The new legislation increases scrutiny of foreign direct investments (FDI) that affect national security or strategically important sectors. This move marks an important step toward enhancing the country’s economic resilience and aligning it with European regulatory frameworks.
Focus on Strategic Sectors
The law targets so-called “sensitive strategic areas” — fields that are vital for the functioning of the state, economy, and infrastructure. To oversee this, Cyprus will establish a national foreign investment monitoring mechanism, which will act as the main tool for controlling capital inflows from abroad.
Alignment with EU Regulations
The adoption of this law was prompted by the need to harmonize national procedures with the EU Regulation on the Screening of Foreign Direct Investments, which came into force in October 2020. This EU framework established a pan-European cooperation network between member states and the European Commission to safeguard public order and security when accepting capital from outside the Union.
By joining this system, Cyprus becomes part of a unified European network that tracks strategic investments and prevents potential risks stemming from the influence of foreign entities or governments on critical infrastructure, energy, transport, telecommunications, and defense.
Investment Thresholds and Scope
Under the new law, all foreign investments worth €2 million or more will fall under the supervision of the national mechanism. The regulation also covers real estate and land acquisitions, but only when these assets are deemed critical to essential infrastructure.
The government will soon conduct a nationwide mapping of such strategic assets. Until that process is completed, the Ministry of Finance will issue special guidelines to help investors navigate the regulatory framework.
The law also clarifies that dual citizens are not considered foreign investors, thus avoiding unnecessary administrative barriers for members of the Cypriot diaspora and EU nationals.
Oversight, Penalties, and Transparency
Foreign investors subject to this legislation must notify the national investment control authority in advance of their intention to invest in Cyprus. After assessing the details, the government will have the power to impose conditions on transactions or, in cases of non-compliance, to levy fines.
This framework aims to ensure transparency, prevent participation of companies with dubious capital origins in strategic projects, and strengthen trust between Cyprus and its European partners.
Political Debate and Law’s Significance
During the parliamentary debate, the AKEL party proposed several amendments, which were ultimately rejected by a majority vote. Despite political differences, lawmakers agreed that the adoption of this law is a necessary step to protect national interests.
Experts emphasize that this mechanism is not meant to discourage foreign investment, but rather to create a clear and secure environment for investors committed to Cyprus’s long-term development.
Outlook: Cyprus as a Reliable Investment Destination
According to the Ministry of Finance, foreign investment inflows to Cyprus have shown steady growth in recent years. In 2024 alone, FDI exceeded €1.2 billion, with strong interest from investors in the EU, the Middle East, and Asia.
The new law is expected to strengthen Cyprus’s reputation as a safe and transparent investment hub and increase confidence among international partners. In the long run, it will foster a more stable and secure economic environment, where national security and investment growth go hand in hand.
By adopting this legislation, Cyprus demonstrates its commitment to developing its economy while maintaining control over strategic resources and safeguarding national interests.