A Questions and Answers Guide To Cyprus Citizenship by Investment
Prepared by Margarita Hadjitofi (m.h@mhadlaw.com)
M. Hadjitofi LLC, Cyprus Law Firm
1.What is Citizenship by Investment?
Citizenship by investment is a process by which a country grants citizenship to eligible applicants which make a significant financial contribution into that country’s economy.
2.What are the benefits of being a holder of the Cyprus citizenship/passport?
Once an applicant is granted the Cyprus citizenship/passport he/she automatically enjoys all the benefits of a European citizen including the freedom of movement, of residence and of work within the EU. A Cyprus citizen can travel to any European Union country and in total to 158 countries worldwide without a visa.
The Cyprus citizenship also has educational benefits. Cyprus has two public universities, the University of Cyprus and the Cyprus University of Technology where tuition fees for undergraduate courses are free. Additionally, a Cyprus citizen has the right to study at any university within the European Union with the same conditions and fees as the national of that country. This can be very advantageous as many European universities have low or no tuition fees.
A Cyprus citizen has a right to healthcare in any of the 27 European Union countries and will be reimbursed for the amount had the healthcare taken place in Cyprus.
3.What is the legal framework for Citizenship by Investment?
The revised Scheme for Naturalization of non- Cypriot Investors by exception (“Citizenship by Investment Scheme”) was established by the Cyprus Council of Ministers by virtue of section 111A(2) of the Civil Registry Laws of 2002-2016. Section 111A(2) enables the Cyprus Council of Ministers to set conditions for the naturalization of investors from third countries that do not fulfill the requirements for naturalization in accordance with the Civil Registry Laws of 2002-2016.
4.Who is eligible to apply?
Any third country national that has:
- A clean criminal record;
- Provided all necessary documents including birth certificates, marriage certificates, passport photos and completed forms;
- Purchased a residence with a purchase price of at least Euro 500.000 plus VAT; and
- Has made a specified investment in Cyprus in accordance with the Citizenship by Investment Scheme,
is eligible to apply for Cyprus citizenship.
5.How many options are available under the Citizenship by Investment Scheme?
There are currently 4 options available.
6.What are these options?
The 4 options are:
Option 1: Investment in real estate, land development
This has become the most popular option. The applicant is required to make an investment of at least €2 million in real estate located in Cyprus.
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.
Option 2: Purchase or Establishment or Participation in Cyprus Companies or Businesses
The applicant is required to purchase shareholding in companies or organizations existing in Cyprus with an investment cost of at least €2 million. The funds received must be used towards financing the investment objectives of the organizations/ companies exclusively in Cyprus, based on a business plan. There is a minimum employment requirement of at least 5 Cypriots or citizens of other European Union member states.
Option 3: Investment in Alternative Investment Funds (“AIF”)or financial assets of Cypriot companies or organizations that are licensed by the Cyprus Securities and Exchange Commission
The applicant is required to buy units of at least €2 million from an AIF established in Cyprus that is licensed by the Cyprus Securities and Exchange Commission and whose investments are made exclusively in Cyprus or in investments that meet the criteria or are in areas approved by the Cyprus Ministry of Finance.
Option 4: Combination of Investments
The applicant is entitled to proceed with a combination of the above investment options (i.e. Option 1, Option 2 and Option 3), provided that the total investment amount will amount up to at least €2 million.
Within this option the applicant may purchase special government bonds of up to €500.000 and must hold onto the bonds for a period of 3 years.
7.What are the criteria for each of the options?
Option 1: Investment in real estate, land development
- Contract of sale;
- Title deeds or proof of registration of the contract with the land registry;
- Proof of payment of the agreed purchase price;
- Copy of a wire transfer to a Cyprus bank in the name of the seller;
- An evaluation certificate from an independent registered land surveyor, if required by the Ministry of Interior or the Ministry of Finance;
- In the case of land development, an investment plan for the development of the land.
Option 2: Purchase or Establishment or Participation in Cyprus companies or Businesses
- Agreement documenting the purchase or establishment or participation;
- Proof of payment of the agreed price;
- Certificate of shareholders issued by the Cyprus registrar of companies;
- Copy of the wire transfer of a Cyprus bank in the name of the company or business evidencing payment for the purchase or establishment or participation;
- Specific business plans;
- Copies of the employment contracts of the Cypriot or European Union citizens employed by the company or business;
- Confirmation from the Social Insurance Department as to the insurable income of the Cypriot or European Union citizens employed by the company or business;
- Copy of the Social Insurance Contributions for every Cypriot or European Union citizen employee;
- Registration Certificate (MEU1) or Permanent Registration Certificate for employees that are European Union citizens.
Option 3: Investment in Alternative Investment Funds or financial assets of Cypriot companies or organizations that are licensed by the Cyprus Securities and Exchange Commission
- Title/titles and other relevant documents of the financial assets/ units purchased;
- Copy of the wire transfer to a Cyprus bank in the name of the AIF or company or organization;
- A specific business/investment plan;
- Confirmation by the Cyprus Securities and Exchange Commission.
Option 4: Combination of Investments
- Proof from the Public Debt Management Office for the purchase of special government bonds;
- Copy of a wire transfer evidencing payment of the bonds into the bank account of the Treasury of Cyprus;
- Any document that might be requested either by the Ministry of Interior or the Ministry of Finance.
- Depending on the investment made, documents listed above under Option 1, Option 2 and Option 3.
8.Are there any residence requirements under Citizenship by Investment Scheme?
Unlike in the case of a Permanent Residency Permit holder who is required to visit Cyprus once every two years, there is no similar requirement for a Cyprus citizen/passport-holder under the Citizenship by Investment Scheme.
9.Is there a requirement to own a permanent residence home in Cyprus?
Yes, an applicant is required to purchase a residential home with a purchase price of at least Euro 500.000 plus VAT (the “Permanent Residence Home Requirement”). If an applicant has opted for Option 1 under the Citizenship by Investment Scheme, then the purchase of another permanent residence will not be required, provided that at least one of the housing units purchased under Option 1 is worth at least Euro 500.000 plus VAT thus fulfilling the Permanent Residence Home Requirement.
10.Does the spouse of the applicant need to apply separately from the main applicant and at what stage of the process can the spouse’s application be submitted?
Yes, the spouse of the main applicant is required to submit a separate application for citizenship and can do so together with the application of the main applicant so that both the main applicant and spouse acquire citizenship simultaneously.
11.Once an applicant has been granted the Cyprus citizenship/passport does his/her minor children automatically receive the Cyprus citizenship/passport?
No, this process is not automatic. After the main applicant has been granted the Cyprus citizenship a citizenship application for each minor child must be submitted. Importantly, the other parent must provide his/her consent so that the child can obtain the Cyprus citizenship.
12.Are the adult children of a successful main applicant also eligible to obtain the Cyprus citizenship/passport?
Yes, financially dependent adult children of the main applicant have the right to apply for the Cyprus citizenship and can only do so after the main applicant has obtained the Cyprus citizenship. Clarity has been given on the term financially dependent adult children and these are: (a) students up to 28 years old that are attending a university to obtain a diploma, undergraduate degree or masters’ degree but excludes a professional qualification such as a chartered accountant program or undertaking a barrister program; and (b) children with severe physical or mental disabilities that renders them unable to work.
13.Can the parents of a successful applicant also apply for the Cyprus citizenship/passport?
Yes, once the main applicant has obtained the Cyprus citizenship the parents of the main applicant can also apply for Cyprus citizenship. Importantly, parents also applying for citizenship must also satisfy the Permanent Residence Home Requirement by purchasing a home with a value of at least Euro 500.000 plus VAT.
14.Can the parents together with the main applicant collectively, acquire one permanent residence home and still satisfy the Permanent Residence Home Requirement?
Yes, it is possible for the main applicant and his/her parents to collectively acquire one permanent residence home in Cyprus provided that the total purchase price of such home is at least Euro 1.000.000 plus VAT (ie Euro 500.000 plus VAT + Euro 500.000 plus VAT).
15.Can the real estate to be purchased under Option 1 and the Permanent Residence Home be used property?
Yes.
16.Can land be purchased under the Citizenship by Investment Scheme?
Yes, land can be purchased under option 1 of the Citizenship by Investment Scheme provided an investment plan for its development is included in the citizenship application.
17.How does a citizenship applicant who is already the holder of a permanent residence permit and owner of a house with a value of Euro 300.000 plus VAT satisfy the Permanent Residence Home Requirement of Euro 500.00 plus VAT?
An applicant who is already the owner of a residence with a value of Euro 300.000 plus VAT is not required to purchase a new permanent residence home with a value of Euro 500.00 plus VAT but is required to purchase an additional residence (apartment/house/villa) with a value of at least Euro 200.000 plus VAT so that the Euro 500.000 plus VAT Permanent Residence Home Requirement is satisfied.
18.Does the main applicant/family member need to be the holder of a permanent residence permit prior to applying for citizenship by investment?
No, the main applicant/family member does not need to be the holder of a permanent residence permit prior to applying for citizenship. However, in accordance with the decision of the Council of Ministers dated 13.9.2016 the main applicant and his/her family members must prior to their naturalization as Cypriot citizens, hold a permanent residence permit in Cyprus for a period of six months. If the applicant (either the main applicant or family member) does not already hold a permanent residence permit, he/she may apply for such permit simultaneously with such individual’s citizenship application. The spouse of the main applicant and children under the age of 18 are considered dependents of the main applicant and therefore are not required to submit separate applications for a permanent residence permit. All other family members are required to submit separate applications for a permanent residence permit simultaneously with their citizenship application.
19.What happens to the Permanent Residency Permit once the main applicant/family members obtain citizenship?
A permanent residence permit is cancelled immediately once Cyprus citizenship is obtained
20.How are successful applicants notified?
Successful applicants/family members are notified by an official letter issued by the Ministry of Interior which is usually received by their lawyer.
21.What is the timing for applicants who do not already hold a permanent residence permit?
Due to the requirement that prior to an applicant’s naturalization as a Cyprus citizen he/she must be a holder of a permanent residence permit for a period of six months the timing is as follows:
Day 1: Submit the application form and supporting documents for citizenship. A confirmation that the citizenship application has been submitted will be issued.
Once the confirmation evidencing that the citizenship application has been submitted, proceed to submit the application form and supporting documents for the permanent residence permit. The biometric data of the applicant and his/her spouse are collected during the submission process.
Day 6: The permanent residence permit is issued.
Day 91: Three months after the submission of the citizenship application, the successful applicants will receive an official letter notifying them that their citizenship application has been approved.
Day 187: The successful applicants may proceed to take all the necessary actions to obtain citizenship including the issuance of a passport/ID card (6 months after the permanent residence permit is issued).
22.What is the timing for citizenship applicants who already hold a permanent residence permit?
The current timing is 3 months from the submission of the citizenship application.
23.Does the applicant/family need to visit Cyprus in order to obtain the Cyprus citizenship?
Yes, if the applicant/ family member is required to submit a permanent residence permit application simultaneously with the citizenship application because he/she is not a holder of a permanent residence permit then such individual(s) must visit Cyprus on the day the permanent residency permit application is submitted so that their biometric data (fingerprints and photograph) and signatures are collected. They are also required to visit Cyprus for the issuance of their Cyprus passport/ID.
24.Once the applicant has received the Cyprus citizenship can he/she proceed to sell the permanent residence home?
The main applicant is required to maintain a permanent residence home in Cyprus with a value of Euro 500.000 plus VAT for life. If the main applicant would like to sell the permanent residence home that was purchased for the purpose of the citizenship application then he/she is required to purchase another permanent residence home in Cyprus at the same value. This also applies in the case of the parents of the main applicant.
25.For how long is the main applicant required to keep the investments under the Citizenship by Investment Scheme?
Other than a permanent residence home which must be maintained for life, the main applicant must hold the investments under the Citizenship by Investment Scheme for a period of 3 years after the citizenship has been granted.
26.Can a high-ranking senior manager of a Cyprus company benefit from the Citizenship by Investment Scheme?
Yes, a high ranking senior manager of a Cyprus company is eligible to apply for citizenship provided that he/she received a remuneration that generate tax revenues in Cyprus of at least Euro 100.00 over a three year period and such tax has already been paid or prepaid. The company which employs the high ranking senior manager should have made the necessary investments under the Citizenship by Investment Scheme during 3 years preceding the date of the citizenship application and the Permanent Residential Home Requirement must also be satisfied.
27.Once an individual has been granted citizenship pursuant to the Citizenship by Investment Scheme can such individual proceed to work in Cyprus?
Yes, once an individual becomes a Cyprus citizen he/she is permitted to work in Cyprus. This is a benefit a Cyprus citizen has compared to a permanent resident permit holder under Category (f) or under Regulation 6(2) who is not permitted to work in Cyprus.
28.Can the Cyprus citizenship be revoked by the individual?
Yes, the Cyprus citizenship can be revoked by the individual provided he/she is at least 18 years old, of sound mind and is a citizen of another country. This can be achieved by submitting the necessary forms/documents to the Ministry of Interior.
29.Can the Cyprus citizenship be revoked by the Government?
The Council of Ministers may also proceed to revoke the Cyprus citizenship if this was obtained by fraud, fraudulent statements, due to important information being withheld or if a term or condition of the Citizenship by Investment Scheme has been breached.
For further information on the topic please contact Margarita Hadjitofi:
Telephone +35799438992