Investing in Cyprus – An attractive revised Legal Framework - Amendments to the Cyprus Investment Pr
The initial implementation of the Cyprus Investment Programme (the “CIP”) took place by the Cyprus Government in 2013 aiming to alleviate the economic consequences that followed the financial crisis at the time. However, due to the recent criticism that the CIP has received at a European level, the Cyprus Government, through the approval of the Council of Ministers, has introduced various strict amendments and conditions in order to improve and upgrade the Programme.
Some of the most significant amendments of the CIP as published in the Official Cyprus Gazette on Tuesday 18th August 2020, are the following:-
[if !supportLists]1. [endif]Honorary naturalization:
A new category has been added providing for honorary naturalization to be granted on grounds of public interest to the following categories of foreigners:
Athletes for participation in the national sports teams of the Republic of Cyprus, on the recommendation of the Cyprus Sports Organization (CMO);
Clergy at the highest levels of the clergy hierarchy of the churches of the religious groups of the Republic of Cyprus, at the request of the representatives of the religious groups in the House of Representatives;
Persons who have provided high-level services to the Republic of Cyprus in the context of transnational and diplomatic relations, on the recommendation of the Ministry of Foreign Affairs;
Academics and scientists who conduct long-term research in the Republic of Cyprus or who present multiannual scientific work on Cyprus, on the recommendation of the Cyprus Academy of Science and Arts
People involved in Art and Culture who, through their work, have provided exceptional services to Cyprus, following the recommendations of the Ministry of Education, Culture, Sports and Youth.
[if !supportLists]2. [endif]Mandatory donation:
Another amendment of the Program regards the Mandatory donation which has increased to €200,000. To be more specific, any applicant for the CIP needs to donate €100.000 to the Cyprus Land Development Corporation and the remaining balance of €100.000 to one of the following:
the Research and Innovation Foundation; or
the Service of Industry and Technology, in order to materialise targeted funding plans for micro and small businesses; or
the Funds for Renewable Sources of Energy and Conservation of Energy; or
the National Solidarity Fund.
[if !supportLists]3. [endif]Exceptions imposed on the eligibility of applicants:
The Government has imposed further controls on the eligibility of the Applicants and/or the Applicants’ family members. Categories of applicants which are not eligible to apply are the following:
Applicants whose assets have been subject to a seizure order within the EU;
Politically Exposed Persons (PEPs), although there has been a change in the definition of who is considered a PEP. Under the new regulations, a PEP is a person who holds a political position at the time of submission of the Application or a person who has held a political position during the last twelve months prior to the date of submission of the application;
Applicants sentenced for a serious criminal offence which carries a sentence of five years or more or for any other serious offence or offences that involve moral obscenity. In the event that a person has been sentenced in another country, the offence he committed must be a criminal offence in Cyprus that carries a sentence of imprisonment;
Applicants subject to criminal investigation, whether in Cyprus or abroad, in relation to a serious criminal offence which carries a sentence of five years or more or for any other serious criminal offence or which involves moral obscenity;
Applicants who are affiliated with any person or legal entity or organisation against which sanctions were imposed by the European Union and these sanctions are still in force, such as shareholders and high-ranking officials of such companies;
Applicants who were, but who no longer are, affiliated with any physical person or legal entity against which sanctions were imposed by the European Union and these sanctions are still in force, such as shareholders and high-ranking officials of companies included in the sanctions list, provided they were affiliated with these companies when the sanctions were enforced;
Applicants who have been subjected to sanctions by the European Union or the United Nations and such sanctions are still in force or were in force up to twelve months prior to the submission of the application;
Applicants who are affiliated with any physical person or legal entity against which sanctions were imposed by the European Union or the United Nations and these sanctions are still in force or were in force up to 12 months prior to the submission of the application;
Applicants who were affiliated with any physical person or legal entity against which the EU or the United Nations have imposed restrictive measures and such restrictive measures are in force or were in force up to twelve months prior to the submission of the application, but these Applicants are no longer affiliated with these legal entities, such as shareholders and high-ranking officials of companies, provided they were affiliated to the particular companies or physical persons when the sanctions were imposed;
The Applicant is wanted at a European level by Europol or at an International level by Interpol.
[if !supportLists]4. [endif]Establishment of a Naturalisation Control Unit:
A Naturalisation Control Unit has been set up in order to expedite the procedure of examining the Citizenship applications. The Unit is composed of suitably trained staff of the Ministry of Interior and will have various responsibilities such examining applications for naturalisation by exception and continuously verifying that those who have obtained naturalisation by exception continue to comply with the terms and conditions under which they have been granted Citizenship. Also, the Unit is responsible for the drafting and publishing of Guidelines, Rules or Circulars, the preparation of an annual report in relation to the implementation of the Programme and its publication on the webpage of the Ministry, including actual figures in relation to the approved and rejected applications that were filed and the investments under made under each category etc.
[if !supportLists]5. [endif]Establishment of a ‘’Supervision and Control Committee’’:
The Government introduced a ‘Supervision and Control Committee’ which is composed of the General Director of the Ministry of Interior (who will act as president), General Director of the Ministry of Finance and the representative of the Cyprus Investment Agency or their representatives as well as suitably trained staff.
[if !supportLists]6. [endif]Amendments regarding the eligibility of the family members and their application’s submission:
Another notable amendment is that the family members of an investor applicant who successfully applies for Naturalisation under the CIP may also be Naturalised provided they fulfil all the criteria. The application of the Investors and their dependent family members may now be submitted either at the same time or after the application of the main Applicant/Investor.
It has to be noted that, now the parents of the spouse of the main Applicant may also apply for Citizenship in addition to the parents of the main Applicant, provided they also own a permanent private residence in Cyprus worth at least €500,000 (five hundred thousand euros) plus VAT.
[if !supportLists]7. [endif]Other Significant clarifications and amendments:
The Citizenship can be revoked if any of the economic criteria or requirements of the Programme are no longer fulfilled.
All funds used for the investments must emanate from the personal account of the investor.
The set up of a land developing company is not a qualified investment anymore.
The investment through the establishment or participation in a Cypriot business or company formed and operating in the Republic of Cyprus with a cost of at least €2.0 m. (Euro 2 million euros), on the basis of an Investment Plan, is still a qualifying investment. However, it must be proven that enterprises or companies have a physical presence in the Republic of Cyprus, with substantial activity and significant turnover, and that they employ at least 9 (nine) Cypriot or European Union citizens. It is noted that the minimum number of employees increases accordingly if more than one Investor invests in the same business or company.
With regards to the permanent residence of at least € 500.000 plus VAT that the Applicant needs to keep for life, further to the other documents that need to be submitted with the application, a search needs to be submitted.
The validity of the Criminal Record of the Applicant has now been extended from three months to six months.
Through the implementation of these further controls and amendments, the Cyprus Investment Programme will remain one of the most attractive schemes in the European Union for investors to obtain citizenship for themselves and their dependents.
In relation to the providers of the Scheme, we note that only licensed administrative service providers such as MPC Services Limited can now act as registered citizenship providers.
The content of this article is intended to provide general information on the subject matter and does not constitute legal advice. For any further information or assistance, please contact Marilou Pavlou by email at email@example.com or by phone at +357 22552727.