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How can I make an eligible business investment for my Cyprus citizenship application?

I am working on a citizenship-by-investment plan but haven’t applied yet. I know I can make a qualifying investment into a Cypriot business, but I read it has to have a substantial presence in the country. What is considered substantial? Who makes that determination? Please advise.


Answers
  • Vasiliou Law
    March 22, 2019

    The applicant must have invested at least 2 million euros for the purchase or participation in companies or organizations established and operating in the republic of Cyprus with investment costs. The invested funds shall be channeled toward the financing of the investment objectives of these companies exclusively in Cyprus, based on a specific investment plan. As explained in the new instructions by the Council of Ministers, "The applications shall be evaluated to verify that the companies or organizations have proven physical presence in Cyprus, with significant activity and turnover and employ at least five Cypriot citizens or citizens of European Union member-states. The minimum number of employees shall increase, if more than one applicant invests simultaneously or almost simultaneously in the same business or company." Therefore, the employees of the company and the physical presence of the company are of essence as well as the business plan of the company.

  • Antonis S. Theodosiou
    March 22, 2019

    The substantial presence criterion will be used by the tax department in determining whether your company qualifies to be considered a Cypriot resident, for tax purposes. If you ensure such a presence, then your company will be taxed on the basis of the Cypriot tax rate, which is amongst the lowest in the EU. Cyprus has not laid down a definitive checklist with regards to the “substance” qualification. It only requires that a company is managed and controlled here in Cyprus. We are drawing guidance, in this respect, from the OECD guidelines and international tax principles. In general (but not conclusively), a company is considered a Cypriot resident (has substantial presence on the island) if the following conditions are met: management and strategic decision making of the company is held here in Cyprus (e.g., contract conclusion); the directors of the company (or the majority thereof) are Cypriot tax residents; an actual administrative office is established on the island.

  • CHRISO SAVVA LLC
    March 22, 2019

    You need to invest in an existing company, which has been in operation for at least five years, employ more than five people (from Cyprus or the EU). This is what substantial means and these are the criteria set by the finance ministry.

  • Fidescorp Chartered Accountants
    March 22, 2019

    The ministry wants to ensure that through the program, job creation is achieved and new businesses in Cyprus are established. Therefore, the eligibility would depend in forming a business plan and actually setting up an establishment that has substance, i.e., an office, employees, meaningful operations and an actual contribution to the Cypriot economy.

  • Kannava, Kitromilidou & Co LLC (KPK Legal)
    March 22, 2019

    The applicant should have bought: units of at least 2 million euros from alternative investment funds (AIF) or registered alternative investment funds (RAIF) established in the republic of Cyprus, licensed/registered and supervised by the CySec and whose investments are made exclusively in the Republic of Cyprus; in investments that meet the criteria of this scheme or in areas approved by the minister of finance. It is permitted for these AIFs or RAIFs to invest in secondary market stock market values of the Cyprus Stock Exchange an amount that does not exceed 200,000. It should be noted, however, that the purchase by an AIF or RAIF of units of other AIFs or RAIFs is not considered eligible. As such an investment must be held by the applicant for at least five years, the manager or auditor of the fund shall be obliged to inform in writing on an annual basis to the ministry of finance with reference to the value of the initial investment. The purchase of financial assets of Cypriot companies or organizations of at least 2 million, such as bonds, bills and securities, issued with the approval of the CySec, by companies that have proven physical presence and substantial economic activity in the republic of Cyprus, and have as a purpose the financing of the investment plans of these companies or organizations exclusively in Cyprus, based on an investment plan, fall under this criterion. There are purchase or establishment or participation in Cypriot companies or businesses, with these requirements: contract of sale; proof of payment of the agreed purchase price; certificate of shareholders by the Registrar of Companies; copy of the wire transfer to a Cypriot commercial banking institution in the name of the company or the organization; a specific investment plan; copies of the employment contracts of the Cypriot or European Union citizens; employed by the company in which the applicant has invested; confirmation from the Social Insurance Department as to the insurable income of the Cypriot or European Union citizens employed in the company; copy of the Social Insurance Contributions for every Cypriot or European Union citizen employee; registration certificate (MEU1) or permanent registration certificate of Union Citizen (MEU3) for employees that are European Union citizens. There is also investment in alternative investment funds or financial assets of Cypriot companies or Cypriot organizations that are licensed by CySec, with the following required: title/titles and other relevant documents of the financial assets/units purchased; copy of the wire transfer to a Cypriot commercial banking institution in the name of the company or the organization; specific investment plan; confirmation by the CySec. The above will be examined by the ministry of interior.