CYPRUS on Wednesday approved a series of changes to its much-criticised Citizenship-by-Investment scheme, so it becomes “more targeted and trustworthy”, said Finance Minister Harris Georgiades.
The Cabinet approved new criteria which will see a Cyprus passport being granted in exchange for an investment of €2.5 million, raising it from €2 million, including the purchase of a residency.
Provision were also made for a mandatory donation of €75,000 to the Research and Innovation Foundation and a second €75,000 contribution to the Cyprus Land Development Corporation to be used for affordable housing.
In addition, the applicant must have a Cyprus residence permit for at least six months before being naturalised as a Cypriot citizen and has to maintain the required investments for a period of at least 5 (five) years from the date of naturalization, instead of 3 (three) years.
In cases where the investment relates to the purchase of real estate or property as well as in the case of a permanent home-owner, a planning permission, a completion certificate and a bank waiver will be required.
Georgiades said the results of an economic impact study of the scheme was presented before the Cabinet.
He said the scheme was launched in the aftermath of 2013 banking crisis, since then 1,864 citizenships were granted within the framework of the scheme, bringing in €6.6 billion.
“But what emerges from the study, is that trade and investment with a positive contribution to the growth rate of an economy are two different things,” Georgiades said.
“The scheme is quite important for the real estate and construction sector, but with little overall impact on the economy,” he added.
The Minister stressed that despite 24% of transactions in the real estate sector were made in the scheme’s framework and the sector has recovered partly because of the scheme, however the economy and its growth rate are not dependent on the specific sector.
For the three-year period 2016-2019, the total contribution of the programme to growth is 1.2% GDP out of a total of 13 percentage points, which is the growth rate over the last three years.
The Cabinet decided to alter the scheme’s criteria in order to protect the financial benefits making it more reliable at the same time, said Georgiades.
“I believe that the mandatory contribution to the Foundation for Research and Innovation will further encourage the creation of an eco-system of business innovation, while the mandatory contribution to the Cyprus Land Development Corporation is to go to financing housing programs mainly for affordable housing,” said Georgiades.
He said, stricter criteria have also been adopted to ensure due diligence procedures are more stringent and effective, such as the measure of thorough scrutiny of each applicant carried out by an independent international house, the obligation for investors to obtain a Schengen visa and the exclusion of applicants who have been rejected by others Member States with similar schemes.
The changes come after an EU report ‘Investor Citizenship and Residence Schemes in the European Union‘ said Cyprus was not doing enough to ensure transparency to combat illicit and criminal activity.
Cyprus is only one of three EU countries selling passports for investment including Malta and Bulgaria which says it will stop.