Why live, work and invest in Cyprus? To name but a few reasons, you get at least 340 days of sunshine, sounds good, right? You can enjoy a natural paradise, a diverse multicultural place, with one of the lowest crime rates in the world and truly blessed by nature, with soft sandy beaches, crystal clear waters and proud mountains. A range of high-level public and private schools are available to choose from, highly accessible healthcare and ample recreation and hospitality options to keep you entertained. But there is much more to the island than meets the eye: it’s a reputable international business hub for doing business, supported by political stability and a robust legal system based on common law principles; and offers diverse opportunities across a number of economic sectors to invest in and significant tax benefits to capitalize on.

Not quite convinced? Here’s a little more to go on. In past year, the Cypriot government has demonstrated its commitment and determination by achieving double-figure growth rates in both Foreign Direct Investment and attracting high net worth individuals to settle down and do business in or through Cyprus. For this very reason, and to keep the momentum going, it has recently introduced simplified procedures for issuing permanent residencies and citizenships in Cyprus that have made the possibilities for relocation so much easier.

Permanent Residency in Cyprus

There are two methods by which one can obtain permanent residency in Cyprus, the fast track option and the normal track option.

Fast track option:

To start off, the interested party should submit a confirmation letter from a financial institution in Cyprus that the minimum amount of 30,000 euros has been deposited from abroad into an account in Cyprus. This shall be pledged for a minimum period of three years.

Then, prove that an annual income of at least 30,000 euros from abroad has been secured. This annual income should be increased by 5,000 euros for every dependent person of his/her family and by 8,000 euros for every dependent parent or parent in law.

Additionally, the applicant must have acquired real estate of at least a total market value of 300,000 euros. The application should be accompanied by the title deeds or the sale contract of the property, which has been officially filed at the Land Registry, and official payments receipts of at least 200,000 euros, not including value added tax (VAT). A key point of note is that the property need not be in the applicant’s name but can be in his/her spouse’s name or in the name of a legal person legally established in the European Union and that the sole shareholder is the applicant or his/her spouse. Where a purchased property is alienated without an immediate replacement with another property, the immigration permit is cancelled.

The immigration permit provided to third county applicants covers his/her spouse and their children under the age of 18. Two spouses can be granted two separate immigration permits if a separate application is submitted, with one of them not being required to satisfy the criteria of making a bank deposit, securing annual income and purchasing property. In the event of death of an immigration permit holder, the spouse is granted the permit.

Furthermore, except for the economic criteria/conditions that an applicant must satisfy there are also other qualitative criteria that an applicant must satisfy too. These include:

  1. Have a clean criminal record from their country of origin or residence (if it differs).
  2. Not be a listed person whose assets have been frozen as the result of sanctions within the boundaries of the European Union (EU).
  3. His/her spouse must confirm that they do not intend to undertake any sort of employment in Cyprus.
  4. The holder of an immigration permit is obliged to acquire a residence in Cyprus within one year from the date of the issuance.
  5. Holders of the permit and his/her dependent persons are obliged not to be absent from the Republic for more than two years.

Any violation of the above will lead to the immigration permit being automatically cancelled.
A brief outline of the process to obtain an immigration permit begins with the submission of the application and the required supporting documents directly to the Civil Registry and Migration Department personally or through an authorized representative. A fee of 500 euros is paid for the submission of the application. When applications are submitted by an authorized representative, these must be accompanied with an authorization letter from the applicant stating the particulars, full address and their contact details. The application is then processed by the Civil Registry and Migration Department and submitted to the Ministry of Interior through the Permanent Secretary of the Minister of Interior. An interview with the applicant may need to be conducted if deemed necessary by the Permanent Secretary of the Ministry of Interior. Finally, the decision is communicated to the applicant or the authorized representative by the Ministry of Interior. The procedure described for the examination of the application shall not exceed two months from the date a complete application is submitted.

Normal track option:

The other method to obtain a permanent residence in Cyprus is known as the normal track option. In this case, the applicant must rent or purchase a house or an apartment with a minimum market value of no less than 300,000 euros. Also, the applicant must secure a minimum annual income of at least 10,000 euros from sources outside Cyprus and at least 5,000 euros extra for every dependent person. There is no requirement for employment in Cyprus under in this option. The same qualitative requirements, included also under the fast track option continue to apply. Under this option, the applicant is free to travel to and from Cyprus without any restrictions. The main benefit of the normal track option is the lower threshold of annual income required of 10,000 euros in contrast with the fast track option that requires annual income of 30,000 euros.

The most important difference between the two immigration permit methods is that under the normal track option, completion of the procedure can take up to one year or even longer, while under the fast track option the application procedure is completed within two months.

Citizenship by investment

Naturalizations through citizenship by investment programs, offer a gateway and stepping stone to what might be in today’s dynamic world, a physical person’s most effective tax risk exposure management tool. High net wealth individuals who wish to relocate to the EU can now do so through such a program, in return for investing in Cyprus. The recently revised criteria for granting a Cypriot citizenship by investment requires the applicant to make an investment of 2 million euros, excluding VAT in any qualifying investment category such as:

  1. The acquisition or development of real-estate projects (acquisition of land is not considered a qualifying investment), or
  2. Purchase or create or participate in a Cypriot business or company that is based and operates in Cyprus. Such a business or company should be able to demonstrate its physical substance in Cyprus with significant activity, turnover, and employment of at least five Cypriot or EU citizens, or
  3. Invest in an Alternative Investment Fund, financial assets of Cypriot companies or Cypriot organizations that are licensed by the Cyprus Securities and Exchange Commission, or
  4. Any combination of the above amounting to at least of 2 million euros, which may also include the purchase of governmental bonds of the Republic of Cyprus with a maximum amount of 500,000 euros.

Additional eligibility requirements for obtaining a Cyprus citizenship by investment include:

  1. Have a clean criminal record from their country of origin or residence (if it differs).
  2. Not be a listed person whose assets have been frozen as the result of sanctions within the boundaries of the European Union (EU).
  3. Acquire a private residence of at least a total market value of €500.000 and must be fully paid.
  4. Prior to naturalization as a Cypriot citizen a residence permit in Cyprus must be obtained.

The applicant may also add dependents to the application including his/her spouse, children (up to age of 18 or between 18 and 27 if they are financially dependent on the main applicant) and parents. A residence permit can be issued within five days from the date of submitting a joint application for residency and citizenship by investment.

Depending on the type of investment, relevant documentation will also have to be submitted as part of the application.

The application process is similar to that for permanent residency. Application submission fees amount to 2,000 euros and Certificate of Naturalization issuing fees are 5,000 euros. The expected time frame for the completion of the process is approximately two months. The Council of Ministers has complete discretion on the approval of any Citizenship application.
Here are a few of the key benefits acquiring Cyprus citizenship by investment has to offer:

The right to live and work within the countries of the EU

Citizenship can be passed on to future generations

Free movement of goods, services, and capital

Visa-free travel to approximately 160 countries, including Canada

Dual citizenship is allowed.

Tax residency:

Citizenship does not automatically equate to tax residency. Yes, there is a difference but nonetheless it’s a starting point. A new law for determining tax residency of individuals in Cyprus has been added in addition to the 183-day rule. The below mentioned three criteria must all be met cumulatively for an individual to be considered a tax resident of Cyprus:

  1. Remains in Cyprus for at least 60 days in the year of assessment, and
  2. Carries out any business in Cyprus and/or is employed in Cyprus and/or holds an office to a person resident in Cyprus at any time during the year of assessment, and
  3. Maintains a permanent residence in Cyprus which is owned or rented by such individual

To be considered as a tax resident of the Republic of Cyprus, the above will apply only in the case where an individual does not remain in any other state for one or more periods, which does not exceed 183 days in total, within the same year of assessment and who is not a tax resident in any other state for the same year of assessment. As a Cyprus tax resident, you will be taxed on your worldwide income.

A final point of interest is that individuals who are Cyprus tax residents but are not domiciled in Cyprus will be exempt from Special Defence Contribution (SDC) which are taxes levied on dividends, interest, and rental income.

It’s a competitive world out there, several countries offer similar investments programs. However, Cyprus distinguishes itself through fast track options for obtaining citizenship and permanent residency. Balancing your personal and business desires is always a tough call, so why not consider your center of interest and make Cyprus your strategic hub!