The Cyprus Ministry of the Interior has published a new program to attract investors.
A new Plan for Foreign Investors is coming into force to replace Cyprus Citizenship by Investment Program which was cancelled in October.
The new investment program allows foreign investors to obtain a residence permit in Cyprus if the applicants fit all criteria. The Minister of Internal Affairs has already presented the new plan to the Cabinet.
1. LEGAL FRAMEWORK
1.1 In accordance with the provisions of paragraph 6 (2) of the Immigration Law, the Minister of Internal Affairs of Cyprus informed the Council of Ministers and decided to issue an immigration permit to applicants from third (non-EU) countries in cases where the investment meets the criteria.
1.2 The applicant must meet one of the investment criteria specified in section 2.1, as well as the quality criteria in section 3 (see below). It must be proven that the money to be used for investment comes from abroad.
2. INVESTMENT CRITERIA
2.1 The applicant must invest at least 300 thousand euros in one of the following investment categories:
- (A) To buy a house / apartment: the purchase of a house or apartment from a developer. It must be a new building worth at least €300,000 (plus VAT).
- (B) To buy real estate (excluding houses / apartments): the purchase of other types of real estate, such as offices, shops, hotels or similar facilities, or their combination for at least of €300 thousand. These properties can also be resold.
- (C) To invest in a Cypriot company operating and staffing in Cyprus: an investment of € 300 thousand in the share capital of a company incorporated in the Republic of Cyprus, based and operating in the Republic of Cyprus and having a proven physical presence in Cyprus and five (5) or more employees.
- (D) To invest in shares of a Cyprus Collective Investment Organization (type AIF, AIFLNP, RAIF): an investment of € 300,000 in shares of the Cyprus Mutual Investment Association.
Any withdrawal of investments without immediate replacement with the same or greater value by the residence permit holder must comply with the conditions set forth in this document and will entail the activation of the license cancellation procedure in accordance with the provisions of Article 6 of the Aliens and Immigration Rules.
2.2 The applicant must, in addition to the investment in accordance with section 2.1, also prove that they have at their disposal a guaranteed annual income of at least EUR 30 thousand.
The annual income increases by 5 thousand euros for each member of the dependent family and by 8 thousand euros for each dependent parent (of the applicant and / or of the spouse). This income may come from salaries, pensions, stock dividends, permanent deposits, rents, etc., coming from abroad in cases where the applicant decides to invest in accordance with regulation 2.1 (A). When calculating the total income, the income of the applicant's spouse may also be taken into account.
In cases where the applicant chooses to invest in accordance with sections 2.1. (B), 2.1. (C) or 2.1. (D) the total income or part of it may also come from sources located in Cyprus.
3. OTHER CRITERIA
3.1 The applicant and their spouse must provide a criminal record from their country of residence stating that they do not pose a threat to public order or safety.
3.2 The applicant and their spouse will confirm that they do not intend to work in the Republic, except that they are working as directors in the company in which they have chosen to invest in accordance with these provisions.
3.3 In cases where the investment does not relate to the share capital of the Company, the applicant and / or his spouse may be shareholders of companies registered in Cyprus and dividend income in such companies cannot be considered as an obstacle for obtaining this residence permit. They can also work as directors in such companies.
3.4 In cases where the applicant chooses to invest in accordance with sections 2.1. (B), 2.1. (C) or 2.1. (D), they must provide information about their place of residence in Cyprus (for example, a title deed), or documents proving the purchase or lease of real estate.
4. LEGAL ISSUES
4.1 Investing in a house / apartment or other real estate:
The applicant submits (besides the application) a document of property ownership or a purchase document with the participant name or their spouse, submitted to the Department of Land Resources for a house or other real estate worth at least EUR 300 thousand (plus VAT if applicable), and official receipts of at least EUR 200 thousand (excluding VAT), regardless of the date of delivery of the property.
When submitting an application, it is necessary to provide evidence that the investment money came from abroad and is not a product of internal borrowing (money transfers, receipts for payment of foreign cards, bank certificate). The rest of the investment value must be returned to the seller's bank account at a Cypriot bank.
It should be noted that the purchase of real estate will be accepted even if it is made by a legal entity in which the applicant and / or their spouse are the sole shareholders or ultimate beneficiaries and which is legally registered in the Republic of Cyprus or in another EU or EEA country.
Regarding clause 2 (the purchase of a house / apartment), it is said that:
- (a) Applicant may purchase two (2) properties (apartments or houses) provided the total market value complies with the provisions of section 4.1 above. In the case of a married couple, the above condition applies to the couple as a whole.
- (b) The purchase must be a housing sold by the development company to the first purchaser, unless the purchase was made prior to 07/05/2013. Sale and purchase documents related to the resale of houses and submitted to the Land Registry before 07/05/2013 (the date of submission of the sale and purchase documents will be confirmed by the Department of Land Registry and Administration) will be accepted.
It should be noted that the property does not have to be purchased from the same developer company.
4.2 Investments in the authorized capital of a Cypriot company with commercial activities and personnel in Cyprus:
To implement this provision, the applicant must make a total investment of EUR 300,000. It also requires the physical presence of the company in Cyprus and employment of at least five (5) employees. In this case, the applicant must provide the following documents:
- Share purchase and sale agreement.
- Certificate of shareholder and certificate of incorporation of the company from the registrar of the company and the official recipient.
- Business profile of the company, including business goals, etc.
- Proof of payment (e.g. bank transfer).
- Certificate of employment for employees of the Social Insurance Board.
4.3 Investments in shares of the Cyprus Investment Fund Collective Investments (type AIF, AIFLNP, RAIF):
In this case, the applicant must make a total investment of EUR 300,000 in investment units and submit the following documents:
- Securities or other confirmation of purchased shares
- Proof of payment (e.g. bank transfer)
- Confirmation from the Securities and Exchange Commission for the establishment of the fund
- Fund memorandum or investment plan.
5. DEPENDENT PERSONS OF THE APPLICANTS
5.1 Residence permit is issued in the name of the applicant. It also includes dependents: the spouse and their children under the age of 18.
If desired, two separate residence permits can be issued to each of the married couples without any obligations, if they submit a special application and pay the additional fee.
In the event that the residence permit provided to the investor is canceled for any reason, this results in the cancellation of the spouse's license in accordance with the provisions of Regulation 6 of the Law. Aliens and Immigration Rules.
5.2 Unmarried children between the ages of 18 and 25 who, on the date of submission of the application, are studying in higher education institutions abroad and who are financially dependent on the applicant, can submit their own separate application for a residence permit. In this case, the father or mother and / or both parents together must submit documents confirming an additional annual income of EUR 5 thousand for each dependent child.
If children study in higher education institutions in the Republic of Cyprus, they must apply for a temporary residence permit in the republic as students in accordance with the relevant legislation (EU directive). After completing their studies in Cyprus, they will be able to submit their own application for an immigration permit, as mentioned above, with the payment of the appropriate fee, regardless of their age, provided that the parents provide proof of additional annual income of € 5,000.
This permit will remain in effect beyond the age of 25, even if the child is no longer financially dependent on his parents. The spouse of the applicant's children and their minor children cannot be included in this type of residence permit as dependents. In case of cancellation of the residence permit issued to the applicant for any reason, it will result in the activation of the process of cancellation of the residence permit for the applicant's children in accordance with the provisions of rule 6 of the Law.
5.3 A residence permit can also be granted to the applicant's parents and their spouses, if they submit separate applications for each family member and pay the additional fee, provided that the applicant provides proof of additional annual income in the amount of EUR 8 thousand for each dependent parent. In case of cancellation of the residence permit issued to the applicant for any reason, this will entail the cancellation of the residence permit of their parents in accordance with the provisions of rule 6 of the Law.
6. MAXIMUM AMOUNT OF INVESTMENT IF THE APPLICANT WANTS TO INCLUDE ADULT KIDS IN RESIDENCE PERMIT
A residence permit can also be issued to an adult applicant who is not financially dependent on more expensive investments, in accordance with the provisions of paragraph 2, as defined below:
The market value of an investment of EUR 300 thousand should be multiplied by the number of adult children who apply for the same investment in order to obtain a residence permit. For example, if the applicant has an adult child, he must invest EUR 600 thousand, if the have two adult children, then the investment amount must be EUR 900 thousand.
In the event that the investment will relate to real estate and the applicant decides to invest in accordance with Sections 2.1. (A) and 2.1. (B), along with the application, it is necessary to provide proof of payment of at least 66% of the market value.
It is understood that in this case, each adult child will be able to prove that they have an annual income of at least EUR 30 thousand, which will increase by 5 thousand euros for each dependent, as provided in section 2.2. In addition, it should be noted that investments can be made jointly in the name of the applicant and an adult child, or exclusively in the name of the applicant.
7. PROCEDURE FOR SUBMITTING AN APPLICATION AND ITS CONSIDERATION
Applications, along with the necessary supporting documents, will be submitted to the Civil Registry and Migration Department in person or via an intermediary (the department phone numbers are 22 308676 and 22 308633). A fee of EUR 500 is payable upon application.
In the case of filing an application through a representative, this must be accompanied by the written permission of the applicant, which must indicate the full details of the representative, as well as his address and contact numbers.
The application will be promptly processed and submitted for final approval to the Minister of the Interior through the Director General of the Ministry of the Interior.
8. TIME FRAMEWORK
If all the criteria have been met and there are no obstacles in the form of the applicant's past conviction, or considerations of a threat to public order and security, the application is forwarded to the Minister of the Interior for consideration and decision. It is assumed that the period for consideration of the application is approximately two months from the date of submission of the completed application.
9. OTHER INFORMATION
Persons who have been granted permission to obtain a Cyprus residence permit through the purchase of real estate must acquire a permanent residence in Cyprus within one year from the date of approval of the submitted application, while they, like their family members, must visit the Republic at least once every two years. Otherwise, the residence permit will expire in accordance with Rule 6 (3) and / or may be revoked in accordance with Rule 6 (4).
10. APPLICATION FORMS
The forms are available electronically on the Department of Population and Immigration website:
- Application Form (MIP1)
- List of documents submitted with the application
- List of documents submitted with the application for children studying abroad
- List of documents submitted with the application for the applicant's parents
- Responsible statement of the applicant's annual income
- A statement of responsibility to certify that the applicant and his / her spouse do not work in Cyprus, except for their work as managers in a company in which they have decided to invest under this policy
For the average high-income family that would love to move to Cyprus there is just too many problems with the PR Scheme to make it worth their while.
If Cyprus wants to take full advantage of its PR Scheme they will have to look at the below analysis and hopefully understand that some changes would be necessary to bring the PR Scheme to its full potential.
The below issues and examples are typical of what a 3rd country family has to go through living on the Island with teenagers in high school.
1. Investors and family members on PR scheme are not allowed to be involved in any form of work in Cyprus, not even volunteer work.
• Many can make the investment and still bring money in but still need to supplement by working at least one member of the family.
• Some are highly skilled professionals and are approached by Cyprus Companies to work for them but one can only work for a Cyprus Company by giving up one’s PR Status. One has just made a big investment just to relinquish all the rights that came with it.
• Example 1– Cyprus Company X would like to make use of highly specialised skill and qualification not found on the Island but they have to jump through so many hoops to be able to get work visa for me and I’m not prepared to give up my PR status. Now at great expense they have to import this skill instead of using some-one on the Island. Example 2 Company with Head office in Cyprus but working office in Greece would like to employ me, thinking my PR status would make travel to Greece easy and establishing contract easy. Unfortunately, not being part of Schengen Zone, visas still apply for travel and not allowed to work for Cyprus company without giving up PR status.
• Long Term Residency Permit after 5 years that allows working status does not apply for Fast Track PR investors and family.
• Investor PR children not allowed summer jobs but any other student in school or university legally allowed to work.
• Asylum seekers allowed to work and get social assistance. Department of Labor Section 21B of the Cyprus Refugee Law provides that the person who is recognized as a refugee receives equal treatment as the citizens of the Republic as regards wage- earning employment. In other words, refugees have the same rights as Cypriot citizens to employment, hence there are no restrictions to any particular sector and there is no need for the Labor Department to approve and stamp a contract of employment between an employer and a recognized refugee.
http://www.mlsi.gov.cy/mlsi/dl/dl.nsf/page5j_en/page5j_en?OpenDocument
2. Children with PR loses PR when turning 18.
• Children applying between ages 18 and 25 keeps PR for life so it makes no sense for children who turn 18 and have had PR for years, went to school in Cyprus, and permanently living in Cyprus to lose their PR.
• Options available are Study/Student/Temporary Residency Visitors Visa before re-applying for PR again. The process is extremely cumbersome and in no way easy at all. Immigration is overwhelmed and appointments takes months to get. Not to mention the lawyer fees every time we have to make these applications for something one has already qualified and paid for.
• When losing PR, it affects GESY eligibility.
• When losing PR, it affects European University applications. European Universities requires 3 years PR status. This interruption in PR status has a big financial implication.
• When becoming 18 and earning adult status even though they still in school they automatically can’t fall under the parents name anymore for various things so trying to open a bank account or registering for something without a photo ID becomes impossible.
• Uncertainty/anxiety for parents about their children status and future in Cyprus.
• Have to pay fees again and again 1st PR /Student Visa/Temporary/PR again when you have been accepted to a University abroad.
• Cyprus promotes once you have PR, it’s for life just visit every 2 years, but when they actually live here they still lose it. If you live here it should be a simple re-issuing of a new adult PR card when turning 18 and not loosing your PR status and having to re-apply all over again.
• Why is Cyprus encouraging students to rather study abroad by taking away their PR if they study in Cyprus? One can re-apply for PR again after studies completed in Cyprus. But this again a very backwards way and in no way an easy and smooth process for something one has already done before.
• Immigration appointments fully booked for months.
• Turning 17.5 to 18 years old one goes for Learners Driving License Test and pass as one has a valid PR card. Then the road transport department is so far behind, the first final driving test booking available is 5 months on so one continues with lessons for months to make sure one passes on the first attempt otherwise one has to wait months again. The cost is hundreds of euros. In the mean time your child turns 18 and loses PR Status and applies for temporary residency until such time they get accepted by a university abroad. The immigration office is so overwhelmed that one only receives a receipt for the application and an immigration stamp on it saying it allows one to travel in and out of the country. After living in Cyprus as a permanent resident for years this receipt is now you're only legal paperwork. One is told directly that come 12 months you would probably not have received your residency card and must just come and apply and get another receipt. On the day of the final driving test we get turned away by Road Transport department saying they do not accept this receipt as a legal status in Cyprus even though immigration accepts it. Showing old PR card, school letters, parents PR card and utility bills to proof she live in Cyprus, Road Transport Department still insists on seeing the valid card.
All the above issues just due to our children who live in Cyprus and loses their PR status when they turn 18. I can understand that for PR card holders not living in Cyprus that this might be a way to control the PR program but for people who permanently reside in Cyprus it makes no sense and is a great source of anxiety, frustration and daily difficulties. For people living in Cyprus it should be a quick revalidating process and a new card to be issued. One cannot say one’s you have your PR it’s for life but for people living in Cyprus, part of the community and economy its proven to be not the case.
3. Application for Citizenship/Passport only after 7 years. (Currently takes up to 2 years for processing the application so actually 9 years) Refugees and asylum seekers apply after 5 years. One needs to live full time in Cyprus (2555 days 7 years) and last 12 month consecutively to apply for Citizenship through Naturalization. Examples of shorter and easier Citizenship by Naturalization for European Countries are:
• Germany 6 years
• Portugal 5 years for investors and can work and don’t have to live there. Only 7 days a year.
• Spain 2- 4 years and 6 months residency a year.
• Belgium 5 years and 6 months residency a year.
• Greece by investment 7 years. Till recently it was 3 years for refugees but now 7.
• Malta 2 years and no residency required.
The reason why some countries don’t have the same requirement as Cyprus of having to live in Cyprus 365 days (2555 for 7 years) to qualify for the Citizen by Naturalization Program is: Many high-income earners 100 000Euro and up want to make Cyprus its home with the family living in Cyprus and children going to school but they still need to travel extensively for their work up to 6 months a year. That means they will never be able to qualify for Citizenship due to not making the 2555 days in a reasonable amount of years and they cannot stay the last year in Cyprus without traveling for work. The high-income earner is the ideal investor who usually buys its first property between 500 000 to 1 000 000Euros, children goes to private schools and maintains high standard of living which stimulates the local economy.
4. Not being part of Schengen Zone so they rather choose countries that’s part of Schengen Zone to facilitate easy movement and work opportunities across Europe. Cyprus could also investigate similar options like they currently have with Bulgaria, Croatia and Romania who through a special treaty allows transit and intended stays up to 90 days.
5. In general, 3rd country nationals and particularly South Africans do there research well and join social media Expat Groups to keep track of the smaller underlying issues as well.
• Increasing crime levels
• Increasing refugee levels
• Excessive banking regulations
• Land registry and Title deed issues
• Immigration offices disorganized and booked months in advance
• Transport/Traffic Depart disorganized or better yet chaotic. To book a driving test for driving License is 5 to 6 months waiting period.
While the establishing of a company in Cyprus provides an alternative to the PR program it is riddled with even more complexity and uncertainty for people relocating across the world. Work Permits and Temporary Residency does not provide the same level of confidence and certainty as the PR status do to make such an emotional and stressful decision. People need certainty because if the business did not work out or permits and Temporary Residency are not renewed going back to where they came from is not an option they want to consider.
https://www.kyprianou.com/en/publications/cyprus-residence-and-work-permits/ppp-301/247/
At the moment the PR scheme is very well suited for retirees and investors with money to have a second or holiday home in Cyprus, neither of them really stimulating the local economy.
If refugees and asylum seekers from 3rd countries are given working rights and can apply for Citizenship through Naturalization process faster than investors, what incentive is there for 3rd country investors who commit a substantial amount of money, who’s children go to private schools, who is part of and active in the community but not allowed to work and have to wait 7 years to apply for Citizenship through Naturalization.
In the 2 years we have lived here we have had several families who due to the reasons above have decided not to invest in the Cyprus PR program. They have more than enough money to invest for them and their children. Some want to come live here and be able to work or some want to come and retire, but at least their children must have the option of work and no one likes the idea of the children losing their PR status. It creates too much uncertainty and risk, and thus choose another country that provides more certainty.
More and more Third Country Nationals are relocating abroad with the purpose of not returning too their home country so they require certainty of their new status in their new home country.
The incentive to rather invest in the Cyprus Fast Track PR program vs Slow Track PR or establishing a company, is very low if you break it down in the following scenario’s:
WORK
• Investors in Fast Track PR program and family members are not allowed to work.
• Asylum seekers can work as soon as asylum status is processed within a couple of months.
• 3rd Country nationals with any legal status including temporary residency and work permits can after 5 years apply for long term residence status which give them the right to work. Fast Track PR program is excluded. In other word I can have made an investment of 50 000Euros for an apartment and with renewing my temporary residency each year I can work after 5 years apply for long-term residency status but some-one who invested 500 000Euros is excluded.
• Even 3rd country student has the right to work with restrictions.
PR Status
• Category-F the slow track has no actual minimum investment amount specified but the higher the amount invested the better and 150 000Euro will give PR status in 12 months and can buy resale property. https://residencies.io/residency/cyprus/permanent-residency/cy6
• Fast track 300 000Euro and 30 000 fixed deposit for 3 years and only new property and supposed to be 2 months but in reality, 5 to 6 months so not much difference from slow track. (the rules seem to have changed somewhat on this point)
Application for Citizenship
• Same amount of years - 7 years so no advantage to the PR Investor.
Work Visa
• Can establish a Cyprus Company with minimum amount of 200 000( new rules 300 000) and employ up to 10 directors in senior management. All work visa members can bring in spouse and children on temporary residency permits due to EU law of not breaking up the family unit. 200 000Euro available for running cost and is not fixed. After 5 years family members can apply for long term residency. They are able to work and after 7 years can apply for Citizenship.
SO YOU CAN SEE THERE IS NO REAL BENEFIT TO THE FAST TRACK PR PROGRAM EXCEPT FOR GETTING PR IN 5 TO 6 MONTHS (and not the 2 months they claim) AND ADULTS NOT HAVING TO RE-APPLY ON A YEARLY BASIS.
If the government is not willing to revisit the requirements and BENIFITS for the PR Scheme and possibly change some of it I’m afraid the PR scheme is not going to create the desired effect to attract more investors.
Recommendations for the Cyprus PR Program to come to its full potential and in line with other more attractive European PR programs, some or all of the following should be looked at:
• Allow PR investors and family unit the right to work in Cyprus or at least after an x amount of years.
• Do not take away PR status of children when turning 18 or at least have a simple revalidating process for their PR status.
• Allow PR investor children to study in Cyprus without losing their PR status.
• Shorten the Citizen by Naturalization time period for Fast Track Permanent Residents from 7 years to 3 or 5 years.
• Reduce the number of months residency required to 6 months per year to qualify for Naturalization and remove the 12-month consecutive stay in last year for Fast Track PR investors.
• Become part of the Schengen Zone
In conclusion it is my strong opinion that the PR scheme in its current form does not provide enough incentive and certainty for 3de countries and particularly South Africans to choose Cyprus for investment for the purpose of relocating permanently.
Other European countries provide much easier, clear and more secure options for a path to become a Citizen through PR and Naturalization process.
The above information is to best of my knowledge correct but if there is any doubt it has to be independently verified.