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What is the general climate of real estate investment in your jurisdiction?
There is strong demand for high-end seafront properties and high-end commercial developments with a yield of 3% or more. This is largely due to the visa programme, which entitles qualifying purchasers of properties above a certain value to residence rights, and the economic citizenship programme, which allows substantial investors to obtain Cypriot citizenship.
Who are the most common investors in real estate?
The most common investors are third-country (non-EU) investors aiming to obtain a permanent residence permit or Cypriot citizenship – most commonly from Russia, Eastern Europe, the Middle East and East Asia.
Are there any restrictions on foreign investment in real estate?
The Immovable Property Acquisition (Aliens) Law, which dates back to when Cyprus was a British colony, required non-Cypriots wishing to acquire immovable property in Cyprus to obtain prior permission from the Council of Ministers. For the purposes of the law, acquisition of immovable property includes:
- the purchase of freehold property;
- the grant or purchase of a lease of property for a period exceeding 33 years; and
- the acquisition of shares in Cyprus companies which own immovable property on the island.
Following the end of a five-year transition period after Cyprus’s accession to the European Union, all remaining restrictions on the acquisition of property in Cyprus by citizens of other EU member states were removed with effect from May 1 2009. Citizens of other EU member states, and companies registered and based in EU member states (regardless of the nationality of their shareholders), may now acquire immovable property in Cyprus on the same terms as Cypriots.
Non-EU citizens and companies incorporated outside the European Union still require permission, but this is generally a formality. It may take a year or so for the formal permit to be issued but the buyer is entitled to occupy the property in the meantime.
What structures are typically used to invest in real estate and what are the advantages and disadvantages of each (including tax implications)?
The typical structure would be to incorporate a Cyprus company to purchase the property. This eliminates the need for a permit from the Council of Ministers. There are no special tax provisions for such companies.
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