Scheme for Naturalization of Investors in Cyprus by exception

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Sydney Wilcox
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1 DECEMBER 2016 ISSUE 5 [STORY TITLE] [Story Subtitle or summary] Scheme for Naturalization of Investors in Cyprus by exception Invest in Cyprus Cyprus is the third largest island in the Mediterranean Sea, located at the eastern end of Europe, at the crux of the busy shipping and air routes linking three continents, Europe, Africa and Asia. This small but dynamic country has long established a strong reputation as a centre of excellence for international business activities, retaining unique clusters of expertise and service capability to support key growth sectors of the economy. Cyprus has a modern, free-market, service-based economy with an effective and transparent regulatory and legal framework offering international investors and domestic businesses confidence to invest, grow and prosper. Capitalising on its competitive advantages, driving and enhancing both traditional and new economic sectors and continuously improving and enhancing its facts. This information is not intended to create, and receipt of it does not constitute, a lawyer-client

2 business environment, Cyprus has developed into a destination of choice for doing business. A business friendly environment and advanced infrastructure, combined with a high quality of life, allows investors and their families to enjoy the best of both worlds. Ease of doing business, safety, stability, year-round sunshine, beautiful beaches and mountain sceneries and centuries of art and culture best describe one of the most attractive destinations in the European Union for both living and doing business. Legal Framework Subsection (2) of Section 111A of the Public Registry Law 141(I)/2002 (Laws ) provides that the Council of Ministers may, under any conditions it determines as appropriate, to allow the Naturalization of foreign entrepreneurs. Therefore, on the 19 th of March 2014 the Council of Ministers revised its previous decision dated 24 th of May 2013 concerning the criteria and conditions for the Naturalization by exception of non-cypriot entrepreneurs investing in Cyprus. On the Council Of Ministers approved the amended scheme regarding the provision of Cypriot citizenship to foreign investors, which is now in force. Eligibility The following non-cypriot natural persons who meet one of the set financial criteria, are eligible to apply for the acquisition of Cypriot Citizenship: Natural persons, either personally or through a company in which they are participating as shareholders, in proportion to their holding percentage. Through investments made by their spouse or jointly with the spouse. As high-ranking senior manager of a company that meets one of the financial criteria below (provided that they receive a remuneration that generates paid tax revenues of at least over three years). Financial Criteria Eligible persons who meet one of the following financial criteria may apply for the acquisition of the Cypriot Citizenship:

3 A1. Investment in real estate, land development and infrastructure projects of at least 2m. the investment objectives of these companies exclusively in Cyprus, based on a specific investment plan. The applicant must have made an investment of at least 2,0 million for the purchase or construction of buildings or for the construction of other land development projects (residential or commercial developments, developments in the tourism sector) or other infrastructure projects. It is noted that investment in land under development is included in this criterion, provided that an investment plan for the development of the purchased land will be included in the application. It is understood that investment in land that is situated in a building zone of zero development, is excluded. A2 Investment in financial assets of Cypriot companies or organisations of at least 2m. The applicant should have made a purchase or should have participated in companies or organizations established and operating in the Republic of Cyprus with investment costs of at least 2,0 million. The invested funds shall be channeled towards the financing of The applications shall be evaluated to verify that the companies or organizations have proven physical presence in Cyprus, with significant activity and turnover and employ at least five (5) Cypriot or citizens of European Union member-states. The minimum number of employees shall increase, if more than one applicant invest simultaneously or almost simultaneously in the same business or company. In addition, the employees of the companies need to have legally and continuously resided in Cyprus during the five years preceding the application submission date. A3. Investment in Alternative Investment Funds or financial assets of Cypriot companies/ organisations that are licenced by the Cyprus Securities and Exchange Commission of at least 2m. The applicant should have bought units of at least 2,0 million from alternative investment funds (AIF) established in the Republic of Cyprus, licensed and supervised by the CySec and whose investments are made exclusively in the Republic of Cyprus, in

4 investments that meet the criteria of this Scheme or in areas approved by the Minister of Finance. In order to confirm that the investments that meet the criteria of the current Scheme will be kept for at least three years, the manager or the auditor of the Fund shall inform in writing and on an annual basis, the Ministries of Finance and Interior with reference to the value of the initial investment. The purchase of financial assets of Cypriot companies or organizations of at least 2,0 million, such as bonds, bills and securities, issued with the approval of the CySec, by companies that have proven physical presence and substantial economic activity in the Republic of Cyprus, and have as a purpose the financing of the investment plans of these companies or organizations exclusively in Cyprus, based on an investment plan, fall under this criterion. It is noted that the purchase by an AIF of units of other AIFs is not considered eligible. A4. Combination of the above criteria, which can also include investment in government bonds of up to The applicant may proceed with a combination of the above investments, provided that the total investment will amount up to at least 2,0 million. Within this criterion (combination of investments) the applicant may purchase special government bonds of the Republic of Cyprus, up to , which will be issued by the Public Debt Management Office of the Ministry of Finance, on condition that the investor will retain these bonds for a three year period. The characteristics and the terms of these special bonds will be determined by the General and Special Issue Terms of the Government Bonds of the Republic of Cyprus. Investments in government bonds through the secondary market are not considered eligible. Terms and conditions A. Clean Criminal Record: The applicant must have a clean criminal record. Furthermore, his name must not be included on the list of

5 persons whose property is ordered to be frozen within the boundaries of the European Union. B. Residence in the Republic of Cyprus: In all cases listed in financial criteria, the applicant must hold a permanent privatelyowned residence in the Republic of Cyprus, the purchase price of which must be at least , plus V.A.T. It is noted that members of the same family, which apply separately as investors, can collectively acquire a residence, provided that the total value of this home-property covers the amount of per each applicant. In case that the purchase price of the permanent privately-owned residence is more than , the amount beyond will be considered as a contribution for the fulfilment of the financial criteria as determined above. Moreover, in case the applicant has invested exclusively in residential unit(s) for the purposes of fulfilling the Financial Criteria and provided that at least one of them is worth at least plus VAT, he/she shall NOT be obligated to buy another permanent privately-owned residence in Cyprus. Effectively, therefore, in this case his/her investment can be 2.0 million instead of 2.5 million. The permanent privately-owned residence must be kept for life (as opposed to the other investments which must be maintained for at least three (3) years). C. Residency in Cyprus: Before the applicant is naturalized, he/she must possess residence permit in the Republic of Cyprus. If the applicant does not already have a residence permit, he may apply for permanent residency on the basis of Regulation 6 (2) of the Aliens and Immigration Law, simultaneously with the application for naturalization. In the event that the application for permanent residency is submitted solely for naturalization purposes pursuant to this Scheme, the terms and conditions of this Scheme shall apply and no additional requirements are imposed.

6 The aforesaid prerequisites apply also to adult family members of the investor who are going to apply for Naturalization. If the application for naturalization is rejected for any reason, the permanent residency which might have been acquired in accordance with the provisions of the Scheme shall be cancelled forthwith. Family members The Decision of the Council of Ministers provides for the grant of the Cypriot citizenship to the spouse, the cohabitant, the parents as well as to the financially dependent adult children (eighteen years old or above) of the investor. Neither the spouse or the cohabitant nor the children are obliged to meet any financial criteria. 1. The husband, wife, cohabitant, parents and any financially independent children over the age of 18 of the businessman/ investor, who had acquired Cypriot citizenship pursuant to this Scheme, may also acquire the Cypriot citizenship, provided they shall apply to the Minister of Interior in the prescribed manner (M127). The term cohabitant has the meaning ascribed to it by the Civil Cohabitation Law, 184(I)/ The application of the Investor and the application for the naturalization of his/her spouse or cohabitant may be submitted simultaneously. The parents and the financially dependent adult children of the Applicant/Investor shall be entitled to apply for citizenship, only after the naturalization procedure of the Applicant/Investor has been successfully completed. 3. It is clarified that: The parents of the Investor must acquire a permanent privatelyowned residence in the Republic of Cyprus, the purchase price of which must be at least , plus V.A.T. It is provided that the Investor and his/her parents may jointly purchase the residence, provided that its total value shall be at least plus VAT. The financially dependent adults are defined as follows: (a) Students up to the age of 28 who study at an institution of higher education and attend a full-time program aiming to

7 obtain an undergraduate degree, such as certificate, diploma, higher diploma, Bachelor s or Master s degree. Foundation courses fall under this definition provided they last for no more than two six-month semesters. Any studies or courses connected with the acquisition of professional titles, such as Certified/Charter Accountant, Barrister etc., are not included. (b) Persons whose mental or physical handicap renders them incapable to exercise any kind of job. Any applications that have been submitted on the basis of the previous Scheme shall continue to be valid and run based on the terms and conditions provided therein. However, any applicants who wish to reapply under the terms of this new Scheme, has to withdraw their pending application first. Our Law Office, has an extensive experience on naturalization of Investors in Cyprus by exception, therefore we: Advise potential investors on legal and regulatory framework governing the naturalization scheme, and on procedural implications and conditions set by competent Ministry and any other competent public authority. Advise potential investors for the requested documentation by the respective competent Ministry for each kind of investment, as classified by the Naturalization Scheme. Undertake collection and/or drafting of requested documentation that potential investor should submit to the competent Ministry for each kind of investment. Maintain overall supervision of the naturalization process, being in continuous contact with the Competent Ministry. Collaborate with real estate developers advising on a potential purchase of a house which is one of the

8 requirements needed for the naturalization process. Undertake due diligence for legal aspects of any kind of investment. Cypriot Citizenship by Investment can be obtained within 3-6 months Cyprus is a common law jurisdiction Benefits of acquiring Cyprus Citizenship by Investment Citizens have the right to live and work within the 28 countries of the EU. Protection by the diplomatic or consular authorities of any EU country Right to vote and stand for European Parliament elections Free movement of goods, services and capital Visa-free travel to over 157 countries including the EU and Canada Citizenship can be passed to future generations by descent No need to renounce previous nationality as Dual citizenship is allowed. THE FIRM Papantoniou & Papantoniou L.L.C. was founded in 1987, by Antonis S. Papantoniou. It is an esteemed law firm that provides an extensive range of high quality legal services to local and international clients. The areas of practice in which the firm specializes are: Corporate & Commercial Law International Tax & Trusts Admiralty and shipping law. Energy Law Litigation & Arbitration Projects and Infrastructure Mergers & Acquisitions Banking & Finance Law Investment Law

9 Intellectual Property Law Wills & Probate Debt Recovery Since 2004, the firm has been a member of European Law Firm (E.L.F.), an international organization consisting of law firms from every European country. E.L.F. is a sophisticated and cohesive network of independent dynamic law firms who know each other personally and collaborate to offer clear, cross-border legal advice and legal services across Europe and beyond. Membership is by invitation only and is limited to one representative per country. OUR SERVICES Papantoniou & Papantoniou LLC is comprehensively staffed with associate advocates and the necessary secretarial support. The firm is active in almost all aspects of the Law, including, but not limited to: Corporate & Commercial Law Services Our firm s Corporate Department offers a comprehensive range of services domestically and internationally. Our network, extensive knowledge and experience constitute a significant opportunity for Cypriot entrepreneurs to expand their business operations globally. However, we also represent the interests of foreign investors and entrepreneurs. Drawing from our rich experience in the services sector and long-term ties with professional associates, we can provide the respective fiduciary services to foreign entrepreneurs regarding the management of a Cypriot company. Furthermore, our firm is a qualified Nominated Advisor NOMAD), approved by the Board of Directors of the Cyprus Stock Exchange. Tax & International Tax Law The firm advises clients in a range of fields of taxation such as Corporate Tax, Income Tax, Property Tax, Trusts, etc. Moreover, the firm also provides services and advice on International

10 Tax Planning by assisting clients to utilize a cost-efficient tax structure through a Cyprus company and through the setting-up of International Trusts. Intellectual Property Law We provide advice and assistance on the acquisition, registration and protection of all types of intellectual property in Cyprus, the European Union and worldwide to clients, companies and organisations wishing to safeguard their IP rights (patent, trademark, and copyright). Shipping Law Cyprus plays a prominent role as a leading shipping centre. Tax benefits, combined with economic and the other significant benefits, make Cyprus the perfect choice for ship owners, charterers and ship managers. Papantoniou & Papantoniou LLC is a leading Cypriot law firm in the area of Admiralty and Shipping Law. The firm offers a range of services to ship owners, freight forwarders, insurers and charterers and has experience in resolving legal disputes that may arise in this area. Litigation Our litigation department has extensive experience and a proven track record in handling a wide range of claims and disputes including: Company Disputes Banking Disputes Insurance Claims Debt Collection Stock Exchange cases Employment Law Family and Matrimonial Disputes Energy Papantoniou & Papantoniou LLC s comprehensive energy sector practice includes oil and gas, power, and renewables, providing strategic assistance clients encompassing the entire energy value chain, from oil majors, independents and transportation companies to power generators and utilities, financial institutions and large customers. Immigration - Investments. Our firm deals with all matters relating to immigration law and citizenship

providing assistance with the identification and

11 applications through the Citizenship through Investment scheme and the conventional route, providing assistance with the identification and securing of suitable and qualifying immovable property.

This article/guide is intended to provide the reader with information on the policy of the Government dated 13 th September 2016 on the:

This article/guide is intended to provide the reader with information on the policy of the Government dated 13 th September 2016 on the: NATURALIZATION OF INVESTORS IN CYPRUS BY EXCEPTION DESCRIPTION OF