Starting from April 2, 2026, Cyprus is introducing a screening mechanism for foreign direct investments, establishing for the first time a clear system of control over strategic transactions. State authorities will now have the power to approve, restrict, or even block investments if they may affect national security or public order.
Finance Minister Makis Keravnos emphasized that this decision is crucial for protecting national interests. According to him, the introduction of such a mechanism is a logical step, taking into account the recommendations of the European Commission, which has long urged all EU countries to implement similar control tools.
How the new system will work
Responsibility for screening investments will lie with the Ministry of Finance, which will act as the central authority in this process. It will be equipped with tools to conduct a full assessment of transactions, including the ability to impose conditions, reject investments, or review already completed agreements.
A special advisory committee will be established to assist the ministry, comprising representatives from key departments, including defense, energy, interior, and transport. This interagency approach will allow investments to be evaluated from multiple perspectives and help minimize potential risks.
Which investments will fall under control
The new regime primarily targets investors from countries outside the EU, the European Economic Area, and Switzerland. However, companies registered within the EU may also be subject to review if they are effectively controlled by third-country investors with a stake of 25% or more.
Particular attention is given to strategic sectors of the economy, including energy, tourism, transport, healthcare, communications, defense, financial services, and dual-use technologies. The scope of control also covers transactions involving land and real estate, which is particularly significant for the Cypriot market.
If an investment exceeds €2 million and involves the acquisition of at least 25% of a strategically important company, it must be approved in advance by the state. Even after completion, authorities retain the right to review the transaction within five years if it was not properly declared.
Why this matters for Cyprus’s economy
In recent years, Cyprus has actively attracted foreign capital, particularly in real estate, tourism, and technology. However, the absence of a formalized screening mechanism raised concerns both domestically and at the EU level. This is now changing. The new system allows the economy to remain open while introducing safeguards to protect the country’s strategic interests. Parliament members note that this is a modern tool that helps balance investment attractiveness with security.
It is worth noting that Cyprus had previously been one of the few EU countries without such legislation. Alongside it, only Croatia had not yet implemented similar measures, although the EU as a whole is moving toward mandatory adoption of such mechanisms across all member states.
What will change for investors
From April 2026, all transactions falling under the law will be subject to a mandatory notification and screening process before completion. This means investors will need to factor in review timelines and regulatory requirements in advance. Authorities are already urging businesses and international investors to carefully study the new rules to avoid risks and delays.
Despite stricter controls, experts believe that increased transparency and predictability may, in fact, boost confidence in the Cypriot market. The introduction of the screening mechanism aligns with broader regulatory tightening across Europe, driven by geopolitical risks and growing interest in strategic assets such as energy and digital infrastructure.
For Cyprus, this marks a shift toward a more mature economic model, where investments are viewed not only as a source of growth but also as a factor of national security. In the long term, such changes may make the market more resilient and better protected from external threats, while maintaining its attractiveness for international business.