Acquiring Cyprus Citizenship

2013-07-01

CYPRUS NATURALIZATION BY EXEMPTION

On 24/5/2013 the Council of Ministers of the Republic of Cyprus issued a decision whereby certain new criteria were introduced for granting Cypriot citizenship to foreign investors and businessmen by means of naturalization even though they do not fulfill the legal requirements set out in the Civil Registry Law.   

These new eligibility criteria for naturalization which particularly target applicants satisfying certain financial criteria, have significantly lowered the financial thresholds specified in the eligibility criteria for naturalization under the previous decision of the Council of Ministers in 2011 which used to be €10 million in relation to direct investments and business activities and €15 million in relation to bank deposits.

CRITERIA:

A foreign investor or businessman intending to apply for Cypriot citizenship must fulfill one of the following criteria:

(i)       Combination of investments and donation to a government fund

 The applicant must have made the following investments and donation:

(a)     an amount of €2 million for the purchase of shares and/or bonds of the national investment company that will be formed. The applicant must deposit the said amount at the Treasury of the Republic of Cyprus until the shares and/or bonds are issued.

(b)     an amount of €0.5 million as a donation to the Research and Technology Fund.

OR

(ii)     Direct investments

The applicant must have direct investments in the Republic of Cyprus of an amount of at least €5 million. Such direct investments can include the following:

(a)     Purchase of immovable property (houses, offices, shops, hotels etc or deployments of a similar nature, excluding unused land);

(b)     Acquisition of companies or businesses that are based and operate in the Republic of Cyprus;

(c)     Purchase of shares of public companies registered in the Republic of Cyprus;

(d)     Purchase of financial assets (e.g. bonds, securities, securities issued and registered in the Republic of Cyprus including those to be issued by the Solidarity Fund in accordance with the National Solidarity Fund Law of 2013);

(e)     Participation in a company/consortium of companies which undertook the execution of a public project.

 

In relation to conditions (a) to (d) above, the applicant must retain in his possession the related investments for a period of at least 3 years. In the case of a portfolio of shares or bonds, it has to be guaranteed that the value of the portfolio for the 3 year period will not be diluted below the specified amount.    

 

The Minister of Interior shall have the right for the period ending 30 June 2014, to decrease the said amount in respect of direct investments to €2 million for investors who participate in a special collective scheme of purchase of immovable property which will include the purchase of immovable property in the Republic of Cyprus  of a total value of not less than €10 million.

 OR

 (iii) Bank deposits

The applicant must have personal deposits in Cypriot banks or deposits of his privately owned companies or trust (in which he is a shareholder) in the Republic of Cyprus, of an amount of at least €5 million and on a 3 year fixed term deposit.

OR

(iv)  Combination of investments and donation to a government fund, direct investments and bank deposits

The applicant must possess a combination of the above amounting to €5 million.

OR

(v)   Business Activities

The applicant must be the shareholder or ultimate beneficial owner of a company (or companies) the management of which is in the Republic of Cyprus and in the last 3 years preceding the year of the application, the applicant must have paid into the Republic of Cyprus in the form of corporate tax, V.A.T. or other fees and taxes and in the form of remuneration for the purchase of business services (legal, accounting, auditing) at least €500.000 per annum.

Alternatively, if the applicant is a shareholder or ultimate beneficial owner of a company (or companies) the management of which is in the Republic of Cyprus, has established its headquarters in Cyprus and is employing at least 5 Cypriot citizens, then the minimum amount that must have been paid  for the above (corporate tax, V.A.T. or other fees and taxes and remuneration for the purchase of business services) should be at least €350.000 per annum in the last 3 years preceding the year of the application. If the applicant employs at least 10 Cypriot citizens, then the amount should be at least €200.000 per annum in the last 3 years preceding the year of the application.

For every such company (or companies) it is possible to file applications for 2 shareholders at the most, who should preferably hold the majority of the shares of the company.     

If the applicant has paid into the Republic of Cyprus fees and taxes (as explained above) of a smaller amount than the amounts mentioned above, a combination can be made with the criteria mentioned under points (i) or (ii) or (ii) above. The total amount of fees and taxes paid into the Republic of Cyprus and for the purchase of business services in the last 3 years, shall be deducted from the required investment to satisfy the criteria under points (i) or (ii) or (iii) above.         

 OR

(vi)    Persons whose deposits in the Bank of Cyprus or Laiki Bank have been impaired due to the measures implemented in both banks after 15 March 2013

The applicant must have suffered impairment on his deposit in one or both of the said banks amounting to a total of at least €3 million.

If the applicant has suffered an impairment in one or both banks amounting to a total of less than €3 million, he may still be eligible to apply if he invests in any additional investment under criteria (i) or (ii) above, for the remaining amount (to sup up to €3 million).

 

TERMS AND CONDITIONS:

Once the applicant falls under one of the abovementioned criteria he is additionally required to fulfill all the conditions set out below:

  • Clean criminal record: The applicant must submit a clean criminal record. In addition, a confirmation must be submitted stating that the applicant’s name is not included in the list of persons whose property is ordered to be frozen within the boundaries of the European Union.

 

  • Residence in the Republic of Cyprus: The applicant must have a permanent privately-owned residence in the Republic of Cyprus, the market value of which must be at least €500.000 excluding V.A.T..

 

  • If after period checks it is proved that  any of the above conditions has been breached then the naturalization may be cancelled.

 

DOCUMENTS THAT NEED TO BE SUBMITTED:

The applicant must submit application form M127 together with a fee of €2.000. The application form must be submitted together with the following depending the criterion under which he will be applying:

  1. 1.       Combination of investments and donation to a government fund

(a)     Receipt of donation to the Research and Technology Fund.

(b)     Receipt by the Treasury of the Republic of Cyprus for the purchase of shares and/or bonds of the national investment company that will be formed.

 

  1. 2.       Direct investments

(a)     Purchase of immovable property: Sale and Purchase Agreement, title of the property, evidence of submission of the agreement to the Land Registry, proof of payment of the agreed purchase price.

(b)     Purchase of a company/business: Sale and Purchase Agreement, proof of payment of the agreed purchase price, certificate issued by the Registrar of Companies confirming the shareholders of the company.

(c)     Purchase of shares: Share certificates (titles).

(d)     Purchase of financial assets: Proof of ownership and purchase of the financial assets.   

 

  1. 3.       Bank Deposits

(a)     Confirmation by Cypriot banks with regards to the 3 years fixed deposits of the applicant or of the companies of which he is the ultimate beneficial owner or of the trust to which he is the beneficiary.

(b)     In respect of company deposits whereby the applicant is the ultimate beneficial owner, an incorporation certificate issued by the Registrar of Companies and/or any other supporting document.

 

  1. 4.       Business Activities

(a)     Certificate of Incorporation issued by the Registrar of Companies.

(b)     Certificate of Shareholders issued by the Registrar of Companies or certificates showing that the applicant is the ultimate beneficial owner of the company.

(c)     Confirmation of the fees paid for the professional services. Such confirmation should be issued by the providers of such services.

(d)     Audited accounts of the company for the last 3 years before the year of submission of the application.

(e)      Confirmation by the Social Insurance Department in respect of payment of social insurance for the employees of the company.

  

  1. 5.       Impairments of the deposits in the Bank of Cyprus and Laiki Bank

(a)     Confirmation as to the amount impaired and the time of occurrence.

(b)     In the case of company deposits whereby the applicant is the ultimate beneficial owner, certificate of incorporation of the company issued by the Registrar of Companies and/or any other supporting document. 

 

PROCEDURE

When examining the applicant’s request the Ministry of Interior shall seek the views of the Ministry of Finance. Then a proposal will be submitted to the Council of Ministers for final decision. If the application is approved the applicant will pay the amount of €5.000 and will be issued a Certificate of Naturalization.

         

 

Notwithstanding compliance with the above criteria and conditions, the decision to grant Cyprus citizenship by exemption remains at the absolute discretion of the Ministerial Advisory Board and the Minister of Interior. 

 

Disclaimer: The information above is according to an official announcement of the Ministry of Interior on 24 May 2013. This information is for general information and should not be relied on for any commercial or investment decisions.

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