Foreign investment issues

Investment restrictions

What restrictions, fees and taxes exist on foreign investment in or ownership of a project and related companies? Do the restrictions also apply to foreign investors or creditors in the event of foreclosure on the project and related companies? Are there any bilateral investment treaties with key nation states or other international treaties that may afford relief from such restrictions? Would such activities require registration with any government authority?

Generally, there are no restrictions on foreign ownership of the shares of a Cypriot company. On the contrary non-Cypriot residents shareholders (or non-domiciled) enjoy certain tax exemptions. In relation to property investment, there are no restrictions on Cypriot and EU nationals. However, nationals of non-EU countries must first seek the approval of the Council of Ministers before real-estate can be registered onto their names. A company whose majority of directors and shareholders is comprised of EU nationals is not considered to be a foreign company for the purposes of owning immovable property in Cyprus. Cyprus has entered into a number of bilateral investment treaties with more than 27 countries, which offer protection for investor rights.

Insurance restrictions

What restrictions, fees and taxes exist on insurance policies over project assets provided or guaranteed by foreign insurance companies? May such policies be payable to foreign secured creditors?

There are no restrictions, controls, fees or taxes for foreign insurance companies operating in Cyprus as long as they have obtained proper licencing from the Insurance Companies Control Service, the local regulator. EU member state companies must comply with the general good requirements that are issued by the local regulator to freely offer services in other member states. Such policies may be payable to foreign secured creditors, provided that such creditors are insured by the insurance company.

Worker restrictions

What restrictions exist on bringing in foreign workers, technicians or executives to work on a project?

As per EU law, there is no restriction on the freedom of movement of individuals to Cyprus from all EU and EEA member states. There are no restrictions on third country nationals, however, the appropriate work permits or business visas will need to be obtained by the project company.

Equipment restrictions

What restrictions exist on the importation of project equipment?

There are no special restrictions, controls, fees or taxes on importing any equipment used by construction contractors other than customs fees and import taxes that would be incurred from importing goods. Any goods imported from EU and EEA countries are imported within the EU customs union and no taxes or custom fees apply. All machinery and equipment imported into the EU need to comply with minimum EU certifications and guidelines for health and safety.

Nationalisation laws

What laws exist regarding the nationalisation or expropriation of project companies and assets? Are any forms of investment specially protected (from nationalisation or expropriation)?

Cyprus is a full EU member and therefore nationalisation, expropriation, transfer and currency restrictions are regulated under EU law and EU policy. Furthermore, article 23 of the Constitution of Cyprus safeguards the right to acquire, own, possess, enjoy or dispose of any movable or immovable property. No deprivation or restriction or limitation is allowed, except for restriction or limitations that are absolutely necessary in the interest of public safety, public health or public morals, the town and country planning, or the development and utilisation of any property to the promotion of the public benefit, or the protection of the rights of others, and only if imposed by law. Just compensation must be paid for any such restrictions, or limitations that materially decrease the economic value of such property. Such compensation, if not agreed, is determined by the courts. In certain cases, nationalisations of financial institutions such as the Cyprus Central Cooperative Bank have been pursued by the government as a form of state intervention to assist with stability and liquidity.