How investors can gain Cypriot citizenship

A lot of people understand the investment program of the Republic of Cyprus to follow the classic formula: you buy a real estate, and you get citizenship. In reality, there is little information available on the detail, and in 2019, the Republic of Cyprus tightened its immigration policy and revised some aspects of the “Citizenship by Investment” program.

Why do you need Cypriot citizenship?

Since Cyprus is a member of the European Union (EU), the holder of the passport of this country is essentially an EU citizen and, accordingly, can live and work in any country within this union. Such mobility is particularly valuable during times of crisis when it is important to be able to move assets quickly.

Moreover, Cyprus itself is famous for its loyal taxation: with corporate tax being only 12.5%. Cyprus has also concluded agreements excluding double taxation with 50 countries, which allows Cypriot residents to receive income from investments and entrepreneurial activities and not to overpay taxes.

Many investors are therefore attracted to moving to this economically stable country, with an independent judicial system and good medical system to live there as a rentier, receiving income in the form of dividends and/or interest. A further incentive for citizenship is that for the first 17 years, any rental income from Cypriot real estate, dividends and interest received by those who moved to Cyprus and became a resident is not subject to any special contribution to the Cypriot defence system. There are no other taxes on dividends or interest.

Changes in immigration policy

In 2019, the Government of Cyprus carried out a reform of the “Citizenship for Investments” program. As a result, some requirements for the applicants have changed, and the procedure for obtaining a passport became more complicated. These changes are outlined below.

  1. The list of objects for investments has been changed. Shares of shipping companies has taken the place of government bonds as objects for investments (along with residential and commercial real estate).
  2. A mandatory non-refundable contribution to state funds of 150 thousand euros has been introduced. Over the five years of the program, contributions have brought the country 6.6 billion euros of foreign investment (as compared with the size of the revenue part of the budget – about 8.5 billion euros per year). But authorities noted that this money helped only the construction industry, while ordinary Cypriots did not feel significant improvements. To attract funding for important social projects, the Council of Ministers decided to introduce the mandatory non-refundable contribution of 150 thousand euros for each investor. This amount is divided between the Research and Innovation Promotion Fund and the Land Development Corporation Foundation. Money from the second fund will be directed to the development and maintenance of state programs of affordable housing.
  3. Mandatory ownership of investments has been extended to five years. After this time, the investor can then sell them. Only housing worth at least 500 thousand euros should remain in lifelong ownership.
  4. The requirements for applicants have been tightened. For example, an applicant for Cypriot citizenship must have a valid Schengen visa. If the applicant previously received a refusal of citizenship of another EU country, the application will not be considered.
  5. The list of mandatory documents for real estate investments has been expanded.

Stages of obtaining Cypriot citizenship

The procedure for obtaining a passport of the Republic of Cyprus is roughly six months, most of which is occupied by checking applicants for citizenship.

Stage 1. Buying real estate

You can purchase:

  • Residential real estate, the minimum amount is 2 million euros. If at least one secondary property is bought, the amount increases to 2.5 million euros.
  • Commercial real estate, the amount is 2 million euros, plus 500 thousand euros for the mandatory purchase of housing for life ownership.

From 2019, it is also possible to invest in Cyprus securities. The amount is 2 million euros plus 500 thousand euros for the mandatory purchase of housing in lifetime ownership.

In addition to the above investments, it is necessary to pay VAT (5% or 19%, depending on the purpose of the facility), as well as 150 thousand euros of a non-refundable contribution to state funds (see above). Thus, the minimum necessary amount for investment is about 2.5 million euros.

It is worth noting that the duties of the owner of the property include payment of utilities, and the annual municipal tax (55-185 euros). It is also advisable to purchase real estate insurance, not only as protection against accidents, but also against third parties such as neighbours.

Only citizens of Cyprus and the EU are entitled to rent Cypriot real estate, other foreigners are prohibited from doing it, including through a local management company or other real estate agents. The fact is that every foreigner, when buying real estate, must receive permission from the Council of Ministers, which states that he/she is allowed to buy an apartment or house exclusively for the purpose of personal residence.

We would recommend that those who are going to buy real estate in Cyprus always make a pre-sale check through their own lawyer. The seller must provide you with a so-called search certificate, which will make it possible to assess the legal purity of the object, the presence of encumbrances, and the rights of third parties.

It is also desirable for the seller to have title to the object if it relates to secondary housing. If the property is new, then you can hope to receive the title within 2-3 years. It is advisable not to make a full settlement (leave 5-10% of the contract amount) before receiving this document if it is a matter of acquiring new real estate.

It should be borne in mind that the registration of the contract for the purchase of real estate in the department of the Land Chamber of Cyprus gives the buyer additional protection. If the seller disappears, the buyer will have the opportunity to re-register the property. The re-issuance is made without the participation of the seller and provided that the buyer fully pays the transaction.

Stage 2. Collection and submission of documents

In order for investments in Cypriot real estate to be approved, it is necessary to provide:

  • Documents on removal of encumbrances from real estate;
  • A certificate that the construction of the facility has been completed, or a bank guarantee in the amount of at least 5% of its value – if the investor buys real estate during the construction phase;
  • Planning permission.

All documents are transferred to the Ministry of the Interior of Cyprus, when a fee of 2 thousand euros is payable.

Stage 3. Passing the check and obtaining a passport

Cyprus real estate can be purchased both by a private person and by a company. Cypriot and EU citizens do not have a limit on the number of objects purchased. The remaining category of persons has the right to purchase no more than two real estate objects.

The candidate must be an adult, have no convictions and not be under EU sanctions. To be sure of obtaining Cypriot citizenship, it is worth ordering a preliminary check of your candidacy from specialized firms.

As we mentioned above, an investor should have a valid Schengen visa and not receive earlier refuses of citizenship of another EU country. In addition to the investor themselves, the following can apply for Cypriot citizenship:

  • Their spouse, even if the relationship is not officially registered. In the latter case, it is necessary to confirm the financial dependence of the spouse, as well as write a statement on cohabitation;
  • Any children of an investor who are under 28 years old at the time of filing the application. Adult children should not have their own sources of income;
  • Parents of the investor and parents of spouse. The age of parents, as well as whether they depend financially on the investor, does not matter. However, it is necessary to purchase additional real estate for their stay in the amount of at least 500 thousand euros plus VAT.

Verification of applicants for Cypriot citizenship takes 4-5 months. Among the most common reasons for refusing citizenship are a poorly prepared package of documents, an illogical chain of evidence of the legality of invested funds, and concealment of information about criminal penalties. After approval of the candidacy, the investor receives a certificate of naturalization and a few days later – a passport.

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