Citizenship-by-Investment Scheme ‘there to stay’ in Times of Renewed Economic Growth
Traditionally, citizenship has been a legal status entailing the registration of an individual, including coming from a third country, with the government of a given country and his/her acceptance into that country’s political framework through legal means. Citizenship ‘by exception’ is the citizenship acquired in exceptional circumstances by an individual from another country, whereby the requirements normally prescribed by the citizenship laws of the given country for ordinary naturalisation are waived fully or partly. One way of acquiring citizenship by exception consists in investing a certain amount of money into the country whose citizenship is sought. Such a possibility exists in various areas of the world, including within the EU, in certain Member States such as in Cyprus.
Cyprus’ citizenship by investment programme seems to be quite successful, if it is taken into account that it has yielded over €2.5 billion in revenues for the government since 2013 – the year the scheme was relaxed. Back then, new routes to fast-track citizenship were created in order to combat in particular the effects of the economic and financial crisis which hit Cyprus in March 2013. The Cypriot authorities had clearly indicated that they wanted to maintain and enhance the scheme, as a way to further encourage foreign direct investments and doing business in the country, notwithstanding any EU pressure. It now clearly appears that the scheme is ‘here to stay’ as Cyprus has now exited the macro-economic adjustment programme with international lenders since March 2016, has entered a new era of economic growth and is seeking as a result to create durable and at the same time flexible real market opportunities for potential investors.
On 13 September 2016 the Council of Ministers of the Republic of Cyprus further revised the scheme providing an overall more favourable framework to foreign investors and their immediate relatives. The minimum amount to be invested has now dropped from €5 million to €2 million through several routes, such as direct investment in immovable property, development and infrastructure projects on the island; the acquisition, incorporation or participation in businesses operating in Cyprus and lawfully employing at least five Cypriots or EU citizens; direct investment in alternative investment funds and other financial assets of Cypriot businesses or organisations operating in Cyprus and regulated by the Cyprus Stock Exchange Commission; or a combination of the above. The qualifying investment is therefore €2 million, out of which only €500,000 can be in governmental bonds. The emphasis has therefore shifted to investment in the real economy.
Another significant change relates to the fact that investors must now hold a residence permit in Cyprus to qualify for citizenship, thereby reinforcing the link between the investor and the country while at the same time keeping it flexible enough. The application for residency is done, examined and issued at the same time as the application for the acquisition of citizenship is made. Immediate parents are entitled to apply along the investor himself, provided they also hold residence permits in Cyprus as described above and satisfy the requirement of a privately owned residence in Cyprus of a market value exceeding €500,000 plus VAT, which remains unchanged.
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Author: Dr. Stéphanie Laulhé Shaelou
Academic and Director of the Interdisciplinary Centre for Law Alternative and Innovative Methods (ICLAIM)