Introduction
On the 15th of May 2019, the new Cyprus Investment program requirements have been enforced. The new changes have introduced a few main changes the main ones being a government donation ranging from €75.000 to €150.000 depending on the investment and an enhanced due diligence process for the applicants.
This article examines the new citizenship changes and the requirements for a successful citizenship application in Cyprus after the 15th of May.
What does not change
The new government requirements for a citizenship application by investment in Cyprus have not changed the core of the program. The main areas of investment remain real estate and Cypriot businesses or Alternative Investment Funds (AIFs).
In addition, no residency or language requirements have been imposed and Cyprus still permits the dual citizenship of applicants. The spouse of the applicant, the parents and children up to 28 can obtain a Cypriot passport on the basis of the initial investment.
What changes with the new guidelines on the Cyprus Investment Program
The main changes introduced by the new guidelines on the Cyprus Investment Program are the following:
Government Donation:
From the 15th of May 2019, the Cyprus Investment Program leading to Cyprus nationality requires a donation to the Research and Innovation Foundation of €75.000 plus a donation of €75.000 to the Cyprus Land Development Corporation (to support housing for the less fortunate).
The €75.000 donation to the Research and Innovation Foundation may be avoided if the investment includes a €400.000 investment in either:
1. A certified innovative enterprise; or ,
2. A company whose operations fall within the primary or secondary sectors of the economy (excluding constructions); or,
3. A company in the sectors of research and development education, health and renewable energy sources.
The ability to avoid donation in certain circumstances illustrates the Cypriot government’s intention to promote investments in education, health, and renewable energy sources. Other government incentives have been given in the past to attract investments in these areas.
Exit Strategy
The government guidelines introduced a change in the time of sale of the investment, increasing it by 2 years. The successful applicant can sell the investment after 5 years instead of 3 years as it was before the changes. This does not affect the residence of the investor as the investor must always have a €500.000 or more residence in Cyprus. If the investor wishes to sell the residence with which he or she acquired citizenship, he must replace it with another residence of €500.000 or more.
Enhanced Due Diligence
The government introduced an enhanced due diligence process for the applicants of the Cyprus Investment Program scheme. It seems that this was the Government’s response to pressures from the EU and the US. We believe this will not make a difference to the applicants for the Cypriot nationality as sufficient due diligence checks were conducted anyway from the banks and the professional advisors of the applicants. Some Cypriot banks require an enhanced due diligence report be taken from an independent foreign company before accepting money for Cypriot citizenships. As it turned out, this may make a funds transfer to Cyprus faster.
Schengen Visa
After the 15th of May 2019, the applicants for Cypriot citizenship under the Cyprus Investment Program must be holders of a valid Schengen visa. Again, this seems as a measure of the government to respond to pressures from the EU for its citizenship by investment scheme. If a government of a European country would give a Schengen visa allowing the applicant travel privileges through the Schengen Zone, how can any of the Schengen Zone countries object to the provision of Cypriot citizenship to the same person?
The requirement for a Schengen Visa is excluded if the applicant does not require a visa for traveling in the European Union.
Rejection of citizenship application from another country
The Cyprus government will not approve a citizenship application of the applicant has been rejected in another European Country. The applicant will have to provide a declaration to this effect.
For further information on Cyprus citizenship by investment program, you can look in our guide or can send us an email.