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Cyprus seeks to attract long term investors

Cyprus property investors

To further attract foreign investment to the island and help economic recovery, Cyprus announced amendments to Regulation 6 (2) of the Aliens and Immigration Regulations, which came into effect on March 24.

The regulation gives non-EU nationals the right to reside in Cyprus permanently. The revision is in line with the Government’s objective to stimulate foreign investment in areas other than real estate and promote Cyprus funds.

The amendments introduced to the Cyprus Residency Programme are more than welcome, especially after the previous Cyprus Investment Programme was suspended.

We are optimistic that the Residency Programme, as amended, will continue to attract those investors who are searching for a Plan B to safeguard their families, in addition to merely protecting their wealth.

Cyprus offers a unique combination of benefits, including quality of life, low cost of living, excellent education, a high standard of healthcare, tax advantages, a strategic business location, and the international business environment, which are important reasons for those looking to obtain Permanent Residency in Cyprus.

As it has become necessary during the lockdown to spend an extended amount of time in one place, investors are now looking for a country where they are happy to stay for a lengthy period.

Thus, countries such as Cyprus that are welcoming to international residents are at the forefront of their consideration. We hope that these amendments will make the Programme more attractive to investors.

The most significant amendments are as follows:

Additional Investment Criteria

Though the required amount of at least €300,000 for the investment remains the same, the criteria have been expanded and are no longer solely related to real estate investment.

All the categories now are:

(a) Investment in a house/apartment:

Purchasing a house or apartment from a development company should relate to a first sale of at least €300,000 (plus VAT).

(b) Investment in real estate (excluding houses/apartments):

Purchase of other types of real estate, such as offices, shops, hotels or similar developments, or a combination thereof with a total value of €300,000. Resales are acceptable.

(c) Investment in the share capital of a Cyprus company with activities and staff in Cyprus:

An investment worth €300,000 in the share capital of a company that is registered, based, and operates in Cyprus, employing at least five (5) people.

(d) Investment in units of a Cyprus Collective Investment Organisation (type AIF, AIFLNP, RAIF):

An investment worth €300,000 in units of a Cyprus Collective Investment Organisation.

No Fixed Deposit

Another significant amendment is the applicant is no longer obliged to deposit €30,000 in a fixed deposit account, locked for three years. This requirement has now been removed.

Secure Annual Income

In addition to making the investment, the applicant should show a secure annual income of at least €30,000, which increases by €5,000 for each dependent and €8,000 for each dependent parent of the applicant or his/her spouse.

If the applicant makes an investment under criterion a) above to purchase a house or apartment, it is essential, as it was previously, the applicant can prove their income derives from abroad.

However, when it comes to investing in criteria b), c), or d), the new amendments provide that the applicant’s source of income may be derived from activities within the Republic.

‘No intention to work in the Republic’

It has been a requirement of the ‘residency programme’ that the applicant and his/her spouse had to certify they did not intend to work in the Republic.

This continues to be the case, except for their employment as Directors in a company they have chosen to invest in under this policy. It is now permitted, provided they do not receive a salary.

It is clarified in the new amendments that where the investment does not relate to a company’s share capital, the applicant and/or the applicant’s spouse may be a shareholder in companies registered in Cyprus. The income from dividends in such companies shall not be considered an impediment to obtaining Permanent Residency.

Proof of Residence

The amended regulations provide that where the applicant chooses to invest under criteria B, C, or D above, they should present information concerning the place of residence in the Republic, which can be a title deed, sales agreement, or rental agreement.

Investment in Real Estate

When investing under criteria A and B above (real estate), it continues to be the case that at least €200,000 plus VAT needs to be paid before submitting the application. Evidence should be provided that funds for the investment emanate from abroad and are not a product of internal borrowing; these funds need to be deposited in a Cyprus financial institution in the vendor’s bank account.

The purchase of real estate can be made by a legal entity in which the applicant and/or spouse are the sole shareholders or UBOs, and the entity is legally established in the Republic of Cyprus or another EU Member State or the European Economic Area.

Under criterion A in relation to the purchase of a house/ apartment (dwelling):

  1. The applicant may purchase up to two (2) units of residential property (apartments or houses), provided that the total market value meets the minimum requirement of €300,000 plus VAT.
  2. This purchase must relate to dwellings sold by a land development company for the first time (not resales) unless the purchase of the dwellings took place before 07/05/2013.

Contract of Sales relating to the resale of dwellings which were deposited in the Land Registry before 07/05/2013 will be accepted for implementing this policy.

The properties do not have to be purchased by the same land development company.

Investors Dependants

The Immigration Permit is issued to the applicant; it can include his/her spouse and dependent children up to 18.

As before, an Immigration Permit can be granted to unmarried children of the applicant between the ages of 18 and 25, only when it is proven that, at the date of the application, they are attending higher education institutions abroad and provided they are financially dependent on the applicant.

Such dependent children shall submit their own separate applications for an Immigration Permit upon payment of the appropriate fee.

If the children of the applicant between the ages of 18-25 are enrolled as students in Cyprus higher institutions, they will have to apply for a Temporary Residence Permit in their capacity as students under the relevant legislation (EU Directive).

After completing their studies, they will be entitled to apply for a Permanent Residence Permit, irrespective of their age. The only prerequisite is that the main applicant provides evidence of an additional annual income of €5,000 per annum.

The Permit will continue to apply after the age of 25, even if the children marry by then, and they are no longer students or financially dependent on the applicant. Their spouse and their minor children may not be included as dependent persons in such a Permit.

Parents and the main applicant’s in-laws can apply based on the main applicant’s investment by presenting an additional annual income of €8,000 for each dependent parent or parent-in-law.

Higher Value Investment

An important addition to the Regulations is that it is now possible for the main applicant to make an investment of a higher value for his adult children to obtain an Immigration Permit (Permanent Residence) even though they are not financially dependent on the Main Applicant.

The market value of the €300,000 investment needs to be multiplied according to the number of adult children, which will rely on such investment to obtain an Immigration Permit.

If the investment relates to real estate (as described in criteria A or B), a receipt of payment of at least 66% of the market value of the properties should be submitted with the application.

In such cases, each adult child must be able to prove a secure annual income of at least €30,000, which will increase by €5,000 for each dependent person.

Such investments can be made jointly in the applicant’s name and the adult child or exclusively in the name of the applicant.

Clean Criminal Record

It remains a fundamental requirement the applicant provides a clean criminal record from his country of origin and residence and generally does not pose any threat to public policy or security.

Investors Application Procedure and Examination

The Civil Registry and Migration Department will process the application, forwarded for examination and decision to the Interior Minister, provided that all the criteria and requirements are met. It is estimated that the examination period will be two months from the date of submission.

This article is intended to provide a general guide; it does not constitute legal advice.

About the author

Esme Palas is a UK qualified Barrister at Law, partner at Michael Kyprianou & Co LLC, Paphos office. Her areas of specialization are immigration & immovable property law.

2 COMMENTS

  1. Invested in Cyprus 10 years ago. My property is currently worth 20% less than I paid for it.

    This will always be the case so long as the government kept flooding the market with building permits to keep the construction industry afloat. A new house is always preferable to an existing Cypriot construction.

    Seeing the advertisement on the back of buses makes me smile – ruefully.

  2. The new PR program comes with a slight improvement for the buyer as far as options go but has not addressed any of the original problems of the PR program which I’m afraid does nothing to attract that much more, “will or encouragement to invest”. So as far as money influx, building opportunity for developers and for the families living here with PR, nothing really has changed. This is my analysis of the old PR program and it still applies to the new proposed one.

    Although the Cyprus Fast Track PR Scheme provides a relatively fast way to obtain PR in Cyprus with some attractive benefits like living in a beautiful and safe country, parent’s in-law can obtain PR under the same investment and good tax incentives, the Fast track PR Scheme still has to make a few changes before it could be the best scheme out there. At the moment the PR Scheme caters heavily for the retirees and people with enough cash for a second or holiday home on an Island. Retirees generally live on a tight budget and the holiday makers usually come once a year or once every two years to maintain the PR status. Both gives an initial cash boost to the economy but neither of these stimulate the economy on continual and sustainable way. All you have is empty houses all over the Island, and there is many of them.

    For the average high-income family that would love to move to Cyprus there is just too many problems with the PR Scheme to make it worth their while.

    If Cyprus wants to take full advantage of its PR Scheme they will have to look at the below analysis and hopefully understand that some changes would be necessary to bring the PR Scheme to its full potential.

    The below issues and examples are typical of what a 3rd country family has to go through living on the Island with teenagers in high school.

    1. Investors and family members on PR scheme are not allowed to be involved in any form of work in Cyprus, not even volunteer work.

    • Many can make the investment and still bring money in but still need to supplement by working at least one member of the family.
    • Some are highly skilled professionals and are approached by Cyprus Companies to work for them but one can only work for a Cyprus Company by giving up one’s PR Status. One has just made a big investment just to relinquish all the rights that came with it.
    • Example 1– Cyprus Company X would like to make use of highly specialized skill and qualification not found on the Island but they have to jump through so many hoops to be able to get work visa for me and I’m not prepared to give up my PR status. Now at great expense they have to import this skill instead of using some-one on the Island. Example 2 Company with Head office in Cyprus but working office in Greece would like to employ me, thinking my PR status would make travel to Greece easy and establishing contract easy. Unfortunately, not being part of Schengen Zone, visas still apply for travel and not allowed to work for Cyprus company without giving up PR status.
    • Long Term Residency Permit after 5 years that allows working status does not apply for Fast Track PR investors and family.
    • Investor PR children not allowed summer jobs but any other student in school or university legally allowed to work.
    • Asylum seekers allowed to work and get social assistance. Department of Labor Section 21B of the Cyprus Refugee Law provides that the person who is recognized as a refugee receives equal treatment as the citizens of the Republic as regards wage- earning employment. In other words, refugees have the same rights as Cypriot citizens to employment, hence there are no restrictions to any particular sector and there is no need for the Labor Department to approve and stamp a contract of employment between an employer and a recognized refugee.
      http://www.mlsi.gov.cy/mlsi/dl/dl.nsf/page5j_en/page5j_en?OpenDocument

    2. Children with PR loses PR when turning 18.

    • Children applying between ages 18 and 25 keeps PR for life so it makes no sense for children who turn 18 and have had PR for years, went to school in Cyprus, and permanently living in Cyprus to lose their PR.
    • Options available are Study/Student/Temporary Residency Visitors Visa before re-applying for PR again. The process is extremely cumbersome and in no way easy at all. Immigration is overwhelmed and appointments takes months to get. Not to mention the lawyer fees every time we have to make these applications for something one has already qualified and paid for.
    • When losing PR, it affects GESY eligibility.
    • When losing PR, it affects European University applications. European Universities requires 3 years PR status. This interruption in PR status has a big financial implication.
    • When becoming 18 and earning adult status even though they still in school they automatically can’t fall under the parents name anymore for various things so trying to open a bank account or registering for something without a photo ID becomes impossible.
    • Uncertainty/anxiety for parents about their children status and future in Cyprus.
    • Have to pay fees again and again 1st PR /Student Visa/Temporary/PR again when you have been accepted to a University abroad.
    • Cyprus promotes once you have PR, it’s for life just visit every 2 years, but when they actually live here they still lose it. If you live here it should be a simple re-issuing of a new adult PR card when turning 18 and not loosing your PR status and having to re-apply all over again.
    • Why is Cyprus encouraging students to rather study abroad by taking away their PR if they study in Cyprus? One can re-apply for PR again after studies completed in Cyprus. But this again a very backwards way and in no way an easy and smooth process for something one has already done before.
    • Immigration appointments fully booked for months.
    • Turning 17.5 to 18 years old one goes for Learners Driving License Test and pass as one has a valid PR card. Then the road transport department is so far behind, the first final driving test booking available is 5 months on so one continues with lessons for months to make sure one passes on the first attempt otherwise one has to wait months again. The cost is hundreds of euros. In the mean time your child turns 18 and loses PR Status and applies for temporary residency until such time they get accepted by a university abroad. The immigration office is so overwhelmed that one only receives a receipt for the application and an immigration stamp on it saying it allows one to travel in and out of the country. After living in Cyprus as a permanent resident for years this receipt is now you’re only legal paperwork. One is told directly that come 12 months you would probably not have received your residency card and must just come and apply and get another receipt. On the day of the final driving test we get turned away by Road Transport department saying they do not accept this receipt as a legal status in Cyprus even though immigration accepts it. Showing old PR card, school letters, parents PR card and utility bills to proof she live in Cyprus, Road Transport Department still insists on seeing the valid card.

    All the above issues just due to our children who live in Cyprus and loses their PR status when they turn 18. I can understand that for PR card holders not living in Cyprus that this might be a way to control the PR program but for people who permanently reside in Cyprus it makes no sense and is a great source of anxiety, frustration and daily difficulties. For people living in Cyprus it should be a quick revalidating process and a new card to be issued. One cannot say one’s you have your PR it’s for life but for people living in Cyprus, part of the community and economy its proven to be not the case.

    3. Application for Citizenship/Passport only after 7 years. (Currently takes up to 2 years for processing the application so actually 9 years) Refugees and asylum seekers apply after 5 years. One needs to live full time in Cyprus (2555 days 7 years) and last 12 month consecutively to apply for Citizenship through Naturalization. Examples of shorter and easier Citizenship by Naturalization for European Countries are:

    • Germany 6 years
    • Portugal 5 years for investors and can work and don’t have to live there. Only 7 days a year.
    • Spain 2- 4 years and 6 months residency a year.
    • Belgium 5 years and 6 months residency a year.
    • Greece by investment 7 years. Till recently it was 3 years for refugees but now 7.
    • Malta 2 years and no residency required.

    The reason why some countries don’t have the same requirement as Cyprus of having to live in Cyprus 365 days (2555 for 7 years) to qualify for the Citizen by Naturalization Program is: Many high-income earners 100,000Euro and up want to make Cyprus its home with the family living in Cyprus and children going to school but they still need to travel extensively for their work up to 6 months a year. That means they will never be able to qualify for Citizenship due to not making the 2555 days in a reasonable amount of years and they cannot stay the last year in Cyprus without travelling for work. The high-income earner is the ideal investor who usually buys its first property between 500,000 to 1,000,000Euros, children goes to private schools and maintains high standard of living which stimulates the local economy.

    4. Not being part of Schengen Zone so they rather choose countries that’s part of Schengen Zone to facilitate easy movement and work opportunities across Europe. Cyprus could also investigate similar options like they currently have with Bulgaria, Croatia and Romania who through a special treaty allows transit and intended stays up to 90 days.

    5. In general, 3rd country nationals and particularly South Africans do there research well and join social media Expat Groups to keep track of the smaller underlying issues as well.

    • Increasing crime levels
    • Increasing refugee levels
    • Excessive banking regulations
    • Land registry and Title deed issues
    • Immigration offices disorganized and booked months in advance
    • Transport/Traffic Depart disorganized or better yet chaotic. To book a driving test for driving License is 5 to 6 months waiting period.

    While the establishing of a company in Cyprus provides an alternative to the PR program it is riddled with even more complexity and uncertainty for people relocating across the world. Work Permits and Temporary Residency does not provide the same level of confidence and certainty as the PR status do to make such an emotional and stressful decision. People need certainty because if the business did not work out or permits and Temporary Residency are not renewed going back to where they came from is not an option they want to consider.
    https://www.kyprianou.com/en/publications/cyprus-residence-and-work-permits/ppp-301/247/

    At the moment the PR scheme is very well suited for retirees and investors with money to have a second or holiday home in Cyprus, neither of them really stimulating the local economy.

    If refugees and asylum seekers from 3rd countries are given working rights and can apply for Citizenship through Naturalization process faster than investors, what incentive is there for 3rd country investors who commit a substantial amount of money, who’s children go to private schools, who is part of and active in the community but not allowed to work and have to wait 7 years to apply for Citizenship through Naturalization.

    In the 2 years we have lived here we have had several families who due to the reasons above have decided not to invest in the Cyprus PR program. They have more than enough money to invest for them and their children. Some want to come live here and be able to work or some want to come and retire, but at least their children must have the option of work and no one likes the idea of the children losing their PR status. It creates too much uncertainty and risk, and thus choose another country that provides more certainty.

    More and more Third Country Nationals are relocating abroad with the purpose of not returning too their home country so they require certainty of their new status in their new home country.

    The incentive to rather invest in the Cyprus Fast Track PR program vs Slow Track PR or establishing a company, is very low if you break it down in the following scenario’s:

    WORK

    • Investors in Fast Track PR program and family members are not allowed to work.
    • Asylum seekers can work as soon as asylum status is processed within a couple of months.
    • 3rd Country nationals with any legal status including temporary residency and work permits can after 5 years apply for long term residence status which give them the right to work. Fast Track PR program is excluded. In other word I can have made an investment of 50 000Euros for an apartment and with renewing my temporary residency each year I can work after 5 years apply for long-term residency status but some-one who invested 500 000Euros is excluded.
    • Even 3rd country student has the right to work with restrictions.

    PR Status

    • Category-F the slow track has no actual minimum investment amount specified but the higher the amount invested the better and 150 000Euro will give PR status in 12 months and can buy resale property. https://residencies.io/residency/cyprus/permanent-residency/cy6
    • Fast track 300 000Euro and 30 000 fixed deposit for 3 years and only new property and supposed to be 2 months but in reality, 5 to 6 months so not much difference from slow track. (the rules seem to have changed somewhat on this point)

    Application for Citizenship

    • Same amount of years – 7 years so no advantage to the PR Investor.

    Work Visa

    • Can establish a Cyprus Company with minimum amount of 200 000( new rules 300 000) and employ up to 10 directors in senior management. All work visa members can bring in spouse and children on temporary residency permits due to EU law of not breaking up the family unit. 200 000Euro available for running cost and is not fixed. After 5 years family members can apply for long term residency. They are able to work and after 7 years can apply for Citizenship.

    SO YOU CAN SEE THERE IS NO REAL BENEFIT TO THE FAST TRACK PR PROGRAM EXCEPT FOR GETTING PR IN 5 TO 6 MONTHS (and not the 2 months they claim) AND ADULTS NOT HAVING TO RE-APPLY ON A YEARLY BASIS.

    If the government is not willing to revisit the requirements and BENEFITS for the PR Scheme and possibly change some of it I’m afraid the PR scheme is not going to create the desired effect to attract more investors.

    Recommendations for the Cyprus PR Program to come to its full potential and in line with other more attractive European PR programs, some or all of the following should be looked at:

    • Allow PR investors and family unit the right to work in Cyprus or at least after an x amount of years.
    • Do not take away PR status of children when turning 18 or at least have a simple revalidating process for their PR status.
    • Allow PR investor children to study in Cyprus without losing their PR status.
    • Shorten the Citizen by Naturalization time period for Fast Track Permanent Residents from 7 years to 3 or 5 years.
    • Reduce the number of months residency required to 6 months per year to qualify for Naturalization and remove the 12-month consecutive stay in last year for Fast Track PR investors.
    • Become part of the Schengen Zone

    In conclusion it is my strong opinion that the PR scheme in its current form does not provide enough incentive and certainty for 3de countries and particularly South Africans to choose Cyprus for investment for the purpose of relocating permanently.

    Other European countries provide much easier, clear and more secure options for a path to become a Citizen through PR and Naturalization process.

    The above information is to best of my knowledge correct but if there is any doubt it has to be independently verified.

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