Cyprus has introduced a raft of changes to its citizenship by investment program in response to criticism of its due diligence and the way it was being administrated.
Important changes include additional mandatory donations, permanent residence requirements in Cyprus and the exclusion of government bonds as an eligible asset.
Changes to the Cyprus Investment Program
1) Mandatory Donations
a) €75,000 to the Foundation for Research and Innovation
The foundation has been setup to promote business innovation in the country by creating the necessary ecosystem and infrastructure.
Exceptions to this requirement include:
- Investments in an innovative business that has received due certification from the Ministry of Finance or a certified social company.
- Investor has acquired a stake in a Cypriot company or business and at least 20 per cent of the minimum investment amount of €2 million (i.e. €400,000) has been invested in a company that is operating in-
- The primary or secondary sector of the economy, or
- In the fields of Research and Tech, Education, Health, or Renewable Energy.
b) €75,000 to the Cyprus Land Development Corporation
This entity has been setup to promote integrated housing policy and to implement affordable housing projects and to work on allied plans and measures.
2) Updates to the List of Eligible Investments
Government bonds are no longer eligible investments under the program.
Investments into the country’s shipping sector provided measurable by a specific criterion.
Investments into Registered Alternative Investment Funds. Such funds are now permitted to invest up to €200,000 in the secondary market of the Cyprus Stock Exchange.
3) Clarification on Reuse of Residential Units
An investor who has purchased residential units to qualify under the program intending to reuse such investments under the “Investments in Real Estate, Development, and Infrastructure Projects” need not purchase another permanent private dwelling provided:
- At least one such dwelling is worth at least €500,000, and
- Investor has made at least three total investments, including the permanent private dwelling, of total value of at least €2.5 million.
4) Minimum Holding Period
Investor must hold the investments for at least five years from date of naturalization, instead of three years under previous rules.
5) Requirements for Real Estate or Property Investments
In all such cases including purchase of a property to qualify for permanent residency, the investor must obtain the following documents.
- Planning permission issued by the Department of Town Planning and Housing in compliance with the rules of the Town and Planning Act
- Completion certificate issued by the project’s architect.
- Proof that at least 5 per cent of value of property project under development is held in a designated account or proof of an equivalent performance bank guarantee issued by the seller to the buyer.
- In case of mortgaged properties, a bank waiver confirming waiver of its rights upon receipt of the dues of the mortgage.
6) EU Requirements
The applicant must hold a valid Schengen visa to become eligible to apply for naturalization.
Anybody whose application for citizenship to any other EU member state has been rejected shall not be eligible under the Cyprus investment immigration program.
Applicant must hold a permanent residence permit in Cyprus for at least six months to qualify for naturalization. If this requirement is not fulfilled, then the applicant must invest an additional €500,000 to qualify for permanent residence in order to become eligible for naturalization.
Transparency and Due Diligence
The government shall prepare an Annual Implementation Report detailing number of passports issued, nationality of applicants, sectors receiving investments from such applicants.
The ban on advertising of the program in public places and on the internet continues. Particularly, the Cypriot passport and symbols of the country and the EU shall not be displayed in promotional material.
The government shall purchase services of a firm offering services towards enhanced due diligence procedures within two months from the date of submission of the application.
Changes related to mandatory donations, reuse of residential units, and mandatory documents for real estate investments shall come into effect from May 15, 2019.
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Cyprus has approved a total of 1,864 applicants for naturalization under its Cyprus Investment Program and has garnered investments worth €6.6 billion since 2013. Close to 25 per cent of all transactions under the program are linked to the construction and real estate sectors.