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As of May 2nd 2023, the Cyprus investment program in respect to the immigration permits to third-country national investors will be governed by a stricter framework following a proposal by the Minister of Interior. This decision aims to shield the process and eliminate a number of weaknesses observed.
The primary goal of the criteria revision is to strengthen the mechanism for monitoring the investments of those who are granted immigration permits. To this end, stricter guidelines regarding the precise controls necessary for the granting of permits as well as the definition of control mechanisms and verifications have been introduced. The criteria revision aims to:
1. Define stricter criteria regarding the checks required for the granting of an immigration permit
2. Correct distortions regarding the beneficiaries
3. Establish a control mechanism for meeting the criteria and maintaining the investment.
It is of utmost importance to note that the new policy aims to institutionalize a control mechanism for compliance with the criteria and maintenance of the investment through the introduction of a new provision:
“The applicant will now be required to submit on an annual basis evidence that he maintains the investment, that he maintains the required income determined for him and his family, and that he and his family members hold a health insurance certificate in in case they do not continue to be beneficiaries of GHS.
It is understood that, in case the holder of the immigration permit fails to prove the above, it will entail the activation of the process of cancelling the permit of himself and his family members.”
Furthermore, the following are being covered by the new policy:
Payment methods and money transfers to Cyprus:
The new policy stipulates that “the money to be used for the investment should be proven to come from abroad from the account of the applicant himself and/or his spouse, provided that he is included as a dependent in his application. The amount of the investment value should be paid into the seller's account in a Cypriot financial institution.”
The aforementioned clause will replace the one currently in effect, which only states that “the money to be used for the investment must be proven to come from abroad.”
Time of relocation and minimum residence time
Notably, an amendment to the legislation will be promoted in respect to the time of relocation and minimum residence time. The suggested amendment will include the period in which the applicant is obliged to relocate in Cyprus as well as, the minimum residence time in the Republic in order for someone to be considered a permanent resident.
Investment Criteria
As per the new criteria, the applicant shall invest at least €300.000 in one of the following categories:
Investment in house/apartment: Acquisition of a residence (either house or apartment) from a development company, which should be a first sale of at least €300.000 plus VAT.
Investment in real estate: Acquisition of any type of real estate (offices, shops, hotels or similar developments or combination of these) with a total value of at least €300.000. These acquisitions could derive from the resale of real estate and does not necessarily need to be a first sale.
Investment in the share capital of a Cyprus company with activities and staff in the Republic: Initial investment of €300,000 in the share capital of a new company or an increase in the share capital of €300,000 for an already-existing company registered in the Republic of Cyprus that is headquartered and conducts business here, has a demonstrable physical presence there, and employs at least five persons.
Investment in shares of a Cyprus Investment Organization for Collective Investments (type AIF, AIFLNP, RAIF): Investment worth €300,000 in shares of a Cyprus Collective Investment Organization whose investments should be made in the Republic of Cyprus
It should be noted that any alienation of the immigration permit holder from their investment without the immediate replacement with another of the same or greater value, which is covered in one of the aforementioned categories, will result in the cancellation procedure of the permit as stipulated in Regulation 6 of the Aliens and Immigration Regulations.
Further safeguarding considerations
Additionally, the existing provision is replaced by the following in light of the finding that the defined annual income is insufficient and that there is no definition of the documents through which the income can be proven, placing the program at high risk in global efforts to combat tax evasion:
"In addition to the investment, the applicant should be able to prove that he has at his disposal an insured annual income of at least €50,000. The annual income is increased by €15,000 for the spouse and €10,000 for each minor child.”
If the applicant decides to invest in a house or apartment, this income may come from work-related wages, pensions, shareholder dividends, permanent deposits, rents etc. deriving from sources abroad and can only be proven via their tax returns of the country in which he is a tax resident. The total income takes into consideration the spouses’ income as well.
Should the applicant proceed with an investment in real estate (apart from residential buildings), in the share capital of a Cyprus company with activities and staff in Cyprus or in shares of a Cypriot Collective Investment Organization, the total income or part of it may also derive from activities within Cyprus, provided that such income is taxable in the Republic.
Quality Criteria
The applicant and their spouse must provide a clean criminal record from their country of origin and their country of residence (in cases where these differ) and prove that they do not pose any threat to public order or public security in any way.
Furthermore, a number of quality criteria have also been included in the new policy:
The applicant and their dependents shall submit a health insurance certificate for medical treatment for both inpatient and outpatient care
The applicant and their spouses shall confirm that they do not intend to be employed in Cyprus, with the exception of their employment as directors in the company they invest into under the policy
In cases where the investment does not concern the share capital of a company, the applicant and their spouse may be shareholders in companies registered in Cyprus and the income from dividends in such companies shall not be considered an obstacle for the purposes of obtaining the immigration permit. They may also hold an unpaid directorship position in such companies.
If the applicant decides to invest in real estate (excluding residence buildings), in the share capital of a Cypriot company with operations and personnel in Cyprus, or in shares of a Cypriot Investment Organization for Collective Investments (type AIF, AIFLNP, RAIF), they must provide documentation proving their and their family's residence in the Republic (such as a property title deed, sales document, or rental document).
In cases where the applicant chooses to invest in a house/apartment, but the number of bedrooms of the investment property cannot satisfy the needs of their dependent family members, they should indicate another property or properties which will constitute the residence of these persons (e.g. property title deed, sales document, rental document).
Legal elements
Regarding the legal elements of a house, apartment, or other property, and in light of the finding that there is not equal treatment for investors under the applicable relevant provision because only this investment requires an initial payment of €200,000 while the other three require an investment of €300,000, the relevant provision of the current policy is replaced by:
"The applicant submits with their application a title deed or a deed of sale in their name and/or their spouse’s name filed with the Department of Lands and Surveys for a residence or other building with a market value of at least €300,000 (plus VAT if applicable) and official receipts for the payment of the amount of at least €300,000 (excluding VAT), regardless of the date of delivery of the property".
Dependents
According to the new criteria, the policy covering an applicant’s depends changes to:
“The immigration permit is issued to the applicant. This includes the applicant's dependents who are the spouse and their minor children under the age of 18.
If they so wish, it is possible to issue two separate immigration permits to each of the parties of the couple without the obligation and the second one to meet the above criteria, provided that a separate application is submitted and the corresponding fee is paid.
Provided that in the event that an immigration permit granted to the investor is cancelled for any reason, it will entail activation of the permit cancellation procedure for the other part of the couple, based on the provisions of Regulation 6, of the Foreigners and Immigration Regulations.”
Based on the aforementioned, the policy does no longer cover the granting of an immigration permit to adults who have not invested themselves in Cyprus through proof of additional income by the investor and without having their own place of residence.
Application submission and review process
The policy in respect to the application submission and review process is revised as per below:
The applications together with the required supporting documents will be submitted to the Department of Population and Immigration Records personally or through a representative after arranging an appointment or in any other way decided. With the submission of the application, a fee of €500 is paid, as well as a fee of €70 for each person included in the application for the issuance of a Foreigner's Registration Card in cases where it does not exist.
In the case of submitting an application through a representative, this should be accompanied by a written certified authorization of the applicant, which should include the full details of the representative, as well as their address and contact numbers.
“The application will be processed in a timely manner by the Department of Population and Immigration Records and will be submitted to the Minister of Interior through the Director General of the Ministry of Interior".
Timeframe
The application will be sent to the Minister of the Interior for review and decision-making if all the requirements of this policy are satisfied and there are no issues with the applicant's criminal history or issues with public order and security.
It is estimated that the timeframe for the examination of the application from the day of submission will be approximately two months.
*DISCLAIMER: This article and its publication are intended to provide a brief introduction and act as a general guide. This is provided for information purposes only and cannot be utilized as a substitute for professional advice. This document does not represent a legal opinion and one must not rely on it without receiving independent advice based on the particular facts of its own case. No responsibility is accepted by the author or the publishers for any loss suffered from acting or refraining from acting based on the contents of this publication.
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