Cyprus tightens its investment program
The Council of Ministers of Cyprus has approved a series of tighter rules for its Citizenship-by-Investment Program.
Within that framework, and as the economy has now recovered to a great extent from the hit it took in 2013, on 13 February 2019 the Cyprus Council of Ministers approved a number of amendments to the CIP which allows investors to obtain citizenship in six months.
The latest amendments to the CIP – and more to follow – will plug certain loopholes and risks. Among other things, new conditions ensure that investments in property that are made on the basis of the program contribute to the Cyprus GDP, as opposed to having the same properties simply changing hands.
The latest amendments are due to be signed by the President of the Republic before being published in the official gazette. The official announcement will also set the exact date when the changes will come into force.
List of expected amendments:
1. Investors will be required to make a donation of €75.000 to the Cyprus Research Promotion Foundation (anticipated to take effect from 15 May 2019).
2. Investors will be required to make a donation of €75.000 to the Cyprus Land Development Corporation (anticipated to take effect from 15 May 2019).
3. Investors are now required to hold their investments for a period of at least 5 years from the date of the investor's naturalization. (This is up from the 3-year period required to date.)
4. The applicant must hold a valid Schengen visa.
5. In the instance where the acquired residential property has already been used by another investor to qualify for the CIP, the required investment amount is increased from €2 million to €2,5 million (anticipated to take effect from 15 May 2019).
6. Any applicant who has previously submitted an application for citizenship in any other EU member state and has been rejected will not be allowed to apply for Cyprus citizenship on the basis of the CIP.
7. Any investments in real estate must be supported by the following documents (anticipated to take effect from 15 May 2019):
- Planning permit
- For completed properties: Certificate of completion of the property
- For properties under construction: At least 5% of the total value of the property must be blocked in a bank guarantee, and the amount only released to the vendors upon the completion of the property.
- In cases where there is a mortgage on the property to be acquired, a bank waiver must be in place.
8. The investment criterion in Government bonds has been abolished.
9. Investment options now also include investments in the Cyprus shipping industry.
As emphasized by the Minister of Finance, these amendments will achieve two clear objectives. On the one hand, new requirements such as the donations to the Cyprus Research Promotion Foundation and the Cyprus Land Development Corporation will finance affordable housing programs, which will benefit segments of the population that are in need. On the other hand, a series of other requirements safeguard the value of the program by ensuring that it is aligned with the decisions of the European Union as a whole and do not undermine any actions or decisions taken by other EU member states.
Henley & Partners is monitoring the situation and will inform you of any important changes.