In light of the global recession and ever changing fiscal and monetary policies that impact investments, there has been an increased interest by foreign investors in relocating their funds and families to a jurisdiction that offers stability and security. Certain changes to the Cypriot immigration policy and legal framework now enable non-EU applicants to obtain Cypriot citizenship on an expedited basis.
The citizenship by investment program in Cyprus enables foreign citizens to apply for a Cyprus citizenship provided that they:
- have a clean criminal record,
- own a permanent residence in Cyprus with a value of at least EUR 500,000 (excluding VAT),
- are not in the list of persons whose property is ordered to be frozen by the EU,
- Visit Cyprus at least once.
Moreover, the applicant is required to meet one of the following key financial criteria in order to apply for the Cyprus citizenship:
- Mixed Investments and Donation to Government Fund amounting to a minimum of €2.5 million. The Ministry of Councils has issued additional guidance that cancels this criterion, but official announcement is still pending; or
- Direct Investments amounting to a minimum of €5 million or €2 million subject to conditions outlined below. The Direct Investments include purchase of Cyprus government bonds or debentures, shares in Cyprus companies, acquisition of local businesses, and participation in a joint venture for the execution of a government project in Cyprus. Investment can drop to €2 million for a special collective real estate purchase scheme of a total value of no less than €10 billion. As per latest developments, the investment has been reduced to €2.5 million for investors participating in a collective investment worth at least €12.5 million, and further reduced to €2 million where the collective investment is worth over €12.5 million. These latest provisions apply until 1.6.2014; or
- Deposits in Banks operating in Cyprus amounting to a minimum of €5 million (personal deposits or deposits of privately owned companies). The list of eligible banks includes local banks and subsidiaries of foreign banks operating in Cyprus but excludes branches of foreign banks. The funds can be deposited in various of the eligible banks; or
- Combination of the above criteria amounting to €5 million; or
- Business Activities – the applicant established a company/(ies), administered in Cyprus and he/she made payments to the authorities (ie taxes etc) and purchased business services for at least €500.000 on average per annum for the last 3 years before his/her application. In case the company/(ie)’s central office is in Cyprus and employs 5 Cypriots, then the above amount is reduced to €350.000 per annum and in case of employing 10 Cypriots, it is further reduced to €200.000 per annum. Further, there must be a proven correlation between the investor and the company/(ies) he/she has acquired. The investor must hold proof that he has contributed to Cyprus’ economy 3 years prior to applying for the citizenship; or
- Impaired Deposits in the Bank of Cyprus and/or in Popular (Laiki) Bank – the applicant has impaired deposits amounting to a minimum of €3 million. In case of impaired deposits of less than €3 million, the applicant can proceed to make additional investments from the criteria outlined above.
The key elements that need to be considered by applicants when selecting an immigration solution include:
- Security over Funds: The jurisdiction should offer financial, political and social stability coupled with an attractive tax regime. Applicants can benefit from the fiscal benefits in Cyprus e.g. low personal income tax, no inheritance taxes and low property taxes. Furthermore, they are re-assured that their investments in Cyprus are protected by legislation that is harmonized with EU directives affording stability and security. The Troika has provided Cyprus with bailout funds which have fueled the necessary liquidity to support the island’s economy.
- Speed and Process of Application: The respective immigration authorities should handle the applications in an efficient and prompt manner. In Cyprus, the fast track citizenship is finalized within 3 to 6 months. The applicant can include their dependent spouse and children on the application, and they are not required to travel to Cyprus to submit the immigration application.
- Return on Investment: Real-estate investment is required for citizenship applications. Currently, property is available at competitive prices and expected to substantially rise in value in the subsequent years, especially in light of the positive developments regarding the anticipated Cyprus gas revenues which will create new opportunities in real estate development.
Successful Cypriot citizenship applicants can enjoy equal treatment with nationals with regards to social benefits, education, welfare, and access to EU territories with the Cypriot passport. Citizenship holders do not become tax residents in Cyprus unless they spend more than 183 days on the island in any calendar year.
Cyprus offers a high standard of living, modern transport and infrastructure, excellent academic institutions, access to quality medical services, a stable government and a robust legal framework which is fully harmonized with EU directives. The recent amendments to Cypriot immigration policy have eased the criteria to obtain citizenship in Cyprus in an attempt to incentivize high net worth individuals to invest in the island. Cyprus has already granted numerous permits to affluent Chinese, Indian and Middle Eastern individuals and their dependent family members who are looking for a jurisdiction that offers financial stability, a gateway to Europe and a quality standard of living for their families.