The Council of Ministers approved on 13 September 2016 a revised scheme for allowing non–Cypriot entrepreneurs and investors (and their immediate families) to acquire Cypriot citizenship. The new criteria provide greater flexibility to potential investors and are, in general, more favourable than before. They also demonstrate a shift in the overall direction of the scheme, which no longer aims on state lending but, rather, on further fuelling the economy and the circulation of currency. This shift clearly reflects the significant recovery of the Cyprus state financials. The most important change is the substantial reduction of the minimum basic amount of investment to €2 million (from €5 million).
Further, the scheme includes a variety of investment options for a minimum of three years whereas it maintains the requirement of additional acquisition of a residential property of a value not less than €500,000. The changes have, without doubt, elevated the Cyprus citizenship program to one of the most attractive programs in the EU. The key provisions of the revised scheme are as follows: The investment options may comprise one of the following: Investment in immovable property, developments and infrastructure projects. The investor is required to make a direct investment of at least €2 million (excl. VAT) in Cyprus, for the acquisition and/or development of residential or commercial real estate projects, tourist infrastructure or other forms of infrastructure. Simple acquisition of land is not immediately considered as a qualifying investment, unless it is accompanied by a business plan as to the intended development and use.
Acquisition or incorporation or participation in Cyprus
The investor is required to make an investment of at least €2 million for the purchase, incorporation or participation in companies which maintain physical presence and activities in Cyprus. Under this heading, there is a requirement that the investment vehicle should employ at least five Cypriot or EU citizens who have been legally residing in Cyprus for a continuous period of at least 5 years.
Further, there should be a business plan, explaining the use of the funds that shall be contributed, the activities, the turnover etc. Investment in alternative investment funds (AIFs), financial assets of Cypriot businesses or organizations. The investor is required to purchase financial assets of at least €2 million in relation to AIFs, bonds and securities that are issued and registered in the Republic of Cyprus and organizations with substantial economic activity in Cyprus which are being regulated by the Cyprus Stock Exchange Commission. An investment under this heading must be made exclusively in Cyprus and should meet the criteria of this scheme and be approved by the Minister of Finance. Combination of the above.
The investor is free to effect an investment that combines the above criteria, provided that the overall investment amounts to at least €2 million. As part of this investment option, the investor may also purchase government bonds in the Republic of Cyprus, however for the purpose of this investment option, the value to be taken into account should not exceed €500,000.
The above demonstrate that investment of €2 million (excl. VAT) under any of the above options is a qualifying investment, a notable change from the previous scheme where investment was capped €5 million if applied individually or €2.5 million if applied through a collective investment scheme.
Citizenship will now rely on qualifying individual investments of €2 million and the purchase of a residence at a price of at least €500,000. The investment in bank deposits is no longer considered as qualifying investment. Also, purchase in government bonds of the Republic of Cyprus is now capped to €500,000. In all cases, the investor needs to own a private residence in Cyprus, the market value of which shall exceed €500.000 plus VAT. If this property has a market value which exceeds this threshold, then part of this excess may be used for the purpose of satisfaction of the €2m threshold required for the investment.
Further, if the investment comprises immovable property, developments and infrastructure projects (option (a) above), then there shall be no requirement to acquire an additional property if the investment includes at least one residence with a market value of at least €500.000 plus VAT and provided that the investor shall maintain in his/her possession the said property throughout his/her life.
Investors must hold a residency permit in Cyprus to qualify for receiving the Cyprus Citizenship. The application for a residency permit shall be submitted and will be issued simultaneously with the filing of the Citizenship application. 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). As an alternative to this, the investor and his parents may acquire one residential property of a total value of at least €1 million (excl. VAT) which will be allocated equivalently.