How the Cyprus CBI program has changed to remain attractive and safe for investors

By Nada Starovlah  

What are the benefits Cyprus offers to investors and their families? How can investors achieve Cyprus citizenship through investment? Also, learn what changes the government recently has done to the country’s citizenship-by-investment program. 

Advantages of investing in Cyprus  

Cyprus is a popular tourist, business, education and retirement destination. It is the third largest island in the Mediterranean. It has a relatively low cost of living while at the same time offering high standard of professional and multilingual services. It also offers access to first-class health care as well an outstanding education systemCyprus is also among the countries with the lowest crime rates in the world, providing a safe and secure place to live.  

In addition, Cyprus offers aattractive tax system where taxable profits of all Cyprus companies are taxed at the rate of 12.5 percentDividend income received in Cyprus from a foreign company is exempt from Cyprus taxes and capital gains are not subject to taxes, except on the sale of immovable property situated in Cyprus. Generally, for businesses Cyprus is a good country, as it offers a modern banking system, low taxation and low start-up costs. 

When looking at benefits of the citizenship-by-investment programcitizenship is available to all members of the family: the husband or wifeminor and adult children under the age of 28 who are financially dependent on the parents; and the parents of the investor.  

Getting European citizenship through investment  

The Council of Ministers of Cyprus has approved amendments to the Scheme for Naturalization of Investors in Cyprus. 

First, the examination period of citizenship applicants under the program normally takes six months. Under option one, there is investing in real estate and infrastructure. The investor can invest in a residence with value of 2.15 million euros, including VAT, if applicable, and including a donation of 75,000 euros to the Research and Development Fund of Cyprus, an obligation that can be waived under certain conditions and a 75,000 euros donation to the Land Development Corporation. It must be retained for five years. After that, the investor has the right to sell the property and buy another for a minimum value of 500,000, including VAT, if applicable.  

The investor may decide not to invest in a single residence but in a selection of residential properties, including one that must be used as a private permanent residence with a minimum value of 500,000 eurosThe 1.65 million can be invested in a range of residential properties that may be resold after five years. This option relates to the purchase or construction of immovable property, whether residential or commercialThe investment must be made on a piece of land where there is an investment plan for its development. Purchasing land in the zone of zero growth is prohibited.  

The second option is purchasing, incorporating or participating in Cypriot businesses and companies. The economic criteria for such an investment is at least 2.15 million euros, which includes the donations. These companies need to employ at least five Cypriot or European Union citizens. This minimum number of employees may change in circumstances where there is more than one investor in the same business.  

The third option is investing in Cyprus alternative investment funds, financial assets or organizations licensed by the Cyprus Securities and Exchange CommissionThe investor should invest at least 2.15 million in the investment funds, provided that the funds are registered and operating in Cyprus as well licensed and supervised by the commission. Investments under this option may also be in the financial assets of Cyprus companies or organizationsInvestment under this option needs be maintained for a period of five years. The manager or auditor of the alternative investment fund shall inform, in writing and a yearly basis, the Ministry of Interior and the Ministry of Finance about the value of the initial investment.  

A fourth option is combining all the previous options. The investor may make a combination of the above investments, provided that the total investment amounts to at least 2.15 million eurosInvestor may no longer invest in Cyprus government bonds. 

After looking at the various options available to the investor, there are also certain terms and conditions that need to be met. For example, one of the criteria is that the applicant, prior to his or her naturalization as a Cypriot citizen, must hold a resident permit in Cyprus. If the applicant does not already hold a resident permit, he or she may apply for an immigration permiton the basis of Regulation 6(2) of the Aliens and Immigration Law, concurrently with the application for naturalization. Besides the above requirements, there are also certain documents that need to be presented by the applicant. For example, there must be a clean criminal record and other personal documentations 

Changes to the Cyprus Investment Program 

The Council of Ministers approved changes to the Cyprus Investment program, including: 

  • Any applicant rejected by another member state will not be eligible to apply for the Cyprus program and the applicant has an obligation to disclose information whether he or she has been previously rejected.  

  • The period of retaining any investment has been increased to 5 years, which excludes the primary residence of 500,000 euros, which still must be held for life. During the 5-year period the investor will be able to change his investment, provided that a consent is granted in this regard by the Ministry of Finance. 

  • The applicant will also need to obtain a Schengen Visa before applying for the investment. 

  • Applicants need to make a donation of 75,000 euros to the Foundation for Research and Innovation (which can be waived under certain conditions) and a donation of 75,000 euros to the Cyprus Land Development Corporation. 

  • Properties under construction will require a mandatory planning permit 

  • Applicants can no longer invest in government bonds, however they are now allowed to invest in the shipping sector as a new option 

  • Investments in registered Alternative Investment Fund has been added as an eligible investment as well as the possibility for these Organizations to invest up to 200,000 euros in the Cyprus Stock Exchange's secondary market. 

  • For the purchase of new residencies, the investment remains at 2 million euros, while re-sales require minimum investment of 2.5 million euros 

Other positive amendments include that only authorized service providers approved to represent the program in Cyprus can offer services. These providers, including both individuals and legal entities, also need to follow a Code of Conduct for the Cyprus investment program. 

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About the Author

Nada  Starovlah
Nada Starovlah

Nada Starovlah is a litigation lawyer currently working at Soteris Pittas & Co. LLC, based in Limassol, Cyprus.

Her main areas of expertise include immigration law, international law, arbitration law, corporate and commercial litigation, banking law, family law, employment law, tort law, land law, European law and human rights law. Amongst others, Starovlah assists clients with their Cypriot citizenship applications, visitor visas, permanent resident permits and other matters related to real estate and immigration.

Prior to joining Soteris Pittas in 2014, she worked for the law firm of Nicos Anastasiades & Partners as a legal trainee. She was awarded by Legal500 as one of the top lawyers in the firm of Soteris Pittas & Co LLC in the litigation department.

Starovlah is a member of the Cyprus Bar Association, the General Council of the Bar and the Chartered Institute of Arbitrators. She is also a law lecturer at the Tutors Panaretos Educational Center in Cyprus. She is also the exclusive author of Etouce based in China dealing with immigration and investment issues as well as the author of Epsilaw based in Cyprus.

Starovlah has an LLB from the University of Manchester in United Kingdom. In 2013 she completed the Bar Professional Training Course from the Honorable Society of the Inner Temple. In 2017 she obtained an LLM in International Commercial Arbitration from the Queen Mary University of London.

Starovlah speaks Greek, Serbian, French and English.

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