European Union's lowest crime rates.

Visa free travel Cypriot citizens require no visa for travel within the European Union and to over 159 non-EU countries.

Dual citizenship Cyprus allows its citizens to hold dual citizenship.

CBI investment options

The investment options under the CBI programme are as follows.

Investment in residential real estate This option entails a €2 million (plus value added tax (VAT) of 0%, 5% or 19%) investment in residential real estate that is situated in Cyprus and held for three years, after which the overall investment in real estate can be reduced to a minimum of €500,000 in residential property (excluding any VAT that was paid on initial acquisition).

Examples of possible investment under this option include:

  • the purchase of a villa for €1.5 million and one apartment for €500,000, with the option to sell the villa after three years; and
  • the purchase of a villa for €2 million that is sold after three years and the simultaneous purchase of a residential property worth €500,000.

The parents of the main investor can also be included in the same application with an additional investment of €500,000 (plus VAT if applicable) in residential property.

Combination of real estate and other investments This option entails the following investments:

  • a three-year investment of €2 million (non-inclusive of VAT) in any of the following investment categories:
    • eligible real estate situated in Cyprus, namely residential property, commercial property, infrastructure or land, provided that a development plan is in place;
    • the creation, acquisition or participation in a Cyprus company or business that employs five Cypriot or EU nationals who have been resident in Cyprus for five years prior to the filing of the citizenship application, where the applicant is a shareholder;
    • investment in an alternative investment fund or the financial assets of a Cyprus Securities and Exchange Commission-licensed entity with activities in Cyprus;
    • investment in interest-bearing Cyprus government bonds (0.75% per annum), provided that the investment does not exceed €500,000;
    • a mix and match of any of the above options; or
    • a €500,000 investment (plus VAT of 0%, 5% or 19%) in residential property, which must be held indefinitely.

The main investor's parents can also be included in the same application with an additional investment of €500,000 (plus VAT if applicable) in residential property.

In addition to satisfying any of the above financial criteria, the primary applicant must:

  • have a clean criminal record from his or her country of origin or residence; and
  • confirm that his or her name is not included in the list of persons whose property is ordered to be frozen by the European Union.

Application process and timeline

The CBI application timeline can be summarised as follows:

  • six months for the main applicant and spouse;
  • seven months for minor children; and
  • 12 months for the main applicant's adult children and parents.

There is no requirement to physically reside in Cyprus before, during or after the CBI application.

The application process can be summarised as follows:

  • A CBI application is filed for the main applicant and his or her spouse.
  • A permanent residence permit (PRP) application must be filed the next day for the main applicant and his or her spouse and minor children (between the ages of six and 17). This requires a one-day visit to Cyprus by the main applicant, his or her spouse and minor children (minor children can be excluded from the PRP application and this will not affect their ability to apply for citizenship).
  • Within five days of filing, approval of the PRP will be granted, allowing the holder of a permit to travel visa free to Cyprus, Germany, Italy, France, the Netherlands and Luxembourg.
  • The CBI application will be approved within three to four months.
  • Certificates of naturalisation and passports for the main applicant and spouse will be issued six months from the date of the original application.
  • Citizenship applications for minor children will require two to three weeks for approval followed by the immediate issuance of certificates of naturalisation and passports.
  • Citizenship applications are filed for adult children (up to the age of 28) and parents of the main applicant.
  • The main applicant's adult children and parents must visit Cyprus the next day to file a PRP application.
  • The main applicant's adult children and parents will receive their citizenship within two to three months of filing the relevant PRP application.
  • Certificates of naturalisation and passports for the main applicant's adult children and parents will be issued six months from the date of the relevant PRP application.

For further information on this topic please contact Charlie Peter Savva or Charles Savva at Savva & Associates Ltd by telephone (+357 22 516 671) or email (cp.savva@savvacyprus.com or c.savva@savvacyprus.com). The Savva & Associates Ltd website can be accessed at www.savvacyprus.com.

Endnotes

(1) See the 2014 report prepared by Knight Frank, a leading independent, global real estate consultancy firm.

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