New Investment Criteria For Cyprus Citizenship
During the last decades, Cyprus has developed as a well-respected international financial and investment centre due to its effective legal system, the low rates on company tax, the efficient administration system and highly skilled workforce.
On the basis of that, Cyprus has laid down rules in its citizenship laws to facilitate the granting of Cypriot citizenship to individuals who invest in Cyprus, which by consequence makes such investors citizens of the European Union and allows them to reside permanently in Cyprus, or even in any other EU member state of their choosing.
II. Alternative Criteria for Investors and Businessmen
As a general rule, citizenship is granted after the fulfilment of a number of criteria vis-à-vis the length of one’s stay in a country. Nevertheless, Article 111A of the Population Archive Law 141(I)/2002 specifically provides that in relation to foreign investors and businessmen, citizenship may be granted even if the mainstream criteria are not met, but rather on alternative criteria that may be set by the Council of Ministers of the Republic through a Regulatory Act.
The Council of Ministers of the Republic has issued such Regulatory Acts over the years, with the most recent being the Regulatory Act dated 13/09/2016 (hereinafter “the Regulatory Act“) which revises the “citizenship by investment” criteria and also includes members of the businessman’s or investor’s families in the scheme of citizenship granting. This Regulatory Act will come into force on the 31st of October, 2016.
Before applying for citizenship, any applicant must compulsorily fulfil the following criteria:
- They must have a clear criminal record;
- They must have a permanent private residence in Cyprus of a value of €500,000 plus VAT;
- The applicant must hold a permit to stay in the Republic at the time of their application for citizenship.
III. The Criteria for Investors
An investor may obtain citizenship, upon an application submitted to the Ministry of Interior and if any one of these criteria is met:
1. First Criterion
The applicant must have made an investment of at least €2 million for the purchase or building of immovable property or the development of new projects in the residential, commercial, tourism or infrastructure sector.
2. Second Criterion
The applicant must have purchased, set up or invested in companies or businesses with their establishment in the Republic of Cyprus and that investment must be of at least €2 million. Such invested capital must be channelled for the funding of investment purposes of such companies/businesses solely in Cyprus, on the basis of an investment plan. Such businesses or companies must have a physical presence in Cyprus with substantial financial activity and an important circle of activities and must employ at least five Cypriot or EU citizens.
3. Third Criterion
They applicant may invest in Alternative Investment Funds (AIF) or financial assets of Cyprus businesses or entities that are licensed by the Cyprus Securities and Exchange Commission (hereinafter “CySec“).
In the case of AIFs the applicant must have bought units of a value of €2 million in AIFs regulated in Cyprus by the CySec and of which the investments are conducted exclusively in Cyprus. Such investments must be kept on for at least three years, the auditor of the AIFs that qualify this specific citizenshipgranting plan shall notify the Ministries of Interior and Finance on an annual basis.
Where the applicant buys assets in Cypriot businesses or entities such a purchase must be of over €2 million and it may include bonds that have been issued after the authorisation of the CySec, for companies with a substantial financial activity in Cyprus and which aim at the funding of investment purposes of those entities/businesses only in Cyprus, and on the basis of an investment plan.
4. Fourth Criterion
It is possible for the applicant to combine the investments in criteria 1-3 above under the condition that the total value of the investment is at least €2 million. Within this context of a combination of investments, the applicant may also buy Government Bonds up to €500,000 from the Department for the Management of Public Deficit of the Ministry of Finance on the condition that such bonds will be kept on for at least three years.
5. Time frame
In all four cases the applicant must have effectuated the relevant investments within the three years preceding the application and the investment must be kept for at least three years following the granting of citizenship.
IV. Criteria for Businessmen
According to paragraph (a) (i) and (ii) of the Regulatory Act, a Director of a company or companies may also apply for citizenship, under the condition that the company fulfils one of the criteria otherwise applied to individual investors. As an additional criterion for the Director, it is necessary that they have a salary for which the income tax exceeds the amount of €100,000 over a period of at least three years and that the relevant taxes have been paid or pre-paid to the Republic.
V. Criteria for Family Members
As per paragraph (b) of the Regulatory Act, it is possible for persons considered to be family members of the applicant investor/businessman who has been granted citizenship to apply for Cypriot citizenship as well.
For the purposes of the Regulatory Act, family members are the following:
- Civil Partner;
- Children dependent on the applicant who are over 18 years of age (students and mentally disabled adults).
In the case of spouses and civil partners, the Regulatory Act provides that it is possible for them to apply simultaneously to the investor/businessman, while parents and dependent children over the age of 18 must apply once the investor/businessman has been granted citizenship.
The applicant’s parent must also fulfil a further requirement; he/she must be the owner of a permanent private residence in Cyprus of a market value of at least €500,000 plus VAT, and where both parents apply they must own a private permanent residence of a value of at least €1 million plus VAT.
VI. Application Process
The application is submitted at the Ministry of Interior using a form M127, and copies of all the required documents of proof of the requirements above must be enclosed therein. KPK Legal can effectively provide this service as well as consultation on these matters.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.