The Government of Cyprus has recently announced a revised set of criteria for granting Cypriot citizenship to foreign investors, in an effort to promote foreign investment in Cyprus.
As with previous criteria, the two pre-requisites for filing an application, are a) the ownership by the applicant of a permanent privately-owned residence in the Republic of Cyprus, the market value of which must be at least €500,000 (previously €1,000,000), plus VAT, and b) a clean criminal record.
The new criteria are focused around making a significant investment or contribution to the Republic of Cyprus and are separated in 6 categories as detailed below. Only one of the six categories needs to be met.
1. Combination of investment in the Cyprus Investment Company and donations to State Fund
An amount of at least €2 million be invested in shares and/or bonds of the Cyprus investment company that will be formed (the applicant must deposit the amount at the Cyprus Treasury Department until the shares and /or bonds of the company are issued);
- An amount of at least €0.5 million be donated to the Research and Technology Fund.
2. Direct investments
The applicant should have direct investments in Cyprus of at least €5 million, noting that direct investments include but are not limited to:
a. Purchase of real estate (houses, offices, shops etc);
b. Acquisition of businesses/companies that are based and have activities in Cyprus;
c. Purchase of shares of companies registered in Cyprus;
d. Purchase of financial instruments (e.g. bonds and debentures registered and issued in the Republic of Cyprus);
e. Participation in a company/consortium that is in charge of the execution of a Government project.
Regarding conditions (a) to (d) above, the applicant must retain the related investments for a period of at least three years. In case of a portfolio of shares or bonds, it should be ensured that the value of the portfolio during the three year period will not be less than the specified amount.
3. Deposits in Cyprus banks
The applicant must have personal fixed term deposits for three years in Cypriot banks or deposits of privately owned companies or trusts (in which he is the ultimate beneficiary) in the Republic of Cyprus of at least €5 million.
4. Combination of categories 1, 2 and 3 listed above
The applicant must have a combination of the above categories amounting to at least €5 million.
5. Business activities
The applicant must be a shareholder or the ultimate beneficial owner of a Cyprus company (or group of companies) the management of which is exercised in Cyprus, and that over the last 3 years prior to submitting the application, has paid into state funds (e.g. Corporate Tax, VAT) and remuneration for the acquisition of professional services in Cyprus (e.g. legal, accounting, audit) an amount of at least €500.000 per annum.
If the Cyprus company employs at least five Cypriot citizens, then the minimum amount that must be paid in Cyprus (as described above) is reduced to €350.000 per year during the three years preceding the filing date of the application.
If the Cyprus company employs at least ten Cypriot citizens, then the minimum amount that must be paid in Cyprus (as described above) is reduced to €200.000 per year during the three years preceding the filing date of the application.
In the scenario where the applicant has paid into the Cyprus economy direct revenue or fees lower than the ones mentioned above, a combination can be made with criteria 1, 2 or 3. The sum of the payments made to the State Funds and the professional fees for the last three years shall be deducted from the required investment to satisfy criteria 1, 2 or 3.
6. Persons whose deposits in Bank of Cyprus or Laiki Bank suffered an impairment
Any foreign person who was the holder of deposits in Bank of Cyprus and/or Laiki Bank and suffered an impairment in the value of his/her deposits of at least €3 million as at March 15th 2013, as a result of the measures imposed on the two banks.
In the case that the foreign person has suffered an impairment in the above mentioned banks which is lower than €3 million, he/she may still apply provided that he/she invests the remaining amount (i.e. to sum up to €3 million) in mixed investments and donations to the state fund (criterion 1) or in direct investments (criterion 2).
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