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Cyprus revises foreign residency rules – the facts

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The Cypriot Government, in an attempt to attract foreign investment to the island and to help economic recovery and further economic growth, introduced Regulation 6(2) of the Aliens and Immigration Regulations which gave non-EU nationals, who invested in Cyprus, the right to permanently reside on the Island, provided certain criteria were met.

In order to address some weaknesses in the system,  these criteria have been amended and will take effect on May 2, 2023, the aim being to protect the integrity of the system, thereby safeguarding their continuity and securing the country’s reputation.

Permanent Residency permits shall be issued to non-EU applicants, provided they meet one of the investment criteria mentioned below.

The applicant must make an investment of at least €300,000 in one of the following categories:

  • House/apartment:Purchase of a house/apartment sold for the first time (not a resale)  by land development company of a minimum value of €300,000 (plus VAT).
  • Real estate (excluding houses/apartments):Purchase of another form of real estate such as offices, shops, hotels or similar developments, or a combination of these, with a total value of €300,000. These properties may also be resale properties.
  • Share capital of a Cypriot company with activities and personnel in Cyprus:
    Investment worth €300,000 in the share capital of a new company or an existing company which is registered, based and operates in Cyprus with a proven physical presence and employs at least five (5) people.
  • Shares of a Cyprus Investment Organisation for Collective Investments (type AIF, AIFLNP, RAIF):

Investment worth €300,000 in shares of a Cyprus Investment Organisation for Collective Investments whose investments need to be carried out in Cyprus.

In the event that the applicant ceases to hold the investment without immediately replacing it with another of the same or greater value, which should meet the conditions set in this procedure, then the Permanent Residence permit will be cancelled.

It must be proved that the money to be used for the investment must have come from abroad from the applicant’s personal bank account or that of his spouse and the value of the investment needs to be transferred to the vendor’s bank account in Cyprus.
In addition, the applicant should prove that he has at his disposal a secure annual income emanating from abroad of at least €50,000. The annual income is increased by €15,000 for a dependant spouse and €10,000 for each dependent minor child.

In cases where the applicant invests in a house or apartment, this income can be from salaries, pensions, stock dividends, fixed deposits, or rents emanating from abroad. Such income, however, can only be proven by tax declarations of the applicant from the country in which the applicant is tax resident. In calculating the total income, the income of the applicant’s spouse may also be taken into account.
In cases where the applicant chooses to invest in real estate excluding houses or apartments, then the total income or part of it may also arise from sources originating from activities within the Republic, provided these are taxed in the Republic.

Quality Criteria 

The applicant and their spouse must submit a clean criminal record from their country of residence or from the Republic, if they reside in Cyprus.

They must certify that they do not intend to work in the Republic, with the exception of their acting as directors in a company in which they have chosen to invest within the framework of this policy.
If the investment does not concern a company’s share capital, they may be shareholders in companies registered in Cyprus and receive dividends. They may also hold the position of director in such companies without remuneration.

Where applicants choose to invest under the investment criteria B, C, or D, they must present information regarding their place of residence in the Republic.

When investing in residential or other properties, the application needs to contain proof that the contract of sale was filed with the Land Registry and official receipts for the payment of at least €300,000 (excluding VAT), regardless of the date of delivery of the property. Evidence must be provided that the funds invested have come from abroad and are not a product of internal borrowing. The total investment should be paid into the seller’s account at a Cypriot financial institution.
The applicant may purchase up to two (2) residential units (apartments or houses), provided that the total market value meets the above criteria. The said purchase must be dwellings sold by the developer for the first time, unless the purchase of the houses took place before May 7, 2013.

The properties do not have to be purchased from the same land development company.

Provisions Relating To Dependents

The Immigration Permit is issued to the applicant and the applicant’s dependents (spouse and minor children up to the age of 18).

Unmarried children between the ages of 18 and 25, who are students in higher education abroad on the date of submission of the application, and who are financially dependent on the applicant, may submit their own, separate application for an Immigration Permit. In such a case, the father or mother and/or both parents together must prove that they have an additional annual income of €10,000 for each such dependent child.

Such permit, once issued, will continue to be valid even after they reach the age of 25, even if they marry and cease to be students and/or financially dependent on their parents.

Higher Value Investments To Include Adult Children

An Immigration Permit may also be granted to adult children of the applicant who are not financially dependent provided a higher value investment is made.

The market value of the €300,000 investment should be multiplied according to the number of adult children, who will rely on the same investment for the purposes of obtaining an Immigration Permit.

Each adult child will need to prove they have at their disposal a secure annual income of at least €50,000, which will be increased by €15,000 for a dependent spouse and €10,000 for each dependent child.

It is no longer possible for applicants  to include in their application their parents or parents in-law.

Mechanism Ensuring Criteria Continue To Be Met 

Applicants are required to prove on an annual basis that they continue to hold the investment and that they continue to receive the required annual income for themselves and their dependants and that they all continue to hold a valid health insurance cover if no longer registered with the national health scheme GHS.

They need to present on an annual basis a clean criminal record from their country of origin and residence. In case the applicants fail to provide the above, then they and their dependents’ residence permits shall be cancelled.

The right of the applicants and their adult dependent children to reside in Cyprus is indefinite. The residency permit issued for the minor children of the applicant will end on reaching the age of 18. They can reapply if they fulfil the relevant criteria mentioned above.

The underlying objective of these provisions is to maintain the integrity of the system, safeguard the process and eliminate the loopholes that were observed.

While one can understand and respect the need for stricter controls, the increase in the amount of annual income that is required will exclude many potential investors, especially those of retirement age who wish to have Cyprus as their retirement haven and who do not have such high annual income.

It remains to be seen how these changes will be perceived by potential investors.

 

The content of this post is intended to provide a general guide to the subject matter and does not constitute legal advice.

By Esme Palas, Barrister at Law, Partner of the Law Firm Michael Kyprianou Advocates and Legal Consultants [email protected]