By Esme Palas
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):
- 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.
- 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.
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.
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. 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