New revised criteria for granting immigration permits to investors
Esme Palas 14:39 - 30 May 2023
Cyprus has always been considered as an ideal destination for permanent residence by non-EU Nationals.
The Cypriot Government, in an attempt to attract foreign investment to the island and to help economic recovery and further economic growth, introduced Regulation 6(2) of the Aliens and Immigration Regulations which gave non-EU nationals, who invested in Cyprus, the right to permanently reside on the Island, provided certain criteria were met. The significance of these regulations and their contribution to the Cypriot economy is well documented.
In order to address some weaknesses in the system, these criteria have recently been amended. The amendments have come into effect as of 2 May 2023 and are applied to applications that are submitted from 02/05/2023 onwards. The underlying purpose behind these changes is to protect the integrity of the system, thereby safeguarding their continuity and securing the country’s reputation.
For all sale agreements lodged at the Land Registry Office between 02/01/2023 and until the 28/04/2023, the previous criteria will be applicable to the examination of any application.
Permanent Residency permits shall be issued to non-EU applicants, provided they meet one of the investment criteria specified in the regulations and fulfil the quality criteria stated therein.
The applicant must make an investment of at least €300,000 in one of the following categories:
(A) Investment in house/apartment: Purchase of a house/apartment sold for the first time (not a resale) by land development company of a minimum value of €300,000 (plus VAT).
(B) Investment in real estate (excluding houses/apartments): Purchase of another form of real estate such as offices, shops, hotels or similar developments, or a combination of these, with a total value of €300,000. These properties may also be resale properties.
(C) Investment in share capital of a Cypriot Company with activities and personnel in Cyprus:
Investment worth €300,000 in the share capital of a new company or investment worth €300,000 in the share capital of an existing company registered in the Republic of Cyprus, which is based and operates in the Republic of Cyprus and has a proven physical presence in Cyprus and employs at least five (5) people.
(D) Investment in shares of a Cyprus Investment Organization for Collective Investments (Type AIF, AIFLNP, RAIF):
Investment worth €300,000 in shares of a Cyprus Investment Organization for Collective Investments whose investments need to be carried out in Cyprus
In the event that the applicant ceases to hold the investment without immediately replacing it with another of the same or greater value, which should meet the conditions set in this procedure, then the Permanent Residence permit will be cancelled.
It must be proved that the money to be used for the investment has come from abroad from the applicant’s personal bank account or that of his spouse and the value of the investment needs to be transferred to the Vendor’s bank account in Cyprus. On 17th May 2023, it was clarified that it is also possible for the funds to be transferred from the corporate bank accounts of a company in which the applicant and his/her spouse are the sole shareholders.
In addition to meeting the criteria mentioned above, the applicant should be able to prove that he has at his disposal a secure annual income emanating from abroad of at least €50,000. The annual income is increased by €15,000 for a dependent spouse and €10.000 for each dependent minor child.
In cases where the applicant invests in a house or apartment under the investment criterion (A), this income can be from salaries, pensions, stock dividends, fixed deposits, or rents emanating from abroad. Such income, however, can only be proven by tax declarations of the applicant from the country in which the applicant is a tax resident or through an official declaration by an independent certified chartered accountant. In 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 Real Estate excluding houses or apartments, then the total income or part of it may also arise from sources originating from activities within the Republic, provided these are taxed in the Republic.
The applicant and their spouse must submit a clean criminal record from their country of residence or from the Republic, if they reside in Cyprus.
The applicant and the applicant’s dependants will need to provide a Health Insurance Certificate providing in- and out-patient insurance cover.
They must certify that they do not intend to work in the Republic, with the exception of their acting as directors in a Company in which they have chosen to invest within the framework of this policy.
If the investment does not concern a Company's share capital, they may be shareholders in Companies registered in Cyprus and receive dividends. They may also hold the position of director in such companies without remuneration.
Where applicants choose to invest under the Investment criteria (B), (C), or (D), they must present information regarding their place of residence in the Republic.
When investing in residential or other properties, the application needs to contain proof that the contract of sale was lodged with the Land Registry Office and official receipts for the payment of at least €300,000 (excluding VAT), regardless of the date of delivery of the property. Evidence must be provided that the funds invested have come from abroad and are not a product of internal borrowing. The total Investment should be paid into the Vendor's account in a Cypriot financial institution.
The applicant may purchase up to two (2) residential units (apartments or houses), provided that the total market value meets the above criteria. The said purchase must be dwellings sold by the developer for the first time, unless the purchase of the houses took place before 07/05/2013.
It is noted that the properties do not have to be purchased from the same land development company.
PROVISIONS RELATING TO THE DEPENDENTS OF THE APPLICANT
The Immigration Permit is issued to the applicant and the applicant's dependents (spouse and minor children up to the age of 18.
Unmarried children between the ages of 18 and 25, who are students in higher education abroad on the date of submission of the application, and who are financially dependent on the applicant, may submit their own, separate application for obtaining an Immigration Permit. In such a case, the father or mother and/or both parents together must prove that they have an additional annual income of €10,000 for each such dependent child.
Such a Permit, once issued, will continue to be valid even after they reach the age of 25, even if they marry and cease to be students and/or financially dependent on their parents.
HIGHER VALUE INVESTMENTS TO INCLUDE ADULT CHILDREN
An Immigration Permit may also be granted to adult children of the applicant who are not financially dependent, provided a higher-value investment is made.
The market value of the €300,000 investment should be multiplied according to the number of adult children, who will rely on the same investment for the purposes of obtaining an Immigration Permit.
Each adult child will need to prove they have at their disposal a secure annual income of at least €50,000, which will be increased by €15,000 for a dependent spouse and €10,000 for each dependent child.
When the applicant invests in real estate under Criteria (A) and (B) above, he has to prove that 66% of the market value of the property has been paid prior to submission of the application.
In addition, it is noted that the investment can be made jointly in the name of the applicant and the adult child or exclusively in the name of the applicant.
In the event that the applicant invests in residential property under criterion (A) above, but the number of bedrooms of the property cannot meet the needs of the dependent family members, the applicant will need to prove another Property which shall be the place of residence of these people.
It is no longer possible for applicants to include in their application their parents or parents-in-law.
MECHANISM FOR ENSURING THAT THE CRITERIA CONTINUE TO BE MET
Applicants are not required to prove that they continue to receive the required annual income for themselves and their dependants on an annual basis. They do, however, need to prove annually that they continue to hold the investment through a search, and that they all continue to hold a valid health insurance cover if no longer registered with GESY. The applicant, their spouse and adult child/ren need to present every three years a clean criminal record from their country of origin and residence. In case the applicant fails to provide the above, then they and their dependents’ residence permits shall be cancelled.
The right of the applicants and their adult dependent children to reside in Cyprus is indefinite. The residency permit issued for the minor children of the applicant will end on reaching the age of 18. They can reapply if they fulfil the relevant criteria mentioned above.
The underlying objective of these provisions is to maintain the integrity of the system, safeguard the process and eliminate the loopholes that were observed. While one can understand and respect the need for stricter controls, the increase in the amount of annual income that is required will exclude many potential investors, especially those of retirement age who wish to have Cyprus as their retirement haven and who do not have such high annual income. It remains to be seen how these changes will be perceived by potential investors.
Esme Palas, Partner, Michael Kyprianou & Co LLC
The content of this article is valid as at the date of its first publication (23/05/2023). It is intended to provide a general guide to the subject matter and does not constitute legal advice. We recommend that you seek professional advice on your specific matter before acting on any information provided. For further information or advice, please contact Esme Palas, Barrister at Law and Partner at the Paphos office via email at email@example.com or at tel.: +357 26930800.
This article first appeared on the website of Michael Kyprianou & Co LLC. Click here to view it.