The Cyprus Investment Programme is rapidly becoming one of the EU’s most popular residence schemes.
- Non Cypriot citizens (and their families) can acquire Cyprus Citizenship by investing €2.5 million* in Cyprus.
*In one specific set of circumstances as detailed below in the financial criteria, the investment required is €2.0 million.
A non-Cypriot citizen who meets one of the financial criteria detailed below can apply for Cypriot citizenship ‘through naturalization by exception’.
- Following the application, Cyprus citizenship will be granted in six months, assuming the application has been completed accurately and the correct documentation filed.
- The applicant needs to be in posession of a residence permit for a period of six months before obtaining the citizenship.
Why Consider Becoming a Cyprus Citizen?
Cyprus is a member of the EU and the following benefits are therefore available:
Free movement of people: A Cyprus citizen can travel, work and reside freely within the EU.
Free movement of services: Cyprus citizens and companies can freely offer services within the EU.
Free movement of capital: Funds can be freely transferred between EU Member States.
Free movement of goods: Goods produced within the EU can be transferred between Member States.
- Donation of at least €75,000 to the Research and Innovation Foundation
- Donation of at least €75,000 to the Cyprus Land Development Corporation
- Fulfill one of the financial criteria below:
The minimum investment is €2.5 million.
- €500,000 of the investment must be in a permanent, privately owned residential property, which must be maintained for life. However, the property can be rented out.
Investments can be made in the following:
- Investment in Alternative Investment Funds or Registered Alternative Investment Funds or in the Financial Assets of Cypriot Companies or Cypriot Organisations licensed by CySec
The applicant must purchase financial assets in a Cypriot company or organisation with a minimum value of €2 million.
The company or companies must have a physical presence and substantial economic activity in the Republic of Cyprus.
- Purchase, Establish or Participate in a Cypriot Business or Company
The applicant must invest at least €2 million purchasing, establishing or participating in a business or company that is based and operating in Cyprus. Such businesses or companies must have a tangible presence in Cyprus and employ at least five Cypriot or EU citizens. Investments in the shipping sector are eligible on the basis of the measurable criteria that will be determined jointly by the Ministry of Finance and Shipping Deputy Ministry.
- Investment in Real Estate, Land Development or Infrastructure Projects
The applicant must invest a minimum €2 million purchasing or constructing buildings or other land development projects.
If the investment is ONLY made in a number of residential properties and one property is worth at least €500,000, and is a permanent, privately owned residence in Cyprus that will be retained for life, the purchase of another permanent residence in Cyprus will NOT be required. This therefore reduces the total contribution required to meet this financial criteria to €2 million (rather than the €2.5 million for each of the other criteria).
- Combination of Criteria
The applicant must meet a combination of the above criteria, with the total investment amounting to at least €2 million. In addition there must be an investment of €500,000 in a permanent, privately owned residential property, as mentioned above.
- The minimum amount of time for which the investment must be maintained is 5 years from the date of naturalisation.
- The applicant and family members must prove that they have a clean criminal record from their country of origin and country of residence (if these are different).
- The applicant’s name must not be included on the list of individuals whose property has been frozen within the EU (sanctions list).
- The applicant must hold a valid Schengen Visa (third country nationals who not require an entry visa for travelling in European Union member states are excluded from this obligation).
Additional Features and Advantages of The Cyprus Investment Programme
- Members of the same family can apply separately as investors to collectively acquire a residence. The value of the property must equal at least €500,000 multiplied by the number of applicants.
- The application for the investor’s spouse, should ideally be submitted at the same time as the application for the investor. The alternative is to apply once the investor has acquired his/her Cypriot citizenship, six months later. When the main investor’s application is approved, applications for relevant dependants (children and/or parents) can follow. Neither the spouse nor the children need to meet any financial criteria. Dependant parents, however, must purchase a permanent private residence in Cyprus.
- There is no language test.
- The applicant, must hold a residence permit in Cyprus for at least six months prior to his/her naturalization as a Cypriot citizen.
- If the applicant does not already have a Cypriot residence permit, he/she must apply for an immigration permit at the same time as the application for naturalization.
- Each application is submitted to the Ministry of Interior and the Ministry of Finance to confirm if the appropriate financial criteria has been met. Once the application has been assessed by the two Ministries the application is then presented to the Council of Ministers to grant approval for the Citizenship application.
How Long Does the Process Take?
Cyprus citizenship will be issued a maximum of six months after the application. As soon as the main applicant’s citizenship is issued, remaining family members can apply for their Citizenship. This second approval process will take two to three months.
Relevant Tax Information and Tax Benefits
- In July 2017, the Cyprus Government voted for an amendment, establishing a new “60 day rule”. This new rule will apply to individuals who, in the relevant tax year:
- reside in Cyprus for at least 60 days.
- operate/run a business in Cyprus and are employed in Cyprus and is a director of a company which is taxed in Cyprus. Individuals must also have a residential property which n they own or rent.
- are not tax resident in another country.
- do not reside in any other single country for a period exceeding 183 days in aggregate.
This is in additional to the “183 day rule”. If the applicant physically resides in Cyprus for more than 183 days in one calendar year, they are considered Cyprus tax resident.
If the applicant satisfies either the current “183 day rule” or the “60 day rule” and becomes tax resident in Cyprus (but not domiciled there), the following sources of income enjoy a ZERO rate of tax (even if the income has a Cyprus source and is remitted to Cyprus):
- Rental income, (standard tax is 3% on 75% of the income).
In addition, there are NO wealth and/or NO inheritance taxes in Cyprus.
If the applicant becomes tax resident in Cyprus, by spending more than 183 days in Cyprus in any one calendar year, he/she will be taxed on income arising in Cyprus and also on foreign source income. Any foreign tax paid can be credited against the personal income tax liability in Cyprus.
- A non-dom regime was introduced in Cyprus in 2015 when the Special Defence Contribution (SDC), the Income Tax Law and the Capital Gains Tax Law were amended. SDC imposes tax on income received from dividends, interest and rental income. It was amended to exempt individuals tax resident in Cyprus (but non-domiciled), from tax on dividends, interest and rental income.
- Capital gains tax is imposed at a rate of 20% on gains from the disposal of immovable property situated in Cyprus (subject to deductions and other conditions). This includes gains from the disposal of shares in companies that own immovable property, excluding shares listed on a recognised Stock Exchange. Capital gains tax is imposed even if the owner of the property is not a Cyprus tax resident. If the individual is a Cyprus tax resident capital gains tax is not applied to property situated outside Cyprus.
The Application for The Cyprus Investment Programme
Dixcart Management (Cyprus) Limited can assist with every step of the process:
- Provide advice on the questions and issues that might arise.
- Assist with the preparation of the application.
- Assist with drafting the relevant documents.
- Submit the application to the authorities.
- Monitor the application and liaise with the relevant authorities.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.