Cyprus has expanded the types of qualifying investments for investors to obtain a golden visa or permanent residency permit to include commercial real estate, Cyprus Company shares and Cyprus Funds. We explore whether these changes to the Cyprus Permanent Residency Programme will be of added value to investment migration applicants.
The Cyprus Government has issued new investment options for applicants who obtain the Permanent Residency in Cyprus under Regulation 6(2) – the Fast-Track route. The process can take approximately 2-3 months and gives the applicant and his/her dependent spouse, unmarried children in tertiary education or in-laws/parents the right to reside in Cyprus.
Is there demand for a Cypriot Permanent Residency Permit/Golden Visa?
Will investors wish to avail the new options and invest in Cypriot Permanent Residency?
Whilst it is not mandatory for permit holders to physically reside in Cyprus – it does offer a wealth of selling points for affluent individuals looking to relocate. It offers an exceptional quality of life, year round sun, developed infrastructure and access to public services, a stable socioeconomic environment and a robust legal system.
What’s most attractive is the various tax benefits and incentives it offers to both corporates/funds headquartered in Cyprus and to individuals (personal income tax incentives).
As recently highlighted by Henley & Partners – health security is also a quintessential factor for investors when selecting investment migration programmes. Cyprus, which managed the covid-19 outbreaks comparatively well, ranked fairly across the parameters on this index which assessed of over 30 residency and citizenship by investment programmes in terms of their emergency preparedness, health readiness, government efficiency and how they managed the covid-19 pandemic thus far. Post pandemic it is likely that investors will consider favourably jurisdictions that have managed the crisis best and that offer a good quality of medical and health services.
How to Obtain the Cyprus Permanent Residency Permit (2021)
Investors in the Cyprus Permanent Residency Programme now have additional investment options available. They may:
- Residential RE Investment – Invest in new residential property worth EUR 300,000 (excl VAT) – these may be from two different properties and developers;
- Commercial RE Investment – Invest in non-residential real estate, including offices, shops, hotels for an amount of EUR 300,000 (excl. VAT) – or a combination of these;
- Cyprus Shares – Invest EUR 300,000 in the shares of a Cypriot Company which has operations in Cyprus and 5 employees; or
- Cyprus Funds – Invest EUR 300,000 in a Cypriot Investment Fund (AIF, RAIF or AIFLNP).
The applicant must prove they have an annual income from abroad in the form of wages, pensions, dividends, or rents of at least EUR 30,000 per annum if they opt for the Residential RE Investment option to qualify for their Permanent Residency Permit.
In all other cases income can be generated from Cyprus (e.g. through Commercial Real Estate Investment/Funds/Shares). Additional funds need to be demonstrated for dependents included on the application – EUR 5,000 p.a. / dependent spouse or child and EUR 8,000 p.a / parent or in-law.
One important amendment to the Cyprus Permanent Residency Program is that there is no longer a requirement for the applicant to leave a deposit of EUR 30,000 in a Cypriot bank account for 3 years.
What else has changed?
Commercial Real estate as a qualifying Cyprus Permanent Residence Investment
The applicant now has the right to invest in offices, shops and hotels that are new/resale properties. This widens the real estate options available and directs foreign funds to the commercial sector instead.
This is a positive development.
The now defunct Cyprus Citizenship programme received criticism on how it was potentially inflating the prices of residential real estate. Many foreign citizenship by investment applicants would acquire residential real estate to meet the programme requirements and leave these properties uninhabited across the island. The updated Cyprus Permanent Residency Programme will now be able to funnel funds towards commercial use properties which will likely support the local economy’s private business sector – a welcome influx of funds during these trying times.
A Cyprus HQ and a Golden Visa
Cyprus has also been bolstering its headquartering solution – attracting global businesses to set-up their headquarters on the island and take advantage of the myriad of tax incentives offered. These include a 12.5% corporate tax rate, a (mostly) zero rate withholding tax on dividends, royalties and interest, and numerous personal income tax incentives for senior executives.
Efforts by the public and private sector to promote the set-up of more Cyprus Companies with a physical presence (substance) in Cyprus have been bearing fruit. Numerous tech companies have been setting up a Cyprus company and hiring professional staff locally – whether in the bustling capital Nicosia or innovative coastal Limassol.
By including Cyprus Company shares as a qualifying investment for the Cyprus Permanent Residency program – entrepreneurs will be even more incentivized to move their headquarters to Cyprus.
Cyprus Funds and the Permanent Residency Program
The comparatively new funds industry in Cyprus has been taking off – quadrupling its Assets Under Management in just four years. The Cyprus Securities and Exchange Commission recently announced the latest statistics for funds in Cyprus demonstrating how well this sector is flourishing.
The Alternative Investment Funds (AIFs), AIFs with Limited Number of Persons (AIFLNPs) and Registered Alternative Investment Funds (RAIFS) are the most popular funds solution in Cyprus – having a 94.8% share of the total EUR 8,582,7773,693 AUM – and UCITS having only 5.2% under their management.
Including Cyprus funds as a qualifying investment under the Golden Visa / Cyprus Permanent Residence Permit will certainly increase demand from fund promoters and investors who have been observing Cyprus’ benefits as a viable fund jurisdiction.
How will the market respond?
Will these additional qualifying investment options draw in more investors to Cyprus?
Certainly. At a comparatively low entry point of EUR 300,000 the Cyprus Permanent Residency Programme is now better suited to business owners/entrepreneurs/investors as there are more viable options to consider. The funds option will likely be of particular interest and create a notable difference in the level of interest in the Cyprus Permanent Residency Programme.
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References
https://www.cysec.gov.cy/CMSPages/GetFile.aspx?guid=5a36a304-d996-460b-b61f-0e6ab881dede
http://www.moi.gov.cy/
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