Cyprus Citizenship for Foreign Investors

How Cypriot Citizenship BENEFITS you:

  1. To move freely, for either travelling or residing, to more than 135 countries including EU and Canada and/or to other countries with which the Republic of Cyprus has established bilateral treaties.
  2. To live, study or work, without visa requirements or other restrictions, within the European Union.
  3. Free movement of goods and services between EU member countries.
  4. Citizenship granted not only to the Applicant but also to his/her spouse, minor children and dependent children (students) up to the age of 28.
  5. 5.     The Applicant and his/her family receive full citizenship for life, which can be passed on to future generations.

 

Our ROLE throughout the procedure:

  • Advise and assist in establishing the most appropriate scheme for your application in order to fulfil all the requirements successfully
  • In depth knowledge and analysis of all legal requirements and of the relevant and applicable legislation
  • Expertise and experience with the application process and legislation
  • Preparation of all required documents
  • Offer a tailor-made investment option that best suits your needs
  • Perform due diligence on Real Estate
  • Drafting and preparing all necessary legal documents (sale agreements, incorporation of companies etc.)
  • Apply to the relevant authorities
  • Assist in structuring the transaction in the most effective way
  • Monitoring the application process with follow up discussions and meetings with the relevant authorities
  • Keeping you informed of the status of the application
  • Ensuring that all required criteria are met
  • Assist with obtaining EU passport and ID card for you and your family members.

 

Recent Amendments:

  • Investment amount has been reduced to €2 million plus €500,000 (not including the VAT) for residential property provided that the applicant chooses the Investment as per points A2-A4.
  • The applicant must first obtain permanent residency in order to be approved for obtaining the Cyprus Citizenship.
  • The applicant’s parents are also entitled to apply for the Cyprus citizenship by exception provided that they own a lifetime residence of at least €500,000 (excl. VAT).
  • If the purchase price of the residential property exceeds the amount of €500,000, the excess amount can be calculated and included in the whole investment.

 

General Key Points:

  1. VAT is not included in neither the amount of the Direct investment nor in the amount of €500,000 of the residential property.
  2. It is imperative that any of the above Investments are not older than 3 years from the application submission date.
  3. Proof of Clear Criminal record.
  4. Tax Residency is only obtained if the applicant and/or spouse and/or family spend more than 183 days in one calendar year in Cyprus.
  5. The application is processed and examined by the Ministry of Interior whereas the Investment Criteria are examined by the Ministry of Finance.

 

NEW REGULATION

 

By a decision approved by the Council of Ministers of Cyprus, on 13th September 2016, the following amendments on the previous investment scheme were introduced (Civil Registry Laws 2002-2015):

 

Investors can apply for Cyprus Citizenship by an individual application and there is no need to be part of a collective group provided that one of the following investments are fulfilled within the period of three years before the date of the submission of the application:

 

A.1 Investment in Real Estate:

The term Real Estate includes immovable property, developments and infrastructure projects.

Under this investment plan, the applicant has to invest at least €2 million for the purchase and/or construction, and/or for creation of developments such as commercial projects and/or development in the tourist sector and/or for any other infrastructure projects. However, if the land is eligible for construction, a business plan needs to be presented to the relevant Authorities for approval.

The total investment can be a minimum of €2 million if one residential property is of at least €500.000 (excluding VAT). The residential property must be kept permanently.

A.2 Purchase or Incorporation of a Cyprus Company or participation in Cyprus businesses or participation in Cyprus businesses or Cyprus Companies.

The Applicant can invest at least €2 million in order to purchase, incorporate or participate in companies, that have physical presence and activities in Cyprus and employ at least five Cypriot or EU citizens who have been legally residing in Cyprus for a continuous period of at least 5 years. The minimum number of employees increases where more than one applicant invests in the same investment.

A.3 Investment in alternative investment funds (AIFs), financial assets of Cypriot businesses or organizations.

Applicant can purchase financial assets of at least €2 million from organizations of alternative investment funds (AIFs), which are registered and their activities are operated in Cyprus and they are licensed and supervised by the Cyprus Securities and Exchange Commission. Furthermore, any other investments which are approved by the Ministry of Finance may qualify for the present investment scheme. The administrator and the auditor of the Fund is obliged to report to the Ministries on annual basis with reference to the initial investment amount.

A.4 Combination of the above

Applicants can have a combination of any of the above criteria amounting to at least €2 million. Within this, the applicant may also purchase Cyprus government bonds of the maximum amount of €500,000.

Cyprus Tonnage Tax System (Law 44(I)/2010)

 

After the recent issuance of the Circular 44/4012 and 45/2012, the Department of Merchant Shipping clarified the application of the tonnage tax system.

 

Taxation of Owners of Yachts and Pleasure Craft registered in the Register of Cyprus Ships

That is to say under the Circular 44/2012, the owners of yachts or pleasure crafts, registered in the Cyprus Register of Ships will not be required to submit Income tax return to the Inland Revenue Department, even though they are deemed to be non-qualifying owners, provided that the only asset owned by these persons is the above yacht or pleasure craft and provided, that it is not used for any other purpose rather than for the exclusive use/ recreational pleasure of the owner of the company.

 

Alternatively, if the yacht or pleasure craft is used either wholly or partially for commercial purposes, the owner must submit income tax returns and tax computations to the Inland Revenue Department and will be taxed accordingly.

 

 

Submission of income tax returns for the period before 31/12/2009

 

It was noted that the Inland Revenue Department was requiring from some shipping companies to submit income tax returns for the period up to the year ended December 31 2009.

In such cases where the registered owners and registered bareboat charterers of Cyprus ships earning income from the operation of such ships or ship management companies earning income from the provision of ship management services, who have received such income tax notification, are required to apply to the Department of Merchant Shipping in order to issue a tax clearance certificate.

On presentation of this certificate, they will be released from the obligation to submit income tax returns, provided that they have no other sources of income.

Amendment to the Cyprus International Trusts Law

08 March 2012: The majority of the Cyprus House of Representatives voted in favour of the bill introducing amendment to the Cyprus International Trusts Law which remained unaltered since its enforcement, back in 1992. The amendments in the Cyprus International Trusts Law intent to lift legal and practical deficiencies as well as to establish a most attractive, reliable and clear field for International Trusts.

 

This development has been welcomed by the Cyprus legal and business sector since it is a step forward in rendering Cyprus a more competitive trust jurisdiction and it further upgrades Cyprus as an International Economic Centre.

 

Realising that Trusts have the potential of being used as the channel for foreign investments in or through Cyprus, legislature examined the concerns expressed by the investors in order to establish a legal framework that really meets their needs.  Moreover, the recently amended legislation is now harmonised with the European Directives.

 

As a result, the amendments introduced the right of a Cyprus International Trusts holding immovable property in Cyprus and modernised the provisions regarding the residency status of beneficiaries and settlors allowing tax residents to enjoy the benefits of Cyprus International Trusts. Additionally the amendments lead to safeguarding confidentiality and strengthening jurisdictional protection through trustees’ responsibilities, trust duration. Finally, special reference has to be made to the provisions regulating the application of foreign jurisdictional laws.

 

Undoubtedly the amendments will be beneficial not only for foreign investors but also for the reputation of Cyprus as an international centre of financial services. It has to be also considered that Cypriot professionals are well experienced and highly educated in International Trusts Law and the recent amendments gave rise to new challenges to the Cyprus professional world.

Amendments to the Cypriot Acquisition of Immovable Property (Foreigners) Law, Cap. 109

A Cyprus Company can buy and register in its name any property and as many properties regardless who is the shareholder (foreigner or not) of the company and without the previous permission from the Council of Ministers

Cyprus-Russia Protocol ratified by Russian Duma


On 15th of February 2012, the Russian Duma ratified the amending Protocol to the Cyprus-Russia Double Tax Treaty of 1998, signed on Oct 7th, 2010.  Cyprus had ratified this Protocol earlier in August 2011.  Russia was waiting to ratify in order to make sure they were prepared for the procedures for information exchange between the two countries that this Protocol would permit.  By ratifying this Protocol Cyprus has been removed from the Russian "black" list.

The Protocol is just coming into force now. According to expert opinions, it is considered that Russia is the main investor in Cypriot economy. Therefore it is expected that Cyprus will protect all Russian investments in the country.  Russian investors should understand that the disclosure of the information would only follow after an official enquiry from the Russian Tax Authorities and also that the procedure is not straight forward. 

It is important to recognize the benefits of Cyprus now being taken off the "black" list of the Russian Federation.  Now it will be allowed for dividends paid from Cyprus tax resident companies and received from the Russian corporate shareholders to qualify for the Russian participation exemption and thus be exempt from Russian tax.  This is expected to create new opportunities for Russian investors for the use of Cyprus companies and funds as a gateway to Europe, Asia and Africa.

Areti Charidemou & Associates LLC Law Firm