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Cyprus: Country and Foreign Investment

Investments by Foreigners

For some time there was a restriction of 49% on foreign participation in Cypriot enterprises, but in many sectors 100% ownership is now permitted, especially in services.

The formal position remains that Central Bank approval is required, and if the level of participation exceeds 49% or if the investment exceeds a designated amount (formerly CY£750,000, now its Euro equivalent), then the Ministry of Commerce, Industry and Tourism also becomes involved. The chances of rejection are now only significant if projects seem likely to cause environmental problems or to compromise national security; investments below the designated amount may also be refused if more than 49% participation is proposed.

The Central Bank permit for foreign investment specifies the activities that may be carried on. Usually, it also requires that foreigners' equity capital must originate outside Cyprus, and must equate to the size of the investment, ie there are thin capitalization rules. Any loan capital must be raised by foreign and domestic shareholders in proportion to their equity stakes.

Permission is required for repatriation of capital, profits, dividends and interest arising from a direct foreign investment in Cyprus, but is normally granted readily. From December 2000 stockbrokers were able to carry out foreign transactions up to a designated amount (then CY£500,000) without prior permission from the Central Bank, but needed to ask above that figure.



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