Cyprus has been ranked the 5th best relocation destination in the world by an international lifestyle review (source: 2014 report prepared by Knight Frank, a leading independent, global real estate consultancy firm). Ranked by key business and leisure indicators, Cyprus was the only European country alongside Switzerland to make it into the top five – ahead of London, Madrid and Monaco. With at least 320 days of sunshine a year, Cyprus was classified the sunniest European location.
One of the most popular routes to obtaining Cyprus residency is through the Cypriot citizenship by investment program.
The minimum investment threshold for the Cyprus Citizenship Program is €2.5 million, with various investment options available including; residential real estate, immovable property, interest bearing government bonds, creation of Cypriot business, fixed deposits or mix of any of the above.
Cyprus ranked highly because of its favourable tax regime for new residents, particularly high net worth individuals. It is also an attractive financial centre. Cyprus is situated in a strategic location at the crossroads of three continents – Europe, Africa and Asia. The Cypriot taxation system is consistently voted by EU tax professionals as being the most attractive in Europe, where the newly introduced “non-domicile” regime results in zero taxation of worldwide dividends and interest income, for a period of 17 years.
Here below are frequently asked questions (FAQs), regarding the Cyprus Citizenship by Investment program, clarifying the main provisions of this program.
(1) How are Cyprus government bonds purchased for the purpose of supporting an application for Cypriot Citizenship by Investment?
It is possible to purchase Cyprus government bonds/debentures directly from the Ministry of Finance (MoF) or through the Cyprus Stock Exchange.
For the purposes of investment in government bonds as a means of obtaining Cyprus Citizenship by Investment, it has been decided that from the 1st of August 2014 onwards, only the bonds purchased from the primary market (i.e. directly from the Ministry of Finance, Public Debt Management Office through the Cyprus Stock Exchange) are eligible. The minimum lock-in period for investment purposes is three years.
The applicant is able to purchase Cyprus government bonds between the 1st and 20th of each month. Payment is remitted to the bank account of the Central Bank of Cyprus. The application for purchase of government bonds can be processed by a power of attorney issued in the name of the applicant’s local advisor (i.e. lawyer).
(2) Does a Permanent Residency Permit (PRP) help towards obtaining Citizenship?
A holder of a PRP who eventually wishes to be granted Citizenship has an advantage in that he may legally reside in the Republic for five consecutive years prior to filing an application for Citizenship by naturalisation in the traditional way (as opposed to the Citizenship by Investment route). This is the only advantage afforded even though many persons opt to obtain the PRP first, and subsequently proceed with an application for Citizenship by Investment, especially when they intend to reside in the Republic with their families.
(3) How long is the examination period for the Citizenship application?
Upon filing of a completed Citizenship application, it usually takes between two to three months before a decision is made by the Ministry of Interior.
(4) Is it a requirement that an applicant must live in Cyprus prior to or after Citizenship being granted?
There are no residency prerequisites either prior to filing the Citizenship application or following the granting of Citizenship. This is one of the many benefits of the Cypriot Citizenship by Investment program, when compared to other EU Citizenships programs.
(5) When does the successful applicant receive their Cyprus passport?
Once citizenship is granted, the applicant can receive a Cyprus passport on the same day simultaneously with the issuance of the naturalization certificate, if done in person in Cyprus. On that day, the applicant issues a sworn statement that he accepts citizenship and can then obtain the Cypriot passport issued by the Ministry of Interior, on payment of acceleration fees of €120. Alternatively, the applicant may obtain the Cyprus passport any time after the naturalisation certificate is issued, from the Citizens Service Centers at a lower cost of €70, but it could take up to two weeks to have the passport issued in this case. A Cypriot passport will also be issued to the Investor’s spouse and dependent children up to the age of 27, provided they are in full-time education.
(6) What does “acquisition of businesses or companies based in Cyprus” mean precisely?
This criterion pertains to a €5m/€2.5m (depending on whether the application is submitted as a group or individual) investment in the participation rights or shares of a Cyprus company(ies) that maintains offices and operates in Cyprus, employing a minimum of five Cypriot citizens, for a period of three years.
An eligible company/business can also be one that was acquired by the Investor up to three years prior to filing his citizenship application.
In all cases, the Investor must demonstrate the correlation with the companies or businesses purchased. This requires the investor to continue to be an owner or be directly involved in the operations of the businesses acquired.
(7) How many Citizenship by Investment applications have been submitted to date?
Since 2013, there have been over 2,000 successful applicants under the Cypriot Citizenship by Investment program, with the Minister of Interior, Mr Socrates Hasikos, reporting (November 2015) that in excess of €3 billion in investment has been generated.
(8) Does the Citizenship by Investment scheme have an expiry date?
As at present, no expiry term has been designated for the program.
(9) One of the financial criteria requires a fixed deposit of minimum €5 million in banks operating in Cyprus. Which are the eligible banks?
The eligible banks are local banks and subsidiaries of foreign banks in Cyprus. The Central Bank of Cyprus maintains a list of these eligible banks which can be found at http://www.centralbank.gov.cy/nqcontent.cfm?a_id=8154&lang=en. Excluded from this list are branches of foreign banks, in Cyprus. It is possible to deposit the investment amount in several of the eligible banks, and it is also possible for the amount to be in a currency other than Euro, provided the total value of the investment is the equivalent of €5 million.The interest rate applied to the fixed deposit depends on the terms of offer of each eligible bank. The beneficiary of the interest accrued is the depositor/applicant.
(10) In regards to satisfying the financial criterion of investment into real estate, are real estate properties purchased by the applicant in the past eligible?
Any property purchased three years prior to filing the Citizenship application is eligible. Additional properties may be purchased in order to meet the total sum required for this investment criterion, namely €5 million (or €2.5 in the case of a group application).
(11) Are re-sale properties eligible for the real estate investment criterion and/or the private residence requirement?
Investors can purchase resale properties, where it should be noted VAT is not applicable, for both purposes.
(12) How can the Investor maintain Citizenship granted?
To maintain Cyprus Citizenship acquired via the Investment Program, the investor must always honor the conditions on which citizenship was granted. This includes maintaining possession of a residential property in Cyprus of a minimum value of €500,000. The relevant investment (i.e. real estate, government bonds, fixed deposit account etc.) can only be disposed of/liquidated after the expiration of the three year period.
(13) Does Cyprus allow dual citizenship?
Yes, it does, which is very beneficial for many reasons, including:
- Cypriot citizens enjoy the freedom to live, work and travel throughout Europe;
- Cypriot passport holders are entitled to travel visa-free to more than 157 countries;
- Cypriot passport holders can quickly and cost effectively obtain visas for other countries;
- Dual citizenship offers an effective tool for international tax planning and provides financial privacy.
(14) Can the residential property be sold or rented out once Citizenship is granted?
Since the Investor is not required to reside in Cyprus, it is possible to rent out their privately owned residence. It is also possible to replace the residential property with another residential property of the same or higher value than €500,000at any time.
(15) Are there any acceptable exceptions to the requirement to acquire and maintain residential property of €500,000?
Where the applicant invests solely in a residential property (can be one or more properties) valued at €5 million and over (or €2.5 million and over in the case of a group application) as a means to satisfying the financial criterion for the Cyprus Citizenship by Investment route, then it is not necessary for the Investor to acquire an additional residential property valued at €500,000, provided one of the investment properties meets the requirements of the residential property, which must be maintained throughout the citizenship. In the event the deemed residential property is sold after the three year lock-in period, the investor would be required to purchase and maintain another residential property of at least €500,000 to replace the initial property(ies).
(16) What are the government fees for submitting an application?
The fee upon submission of the citizenship application is €2,000 per applicant. On the issuance of the naturalisation certificate an additional €5,000 is payable, per applicant.
(17) Are medical tests required or a health insurance prior to applying for a citizenship?
No medical tests are required prior to applying for Cypriot Citizenship by Investment. Obtaining health insurance is not obligatory for the applicant.
(18) Where an applicant for a Cypriot Citizenship by Investment is the holder of a European permanent residency, is it required for the residency to be revoked prior to applying for Citizenship in Cyprus?
No, it is not required for the European permanent residency of any country to be revoked in order to apply for Citizenship in Cyprus.
(19) In case an applicant already owns residential premises in Cyprus, will he still be required to purchase an additional permanent residence of at least €500,000 for the purposes of the Citizenship by Investment application?
Provided the existing residential premises owned by the applicant were purchased for a value of at least €500,000, then it will not be required to purchase an additional permanent residence. If however, the acquisition price at the time of the purchase was below €500,000, then the applicant will be required to purchase an additional residential property(ies) to satisfy the €500,000 residential property criterion.
(20)Can an unmarried couple simultaneously file a Cyprus Citizenship by Investment application where the investment will be made solely by one of them as the main applicant and the unmarried partner will be considered the spouse?
No, a couple is required to be married before they can simultaneously file a Cyprus Citizenship by Investment application as spouses. It is however possible to approach such scenario in two-steps as follows; one partner to file the citizenship application as the main applicant, and once the couple is married, and subsequent to the main applicant’s successful application, the new spouse to file an application. In such cases, no additional investment will be required by the new applicant spouse in order to obtain citizenship.
Our firm has long established itself as a leader in the field of immigration services, and we are well positioned to assist clients with the preparation and filing of a citizenship application. We are frequently engaged by some of the world’s largest and most reputable international law firms, accounting firms and family offices. Our team of highly experienced professionals can advise you further on obtaining Cyprus Citizenship by Investment, on the basis of your particular facts and circumstances.
Please feel free to contact Charles Savva at [email protected] to discuss how we can be of assistance to you.