Incentives for third country nationals to invest in Cyprus
Contributed by Fiducenter (Cyprus) Ltd
04 October, 2012
Contributed by Fiducenter (Cyprus) Ltd [www.fiducenter.com.cy]
As part of its effort to attract foreign high net worth individuals, the government of Cyprus is providing some incentives to third country nationals to invest in Cyprus.
These incentives are already giving fruits as evidenced from the statistics, since in the last three years a considerable number of foreign nationals were granted permit or nationality, amongst them some of the richest people in the world.
The government has recently revised the criteria to be satisfied in order to gain access to the incentives provided by Cyprus for attracting foreign high net worth individuals. This was made in an effort to make the offering even more attractive, in the light of increased interest, especially from Asian investors, who see Cyprus as the gateway (being the far eastern border of the EU) to the great freedoms provided by the EU to its Member States and their citizens, especially the freedom to conduct business in the union. The schemes offered are as follows:
a. Immigration Permit
This special class of permit relieves its holders from time consuming procedures associated with other types of permits, such as consular inspections, renewal of permits, re-entrance permits, etc.
With regards to this scheme the Ministry of Interior recently announced the implementation of a “fast-track” procedure in order to issue the relevant permit, assuming the requirements set by the scheme are satisfied. These requirements have also been streamlined in order to match the needs and expectations of the modern investor while bringing some real benefits to the country and also to make the whole procedure much more straightforward. The applicant, along with his application for a permanent permit, must submit the following:
- title deed or property purchase agreement deposited with the Land Registry Department for a privately owned residence or any other construction in Cyprus of a value not less than EUR300,000 and official receipts for settlement of an amount of at least EUR200,000;
- certificate of clean criminal record from the country of the applicant;
- evidence of an insured annual income of at least EUR30,000 per annum, increased by EUR5,000 for each dependant;
- certificate from a Cyprus bank that he has deposited an amount not less than EUR30,000 in an account blocked for a period of at least 3 years;
- confirmation by the applicant that he/she does not intend to be employed or self-employed in any direct or indirect way in Cyprus;
- evidence of visiting Cyprus at least once every two years – failure to provide this on a continuing basis will lead to cancellation of the permit once granted
The procedure to be followed for completion and submission of the application as well as its processing once it is submitted is also outlined in the announcement of the Ministry of Interior.
b. Cypriot Passport/Citizenship
This is a scheme implemented by the government for providing citizenship in special cases, after approval is obtained from the Council of Ministers. Although each case is considered on its own merit, some criteria have been formed as to the minimum requirements, which need to be met for considering such application. The following conditions must be satisfied in order for people from third countries to be granted with the Cypriot citizenship:
i. Must be over the age of 30 years;
ii. Must have clean criminal record;
iii. Must have a permanent home in Cyprus of more than €0.5m worth and travel to the island often.
In addition to the above minimum criteria, the applicant must satisfy one of the following conditions:
a. Must have business activities, such as companies registered in Cyprus, with a total annual turnover of not less than €10m. on average for the last three years before the year of application or with at least 1/3 of the employed staff to be Cypriots OR
b. Must have direct investments (real estate, businesses, registered securities issued in Cyprus) of at least €10m. OR
c. Must have personal deposits or deposits of own companies or trusts with a bank in Cyprus amounting to at least €15m. The funds must be tied with the bank for a period of at least 5 years. In case it is revealed from periodical checks that this criterion is not followed, the naturalisation can be recalled OR
d. Must have a combination of the above a – c investments of at least €15m. OR
e. Must have incorporated company/ies the administration of which is in Cyprus and which have contributed for the last three years before the year of application at least €500,000 annually on average on either tax or VAT charges or on fees for provision of business services (legal, audit, accounting, banking, etc.).
It should be stressed that even if the figures stated above are not fully achieved, as long as the potential investor has the correct profile and commits himself to a considerable and respectful investment in the island, he might be eligible for the passport.
Reduction of VAT rate imposed on the acquisition and/or construction of new house for primary residence
Another incentive recently enacted related to investments made by third-country nationals in Cyprus is related to the VAT rate charged on construction or acquisition of property.
The VAT provisions related to the application of the reduced rate of 5% (as compared with the standard VAT rate of 17%) on the construction or acquisition of residential property in Cyprus which is to be used as the primary and permanent residence have been extended so as to include acquisitions by individuals who do not ordinarily reside in Cyprus but acquire property to be used as their residence while they are in Cyprus.
Furthermore, the application of the above special provisions has been extended to apply also to persons from countries outside the EU. This is applicable for all contracts signed as from 8 June 2012.
Amendment to the Land Registry (Duties and Fees) Law
On 2 December 2011, an amendment to the Land Registry (Duties and Fees) Law has entered in to
force. This provides for full exemption from transfer fees for all transfers of real estate property for
which VAT was payable on the transaction and 50% exemption from transfer fees for all other
transfers. The Law was initially intended to be in effect for six months starting from 2 December 2011 but it was extended until the end of 2012 (there is a possibility that it will be extended in 2013 as well) and covers all new contracts to be executed during this period.
The above incentives, together with some other advantages that Cyprus has to offer, such as its geographical location, its sunny weather, the business-friendly time zone, low crime and pollution and the top quality of facilities and services on offer, such as marinas, golf courses, professional services, private schools and universities, are expected to significantly increase the number of foreign people investing in Cyprus over the coming years.
Fiducenter has extensive expertise and experience providing professional services to foreign persons interested to invest in, establish presence or even relocate to Cyprus. We are at your entire disposal for any queries you may have and to discuss your particular facts and circumstances in order to come up with the best possible solution, tailored to your needs and objectives.
Phone: 357 25 50 40 00 Fax: 357 25 50 41 00
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