Citizenship by Investment in Cyprus
On the basis of a Council of Ministers’ Decision dated 24th of May 2013 (with certain amendments from September 2016) foreign investors can acquire citizenship of Cyprus by investment of 2,000,000 EUR. This is called naturalization by exception.
Key benefits of the Cyprus (EU) citizenship:
- Free travel, residence, and work within the EU
- All family members (spouse, children under 18 years, and adult dependent children over 18 years and up to 28 years) can obtain Cyprus citizenship together with the investor
- Parents of the investor can be included into citizenship application provided they have a private residency in Cyprus (house or apartment that costs minimum 500,000 EUR + 5 % VAT).
- No requirement to physically reside in Cyprus before the application or after obtaining the citizenship
The following investment options are available for citizenship application:
- Direct investments (property, land for development, securities of Cyprus companies, government bonds, etc.) amounting to a minimum of EUR 2,000,000. Combination (investment into different types of assets) is allowed; or
- Business activities – the applicant established a company (companies), administrated in Cyprus and he/she made payments to the authorities (taxes, etc) and purchased business services for at least EUR 500,000 on average per annum for the last 3 years before application. In case the company’s central office is in Cyprus and employs 5 Cypriots, then the above is reduced to EUR 350,000 per annum and in case of employing 10 Cypriots, it is further reduced to EUR 200,000 per annum.
NOTE: Investment EUR 2,000,000 must be kept in Cyprus during 3 years after citizenship is granted. Private property 500,000 EUR must be kept in Cyprus forever (if sold another property of the similar cost must be purchased). It means that after three years you can sell and recover only EUR 1,500,000 investment.
In addition to the criteria mentioned above applicant must fulfill the following conditions:
- Hold a clear criminal record,
- Confirm that the applicant’s name is not included in the list of persons whose property is ordered to be frozen within the EU,
- Privately owned residence in the Republic of Cyprus the cost of which must exceed the amount of EUR 500,000 excluding VAT,
- Have at least one visit to Cyprus.
Tax residency. Applicant does not become a tax resident unless he spends in Cyprus more than 183 days in any calendar year. Dual citizenship is recognized. No need to renounce your previous citizenship before acquisition of Cyprus citizenship. Timeframe. The application processing usually takes 6 months. Legal fee. The level of legal fee depends upon the family composition and the level of our involvement but generally is near EUR 50,000. Our services include full support with allocation of investment, purchase of property, and preparation of citizenship application and supporting documentation. After citizenship is granted we shall assist with the process of obtaining a Cyprus Passport and Identity Card for each person included into application.
Questions and Answers Regarding Citizenship of Cyprus:
Question: We want to get citizenship by bond investment. Is this option still valid? We have information that this option may soon be closed by Cyprus authorities.
Answer: Between May 2013 and September 2016 bond investment was a popular investment route towards citizenship because government bonds are conservative investment with clear exit strategy. In September 2016 the scheme was reformed and now bond investment is limited to only EUR 500,000. It is generally believed that the Cypriot economy strengthened; that is why the government stopped issuing these bonds in the previous volume (EUR 10,000,000 monthly).
Question: Can you tell me if Cyprus recognizes the common-law marriages for the purpose of citizenship by investment application? We are family of two adults and three kids but we are not officially married. Can we start the citizenship application process without marriage or should we get marriage certificate first?
Answer: Cyprus authorities accept common law wives or husbands for citizenship-by-investment purposes.
Question: We consider obtaining Cyprus citizenship by investment. The scheme requires purchase of property valued 500,000 EUR. Can we sell property after some years? Can we exploit the property for commercial purposes?
Answer: As the regulation currently stands, the passport holder must always have in his/her ownership a house(s) having a sales contract price of at least EUR 500,000. Yet one can benefit from any capital appreciation by selling the house bought originally at a higher price and buying a new one at EUR 500,000. Capital gains tax is payable on the profit made subject to an exception of part of the profit for first time sellers (does not apply to companies) and a deduction for inflation. Transfer fees should also be taken into account when contemplating sale/purchase transactions. Advice from a tax expert should be sought for matters pertaining to tax before entering into any transaction.
As to commercial exploitation of property, yes, this is possible. In the case, however, where the VAT paid upon buying the house was at the reduced rate of 5% then, if the renting out will take place within the first 10 years of the purchase of the property, the difference between the going rate of VAT (currently at 19%) and the 5% paid i.e. 14% on the sales contact price, shall have to be paid to the state. Alternatively, the house can be rented after 10 years of being purchased without paying the excess VAT.
Question: Russian family is interested in Cyprus citizenship by investment. Family consists of 4 members (husband, wife, and two minor kids). Unfortunately, there is some complication. Husband (who must theoretically be the main investor) works in the structure that operates on a contract basis with government owned strategic company in Russia. It is not really desirable for him (though not prohibited) to become dual citizen in the 4 years to come (duration of the contract) because in this case he must declare the second citizenship to Russian authorities. His idea is the following. His wife will be the main applicant and kids follow to get Cyprus citizenship. In this scenario will he be eligible to apply for citizenship based on his marriage to a Cyprus citizen after 4 years (let us say in 2019)? We know that if you are married to citizen of Cyprus then the reduced period of 2 years applies for naturalization. What about physical residence requirement? Will he be expected to reside physically in Cyprus in order to apply for citizenship based on his existing marriage? Or this is not possible at all? Naturally enough he is unwilling (and maybe not able) to invest twice.
Answer: We had a consultation with Ministry of Interior of Cyprus regarding this case. The spouse should be able to apply in the same way as if they were applying together (by exception as the spouse of an investor-applicant with the fast track procedure), despite the application being made 4 years later. This would mean that the rule that would apply to foreigners marrying a Cypriot would not be applicable in this case. They would actually not apply anyway since this couple is already married.
Question: My situation is as follows. In 2011, I commenced construction of a house in Cyprus. There was a loan and a mortgage but I paid off the mortgage by 2013, and the house was finished. The cost of the house was 1,100,000 EUR. At that time (2011- 2013) I was not thinking about Cyprus citizenship. In 2013, I commenced construction of another house in Cyprus and by now (2015) accomplished the construction with investment of 1,400,000 EUR. Now I have property in Cyprus that costs around 2,500,000 EUR. Is it possible to enter collective scheme and use those objects as investment good for citizenship? I am ready to invest some more money, let us say to bank deposit, if the current investment not sufficient to apply. Surely, I am not going to invest too much. I actually want to use the existing investment.
Answer: The program dictates that for an investment to be eligible under the Naturalization by Exception program it needs to have been done within 3 years prior to the application. This means that if the investment was made and paid for in 2011 then we will not be able to include it in the investments required for the application. If, however, the payments for the construction were made during these past 3 years then we could argue that that is when the investment was made. We need to have a complete picture of what money has been invested during the 3-year period. In any case, please, bear in mind that if your eligible investments fall short of the € 2,5 million mark then in order to complete that you will need to make an additional investment in residential real estate for the remaining amount in order to be able to apply with an investment of € 2,5 million in a collective investment. You cannot complete the € 2,5 million requirement with an investment in a different class of investments. 3 years after the approval of citizenship you will be able to sell these investments but will need to keep one residence of at least € 0,5 million indefinitely.
If you have any questions regarding immigration to Cyprus or wish to use our legal assistance in obtaining residency or citizenship in Cyprus contact us today