Cyprus changes its CBI (Citizenship Investment) rules. We highlight the key changes that are about to be brought into play and mounting pressure from the EU.
Mounting pressure from European Parliament
The Cypriot Government has recently been under substantial pressure from the European Parliament regarding its citizenship by investment programme – namely the Cyprus Investment Programme.
The European Parliamentary Research Service recently issued a report “Citizenship by Investment (CBI) and residency by investment (RBI) schemes in the EU” which was critical of the RCBI industry’s offering to HNWIs.
The report highlights the security concerns of Citizenship investment schemes, as migration is a highly contested subject throughout the EU. The other key concern raised was the link between citizenship and genuine ties to the country.
This is encapsulated by the EU Justice Commissioner Vivian Reding’s statement on 15 January 2019.
Member States should only award citizenship to persons where there is a “genuine link” or “genuine connection to the country in question”.
Whether the concerns of the European Parliament are accurate or not is another debate in itself. Yet the Cyprus Government did take certain steps to change its CBI programme, demonstrating their acknowledgement of the concerns voiced by the European Parliament recently.
Read more: Cyprus Investment Programme Legal Update
Cyprus CBI Changes Listed below
Cyprus government’s steps to tackle EU pressure and mounting criticism are briefly summarized below:
Supporting Innovation & Research in Cyprus
A mandatory donation of EUR 75,000 to the Foundation for Research and Innovation to promote the creation of an entrepreneurial innovation ecosystem. Important to note is that, the obligation to contribute to the Foundation for Research and Innovation is lifted if either:
- The applicant invests at least EUR 75,000 in a certified innovative business (which has been certified by the Treasury) or a certified social company, or
- The applicant has made an investment under A.3 ‘Purchase or Establishment or Participation in Cypriot Companies or Business’ worth at least 20% of the EUR 2 Million investment cost (i.e EUR 400,000 ) to a company operating in the primary sector of the economy. Or alternatively, if the company operates in the fields of research and development, education, health, and renewable energy sources.
Supporting Affordable Housing in Cyprus
A mandatory donation of EUR 75,000 to the Cyprus Land Development Corporation, the government body aimed at implementing integrated housing policy, affordable housing projects and other housing plans/measures to support the local communities.
An Extended Cyprus Investment Holding Period
As of May 2019, applicants will now need to hold their investments for a period of 5 years minimum. Whether these are in real estate, AIF/RAIF investments, investments /participation in Cyprus Companies etc. that meet the Cyprus Investment Programme requirement and have a value of EUR 2 million. Previously this was set at a maximum period of 3 years, after which investors could exit their investments, ensuring they only retain their residence in Cyprus in perpetuity.
Additional Documents to Include
Once the new legislation is enforced – applicants will also need to apply for a Schengen visa and submit proof that they have successfully obtained such visa.
This is a positive addition as it allows the Schengen countries to have an initial opportunity to vet the applicant and endorses more collaboration between EU member states. Cyprus is currently not a member of the Schengen area at present.
In addition to demonstrating a clear criminal record and presenting all pertinent due diligence reports, applicants will also need to provide documents regarding their real estate investments.
These include the contract of sale, proof of the contract’s registration with Land Registry, proof of payment etc…).
For the Cypriot residential investment that is to be held in perpetuity it should be valued at EUR 500,000 (exc VAT). Urban planning permissions, bank waivers and a certificate of completion signed by the architect must also be submitted or a Performance Bank Guarantee arranged for properties under construction.
