Update on revised Cyprus (EU) citizenship by investment scheme

By Nick Tsilimidos, Papaphilippou & Co
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Pursuant to the Council of Ministers decision dated 19 March 2014, a non-Cypriot citizen who meets certain qualitative and investment criteria may apply for the acquisition of Cypriot (European Union) citizenship and Cyprus (EU) passport through naturalisation by exception.

Nick Tsilimidos L. Papaphilippou & Co 律师 塞浦路斯 Advocate L. Papaphilippou & Co Cyprus
Nick Tsilimidos
Advocate
L. Papaphilippou & Co
Cyprus

Following the acquisition of Cypriot citizenship by the head applicant-investor, his or her spouse, as well as any financially dependent adult children (18 years old or above) of the applicant, will also be eligible to apply for Cypriot (EU) citizenship and Cyprus (EU) passport. Neither the spouse nor the children are obliged to meet any financial criteria.

Adult children are considered as financially dependent when: (a) they are students up to the age of 28 and are attending an institution of higher education aiming to obtain a diploma or an undergraduate or postgraduate qualification; or (b) they suffer from a severe physical or mental disability that makes them unable to work. Individuals who are studying for the acquisition of a professional qualification (i.e. chartered accountant or barrister), or individuals who are pursuing the acquisition of a second undergraduate or postgraduate qualification are not considered financially dependent.

Qualitative criteria

The applicant must have a clean criminal record. His or her name must not be included on the list of persons whose property is ordered to be frozen within the boundaries of the EU.

The applicant must purchase a residence in the Republic of Cyprus, the purchase price of which must be at least 500,000 (US$644,000) plus VAT. VAT paid on the purchase price as well as transfer fees, stamp duty or other applicable taxes are not taken into account when calculating the purchase price of the residence.

The residence must be, and remain, permanent and privately owned. The applicant may exploit the residence in any manner deemed fit (i.e. rent or lease), provided that the ownership status of the residence remains unchanged. Should the applicant elect to sell the privately owned residence, he or she is under an obligation to replace it with a residence of equal or higher purchase value in Cyprus.

The purchase price of the privately owned residence is not computed in the investment amount of the investment criteria below; it is an additional requirement. It is only where the applicant decides to invest in the purchase of a privately owned residence alone with purchase price of either 5 million (investment criterion 3) or 2.5 million (investment criterion 8), that he or she is exempt from the obligation to buy an additional privately owned residence with purchase value of 500,000 plus VAT.

Investment criteria

The investment criteria may be met by the applicant either personally or through a legal entity in which he or she participates, provided that there is a proven link between the applicant-investor and that legal entity. A high-ranking senior manager may also apply, provided that he or she receives such a remuneration that generates for the Republic of Cyprus tax revenue of at least 100,000 for a three-year period, and provided that this tax has already been paid or prepaid.

The applicant may invest in any one of the following:

  1. Government bonds of the Republic of Cyprus for at least 5 million; or,
  2. Financial assets of Cypriot companies or Cypriot organizations for at least 5 million. These financial assets can be purchased either at issuance, or subsequently through the market; or,
  3. Real estate, land development and infrastructure projects for at least 5 million; or,
  4. Purchase or creation or participation in Cypriot businesses or companies for at least 5 million. These businesses or companies should have a tangible presence in Cyprus and employ at least five Cypriot citizens; or,
  5. Personal fixed term deposits in Cypriot banks, or deposits of privately owned companies or trusts (in which the applicant is the beneficiary owner) in the Republic of Cyprus of at least 5 million, or its equivalent in any other international currency. Local banks, as well as approved subsidiaries of foreign banks operating in Cyprus, are considered Cyprus banks. The said amount need not be deposited in a single bank; it may be spread across a number of Cypriot banks; or,
  6. Combination of the above-mentioned criteria 1, 2, 3 , 4 and 5 amounting to at least 5 million; or,
  7. Persons whose deposits with the Popular Bank Public Company have been impaired due to the measures implemented after 15 March 2013 by at least 3 million; or,
  8. The Council of Ministers has the right to reduce the investment threshold of criteria 1, 2, 3 and 4 to 2.5 million for investors who demonstrably participate in a special collective investment scheme, provided that the total value of such investment scheme is at least 12.5 million.

The applicant must retain any of the said investments for a period of at least three years following the acquisition of the Cypriot citizenship. The three-year period begins on the date of the approval of the application by the Council of Ministers.

Documentation requirements

A certificate of clean criminal record from the country of origin and the country of residence (if it differs) must be provided by the applicant. For the privately owned residence, any of the following documents will be acceptable: contract of sale; title deeds; receipt for lodging the contract with the Lands and Surveys Department; receipts for paying the agreed purchase price; or a copy of the wire transfer in a Cypriot commercial banking institution in the name of the seller, or the seller’s company. Further documents, the description of which will depend on the nature of the investment sought and undertaken by the applicant, will be required.

The applicant must procure legalisation of any foreign documents by a licensed solicitor practising in the Republic of Cyprus and submit the documents duly translated in Greek, along with the application form.

Review timeframe

The timeframe for the examination of a complete application is approximately three months. None of the above affects the absolute discretion of the Council of Ministers its decision. In the case where, following a periodic inspection, it has been ascertained that any conditions are being circumvented, the naturalisation may be revoked.

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