CYPRUS

 

Europe has long established itself as the most sought after region in terms of high net worth immigration, accounting for over half of the total number of global citizenship applications, with the Caribbean in second place, followed by North America in third. Also noteworthy, are recent studies conducted by global immigration experts, ranking the Cyprus Citizenship by Investment program, now 'CYPRIOT INVESTMENT SCHEME' among the "top ten best in the world".

 

Cyprus has recently been ranked the 5th best relocation destination in the world by an international lifestyle review (source: 2014 report prepared by Knight Frank, a leading independent, global real estate consultancy firm). Ranked by key business and leisure indicators, Cyprus was the only European country alongside Switzerland to make it into the top five – ahead of London, Madrid and Monaco. Cyprus ranked highly because of its favourable tax regime for new residents, particularly high net worth individuals. With at least 320 days of sunshine a year, Cyprus was classified the sunniest European location.

 

Certain changes to the Cypriot immigration policy and legal framework now enable non-EU applicants to obtain Cypriot citizenship on an expedited basis. Cyprus Citizenship by Investment is available to foreign investors pursuant to subsection (2) of section 111A of the Civil Registry Laws of 2002-2013 and the decision of the Ministry of Councils in September 2014, as amended.

 

The Cyprus government has formulated a "fast-track" citizenship scheme aimed at high net worth individuals, investors and entrepreneurs. This allows the successful applicant and their family to hold a Cypriot passport and enjoy all the benefits of a Cyprus and EU National.

 

Why is the Cyprus Citizenship by Investment program considered to be the most attractive in Europe? Some of the main reasons include the following:

 

• No requirement to make a donation to the local government, unlike the Maltese citizenship scheme which requires a donation of EUR 650,000.

• Applicants are not required to live on the island prior or during the application, or even after citizenship has been granted, unlike many other EU countries, including Malta, which requires applicants to physically reside in Malta one year prior to filing an application.

• Successful applicants receive a Cypriot passport within 6 months of filing an application, being by far the fastest route to EU Citizenship.

 

Why become a Cyprus citizen? Some of the main advantages of Cypriot Citizenship include the following:

 

• Freely travel, reside and work within the EU. An entire family can obtain Cyprus Citizenship i.e. spouse of applicant, children under 18 years, and adult dependents (ages 18 to 28).

• Establishment and free movement of services - individual citizens and their companies can offer services within the EU Member States without any obstacles.

• Transfer funds between EU Member States, purchase of property in any preferred EU Member State, and invest in any type of activities.

• All goods produced in EU Member States can be freely transferred between Member States.

• No requirement to physically reside in Cyprus either before the filing of an application or after obtaining Cypriot Citizenship.

• Cyprus is an attractive financial centre due to its highly favourable tax system and strategic location at the crossroads of three continents – Europe, Africa and Asia. The Cypriot taxation system is consistently voted by EU tax professionals as being the most attractive in Europe.

• Cyprus offers a high standard of living with access to reputable private schools, private medical facilities and among the lowest crime rates within the EU.

• No visa required for travel within the EU; no visa required for travel to over 50 non EU countries.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The citizenship by investment program in Cyprus enables foreign citizens to apply for a Cyprus citizenship provided that they:

 

• Purchase and maintain a privately owned residence in Cyprus, the value of which must be at least €500,000 excluding VAT.

• Have a clean criminal record from the country of origin and/or residence.

• Confirm that the applicant's name is not included in the list of persons whose property is ordered to be frozen by the EU.

 

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NOTE: The Cabinet of Cyprus approved several changes to the Cyprus Investment Programme, introducing stricter rules to be met when applying for Cyprus citizenship:

 

While the technical details of implementation still need to be announced, the major changes are:

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• Applicants for Cyprus citizenship now need to be in possession of a valid Schengen Visa.

• The required investment needs to be maintained for at least five years (previously three years).

• Investment in Government Bonds is not eligible anymore.

• Applicants who previously applied for citizenship in another EU country and have been rejected, will not be entitled for Cyprus citizenship anymore.

• Applicants for Cyprus citizenship must be in possession of a Cyprus residence permit for at least six months prior to naturalization as Cyprus citizen.

• A mandatory donation of EUR 75.000 to the Foundation for Research and Innovation is now mandatory. The funds of the Foundation are used to promote the creation and enhancement of the innovation ecosystem of Cyprus.

• The required minimum investment remains EUR 2.000.000, plus EUR 500.000 in the applicants own residential property. New is that min. 20% of the EUR 2.000.000 need to be invested in-line with the criterion “Buy or set up or participate in Cyprus businesses and companies”.
  Companies to be invested in must be active in the primary or secondary sectors of the economy, or in one of the fields of research and technology, education, health, or renewable energy.

• A further mandatory donation of EUR 75.000 has to be provided to the Cyprus Land and Development Corporation, aiming for implementing affordable housing policies.

• Investments in the shipping sector have been included in eligible investments.

• Investments in listed Alternative Investment Products are now an eligible investment as well, with a cap of EUR 200.000.

• Cyprus will publish an annual Implementation Report, which will include the numbers of Cyprus citizenships granted, the original nationality of the new citizens, and the sector of investment.

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Highlights of the latest changes to the Cyprus Investment Program

 

The Cyprus Investment Programme (CIP) has been recently revised, following the meeting of the Council of Ministers on the 31st July 2020. The new revisions were published in the Cyprus Gazette on 18th August 2020 and includes the following:

1. Contributions to approved charitable organisations has increased by €50.000 to €200,000 (€100,000 for scientific research, renewable energy, and infrastructure) and €100,000 to the Cyprus Land Development Corporation for the development of affordable housing. It is important to emphasise that the contribution is payable after the approval of the Application for Naturalization by the Council of Ministers.

2. It is now possible for politically exposed persons (PEPs) who do not hold a state office or ceased to be active in this category (former PEPs) 12 months before date of submission of the application to apply under the Programme.

3. Τhe parents of the investor or the parents of the spouse can apply as dependents on the main applicant’s application simultaneously with the main applicant, provided that they own a permanent private residence worth at least €500,000 plus VAT.

4. Dependents (spouse and children above 18 years old) can now apply simultaneously with the Investor.

5. The validity of the police clearance certificate issued by the authorities of the applicant’s country of residence is now increased from 3 months to 6 months prior to the submission of the application.

6. The criterion of the establishment of a business in Cyprus has been also amended increasing the required number of European Citizens/residents employees from 5 to 9.

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The Real Estate option in short:

 

The Investment

1 .Fast track procedure: Approval will be issued within approximately 3 months.

2 . A € 2 million (plus vat if any) - Investment in a single Residence. A single property to be used as a residence at a minimum value of € 2 million. The residence must be retained by the investors for a period of 5 years. After 5 years the Investor has the right to sell his/her property and buy another one at a minimum value of €500,000. 

3. A €2 million (plus Vat if any) Investment in a selection of Residential Properties, out of which one property is to be used as a privately-owned permanent residence of a minimum value of €500,000. The remaining € 1.5 million can be invested in a range of residential properties only, which may be resold after 5 years. 

4. It is noted that members of the same family, who apply separately as investors , can collectively acquire a residence, provided that the total value of this home-property covers the amount of €500.000, per each applicant. 

5. In case that the purchase value of the permanent privately owned residence in Cyprus exceeds the amount of €500.000,part of this additional amount can be used for purposes of supplementing the total amount of the investment made in the basis of the criteria of Part A above.

6.The applicant, prior to his/her naturalization as a Cypriot citizen must hold a residence permit in Cyprus.If the applicant does not already hold a residence permit, he/she may apply for an immigration permit on the basis of Regulation 6(2) of the Aliens and Immigration Law, simultaneously with the application for naturalization. 

7. Any property/ ies purchased during the past 3 years, can also be included in the required investment amount.

8. The program applies to the immediate family of the applicant i.e the spouse and dependent children up to the age of 28 if full time university students.

9. Applicants must hold a clear criminal record from the country of origin and the country of residence (if different). 

10. No requirement to physically reside in Cyprus, before/ after approval. 

 

Money-back guarantee on the investment if the citizenship is not received *

 

* Terms and conditions apply

 

 

Benefits

 

• Same rights as any European Citizen

• Cyprus allows multiple citizenship

• You can travel, live, work and study anywhere in the European Economic

• Area ( European Union, Iceland, Liechtenstein and Switzerland)

• Travel to 170+ countries without a visa

• Offers an effective tool for family and tax planning

• Offers an additional insurance against political instability

• Cyprus has zero inheritance tax

• Enables access to some of the best healthcare and education in the world

 

Cyprus Passport Holders are Entitled to Visa Free Travel

 

Africa
1.Botswana*
2.Comoros
3.Djibouti
4.Egypt*
5.Gambia
6.Kenya*
7.Lesotho
8.Madagascar
9.Mauritius
10.Mayotte
11.Malawi*
12.Morocco*
13.Mozambique
14.Reunion
15.Bulgaria
16.St Helena
17.Seychelles
18.South Africa*
19.Swaziland
20.Tanzania
21.Togo
22.Tunisia
23.Uganda
24.Zambia*
25.Zimbabwe

 

Americas
26.Anguilla
27.Antigua & Barbuda*
28.Argentina*
29.Aruba
30.Bahamas*
31.Barbados*
32.Belize*
33.Bermuda*
34.Bolivia*
35.Brazil*
36.British Virgin Islands
37.Canada*
38.Cayman Islands
39.Colombia*
40.Costa Rica*
41.Curacao
42.Chile*
43.Dominica*
44.Dominican
45.Rep. Dutch Caribbean
46.Equador
47.El Salvador*
48.Falkland Islands
49.French Guiana
50.Greenland
51.Grennada
52.Guadeloupe
53.Guatemala*
54.Haiti
55.Honduras*
56.Jamaica*
57.Martinique
58.Mexico*
59.Montserrat
60.Nicaragua*
61.Panama*
62.Paraguay*
63.Peru*
64.St Barthelemy
65.St Kitts & Nevis
66.St Lucia
67.St Maarten
68.St Martin
69.St Pierre&Miquelon
70.St Vincent
71.Trinidad & Tobago
72.Turks & Caicos
73.Uruguay*
74.Venezuela*

 

Asia
75.Armenia
76.Bangladesh*
77.Bruneia*
78.Cambodia
79.Darussalam
80.Georgia
81.Hong Kong*
82.Indonesia*
83.Iraq
84.Israel*
85.Japan*
86.Jordan
87.Kyrgyzstan
88.Laos
89.Lebanon*
90.Macau
91.Malaysia*
92.Maldives
93.Nepal
94.Oman
95.Philippines*
96.Singapore*
97.South Korea*
98.Sri Lanka
99.Taiwan*
100.Timor Leste
101.Thailand*

 

Europe
102.Albania*
103.Andorra
104.Austria*
105.Belgium*
106.Bosnia & Herzegovina*
107.Bulgaria*
108.Croatia*
109.Cyprus*
110.Czech Republic*
111.Denmark*
112.Estonia*
113.Faroe Islands
114.Finland*
115.France*
116.Germany*
117.Greece*
118.Guernsey
119.Hungary*
120.Iceland
121.Ireland*
122.Isle Of Man
123.Italy*
124.Jersey
125.Latvia*
126.Liechtenstein
127.Lithuania*
128.Luxembourg*
129.Macedonia
130.Malta*
131.Moldova*
132.Monaco
133.Montenegro
134.Netherlands*
135.Norway
136.Poland*
137.Portugal*
138.Romania*
139.San Marino
140.Serbia*
141.Slovakia*
142.Slovenia*
143.Spain*
144.Sweden*
145.Switzerland
146.Turkey*
147.Ukraine*
148.United Kingdom*
149.Vatican City

 

Oceania
150.Austrailia
151.Cook Islands
152.Micronesia
153.Fiji*
154.French Polynesia
155.Kiribati
156.Marshall Islands
157.Nauru
158.New Caledonia
159.New Zealand*
160.Niue
161.Palau
162.Papau New Guinea
163.Samo
164.Tokelau
165.Tonga
166.Tuvalu
167.Vanuatu
168.Wallis & Futuna

 

Middle East
169.United Arab Emirates
( Dubai, Abu Dhabi, Sharjah,
Ajman, Umm al Qaiwain, Ras al
Khaimah, Fujairah )
 

* EU Members
* Time Restriction Apply

 

Visa Free Travel with Duration of Stay

A) Visa-free entry (or visa-on-arrival) valid for 6 months Canada, Dominica, Bermuda

B) Visa-free entry (or visa-on-arrival) valid for 183 days Peru

C) Visa-free entry (or visa-on-arrival) valid for 180 days Mexico, Panama

D) Visa-free entry (or visa-on-arrival) valid for 4 months Fiji

E) Visa-free entry (or visa-on-arrival) valid for 3 months Antigua and Barbuda, Argentina, Bahamas, Barbados, El Salvador, Honduras, Hong Kong, Israel, Japan, Jamaica, Kenya, Malaysia, Morocco, New Zealand, Uruguay

F) Visa-free entry (or visa-on-arrival) valid for 90 days Albania, Argentina, Bangladesh, Bolivia, Bosnia and Herzegovina,
Botswana, Brazil, Brunei, Chile, Colombia, Costa Rica, Guatemala, Hong Kong, Malawi, Moldova, Nicaragua, Paraguay, Serbia, Singapore, Taiwan, Ukraine, Venezuela, Zambia

G) Visa-free entry (or visa-on-arrival) valid for 1 month Belize, Lebanon, Turkey

H) Visa-free entry (or visa-on-arrival) valid for 30 days Egypt, Indonesia, South Africa, South Korea

I) Visa-free entry (or visa-on-arrival) valid for 21 days Philippines

J) Visa-free entry (or visa-on-arrival) valid for 15 days Thailand

 

EU OVERVIEW:

 

UK
- Education free of charge
- University standard fees & loans available
- Healthcare free of charge
- Unemployment & housing benefit
- Child benefits from 1st child
- Pension entitlement

 

Germany
- Education including university free of charge
- Healthcare through medical insurance
- Unemployment benefits & retraining
- Child benefits from 2nd child
- Pension entitlement

 

Sweden
- Education including university free of charge
- Healthcare free or very low cost
- Unemployment and disability benefits
- Housing benefit and child benefit from 1st child
- Pension entitlement

 

France
- Education free of charge
- University fees below €250p.a.
- Healthcare through government medical insurance
- Unemployment benefits & retraining
- Child benefit from 1st child
- Pension entitlement

* Terms and conditions apply

 

 

TAXATION

 

In light of the shifting international tax landscape, businesses are focusing on establishing economic substance, cautiously considering the jurisdictions they operate from in order to safeguard their interests.

Cyprus' strategic location, full EU membership, developed legal system, competitive corporate income tax rate of 12.5%, well-educated workforce and business-friendly environment make Cyprus an ideal country to establish business presence.

 

In addition to the above, Cyprus offers a number of personal tax incentives that aim to attract multinational companies to relocate key personnel to perform their duties from Cyprus. The tax incentives also appeal to high-net-worth individuals who are willing to relocate to Cyprus.

 

Below, we present an overview of Cyprus' personal tax regime as well as the key tax benefits provided to expatriate individuals relocating to Cyprus.

 

Personal Taxation

 

Personal taxes and contributions

 

The main types of direct taxes applicable to an individual in Cyprus are:

• income tax

• special defence contribution on dividend, interest and rental income

• capital gains tax on gains from the sale of Cypriot real estate

 

An individual working in Cyprus is also subject to social insurance and other contributions.

An individual is subject to income tax and/or special defence contribution depending on his/her tax residency and domicile status, a concept introduced in the Cyprus tax law in July 2015.

 

Tax residency

 

An individual is tax resident in Cyprus if he/she is present in Cyprus for more than 183 days in a tax year.

Domicile

 

An individual's domicile is that of his/her father's domicile (at birth) or that of his/her choice. Therefore, an individual born to a non-Cypriot domiciled father is considered to be non-domiciled in Cyprus. However, a non-domiciled individual may be deemed as domiciled in Cyprus if he/she has been a Cypriot tax resident for at least 17 out of the last 20 years prior to the relevant tax year. An individual born to a Cypriot domiciled father may also qualify as non-domiciled in Cyprus subject to certain conditions.

 

Taxable income

 

A Cypriot tax resident individual, irrespective of his/her domicile status, is subject to income tax on his/her worldwide income, subject to exemptions.

A tax resident individual who is non-domiciled in Cyprus is exempt from tax on dividend and interest income.

A non-Cypriot tax resident individual is subject to income tax on income accruing or arising only from sources within Cyprus and is exempt from tax on dividend and interest income.

 

Personal income tax rates

 

Taxable income up to €19,500 is effectively exempt from income tax. Taxable income exceeding this amount is subject to progressive income tax rates ranging from 20% to 35% (for income exceeding €60,000).

 

Key Tax Benefits for Expatriate Individuals

 

Income tax exemptions for taking up employment in Cyprus

 

An expatriate individual relocating to Cyprus (irrespective of his/her tax residency or domicile status) is eligible to one of the following income tax exemptions on employment income:

 

• 50% of the remuneration from any employment exercised in Cyprus by an individual who was resident outside Cyprus before the commencement of his/her employment in Cyprus. The exemption applies for a period of ten years starting from the first year of employment provided that the employment income of the employee exceeds €100,000 per annum. 
  The 50% tax exemption would not be granted to an individual who has been a Cypriot tax resident for at least three out of the last five years immediately prior to the year of commencement of employment or to an individual who has been a Cypriot tax resident in the tax year immediately prior to the year of commencement of employment.

• 20% of the remuneration or €8,550 (whichever is the lower) from any employment exercised in Cyprus by an individual who was resident outside Cyprus before the commencement of his/her employment in Cyprus. The exemption applies for a period of five years from 1 January following the year of commencement of the employment and applies for tax years up to 2020.

 

Income tax exemption for overseas employment

 

Remuneration from rendering services outside Cyprus to a non-resident employer or to an overseas permanent establishment of a resident employer for more than 90 days in a tax year is exempt from income tax.

Low social insurance contributions

Employees and employers are subject to social insurance contributions at the rate of 7.8% and 9.5% respectively, on the employees' gross employment income, subject to an income ceiling. Furthermore, employers are subject to an additional 2% contribution calculated on the employees' gross employment income. An exemption from contributing to the Cyprus social insurance scheme may be granted for a period of time to qualifying expatriate EU nationals that take up employment in Cyprus.

 

No tax on dividend and interest income

 

A non-domiciled individual, irrespective of his/her tax residency status is exempt from tax on dividend and interest income.

 

No tax on gains arising from the disposal of investments

 

Any gains arising from the disposal of shares, bonds and other similar financial instruments (including options and rights thereon) are exempt from tax.

 

Nil/reduced withholding tax on income received from abroad

Cyprus is a party to more than 55 tax treaties that provide for nil or reduced withholding tax rates on dividends, interest, royalties and pensions received from abroad.

 

No tax on retirement gratuity and special tax regime on foreign pension income

Any lump sum received as a retirement gratuity is exempt from tax. Furthermore, a Cypriot tax resident individual receiving pension income from services rendered abroad may choose to be taxed at a flat rate of 5%, on amounts exceeding €3.420 per annum.

 

Exemption from capital gains tax (CGT) on sale of real estate gains arising from the disposal of non-Cypriot real estate are exempt from CGT. Furthermore, a specific CGT exemption applies to gains arising from the disposal of Cypriot real estate, if acquired between 16 July 2015 and 31 December 2016.

 

Estate duty, wealth tax, gift tax and inheritance tax

 

There is no estate duty, wealth tax, gift tax or inheritance tax in Cyprus.

 

Sample Personal Tax Computation

To numerically demonstrate the tax benefits available to qualifying expatriate individuals relocating to Cyprus, we calculate below the Cypriot tax liability of a Cypriot tax resident non-domiciled individual who takes up employment in Cyprus, earns income from investment sources and realizes a capital gain on the sale of real estate.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

An individual with the above profile would be liable to total Cypriot taxes and contributions of approximately €20,000 arising on his/her employment income. His/her investment income would be fully exempt from tax in Cyprus.

 

Roeth & Partners are experts in the area of Immigration Services in Cyprus, and well positioned to assist clients with the preparation and filing of a Citizenship Application.