On 18th August 2020, the Cyprus’s Official Gazette published the latest amendments of the Cyprus Investment Programme (CIP) which have been decided and approved by the Council of Ministers and voted by the House of Parliament in Cyprus. The new rules introduce stricter regulations and supervision requirements. While in principle and structure the CIP remains the same, the amendments that have been passed have as an aim to further improve CIP as well as strengthen the CIP’s trustworthiness and credibility.
1. Controls imposed on the eligibility of investors and their family members
Further controls have been imposed by the Government on the eligibility of investors and/or their family members that fall into one or several high-risk categories. This measure was taken to strengthen the control over granting the Cyprus citizenship and enhancing the CIP’s credibility. Applicants falling in any of the following High-Risk categories will not be eligible to obtain the Cyprus citizenship under CIP:
- Applicants whose asses have been subject to a seizure order within the European Union.
- Politically Exposed Persons (“PEP”). Under the new regulations, a PEP is a person who holds a political position at the time of the submission of the CIP application or a person who has held a political position during the last 12 months prior to the date of submission of the application. It used to be 5 years.
- Applicants that have been convicted of a serious criminal offence which carries a sentence of 5 years or more or for any other serious offence or for a dishonourable offense or involving moral indecency.
- Applicants who are subject to criminal investigation either in Cyprus or in another country in connection with a serious criminal offence which carries a sentence of 5 years or more or for any other serious offence or for a dishonourable offense or involving moral indecency.
- Applicants who are associated with any natural person or legal entity against which restrictive measures and sanctions have been imposed by the European Union that are still in force. Examples are shareholders or senior management of companies included in the sanctions lists.
- Applicants who were, but are no longer associated with any natural person or legal entity against which restrictive measures and sanctions were imposed by the European Union and these sanctions are still in force. Examples are shareholders or senior management of companies included in the sanctions lists, provided that they were associated with these companies when the sanctions were imposed.
- Applicants who have been sanctioned by the European Union or the United Nations with such sanctions still being in force or were in force for a period of up to 12 months prior to the date to the submission of the CIP application.
- Applicants who are associated with any natural person or legal entity against which sanctions were imposed by the European Union or the United Nations with such sanctions still being in force or were in force for a period of up to 12 months prior to the date of the submission of the CIP application.
- Applicants who were but are no longer associated with any natural person or legal entity or agency against which sanctions were imposed by the European Union or the United Nations with such sanctions still being in force or were in force for a period of up to 12 months prior to the date of the submission of the CIP application. Examples are shareholders or senior management of companies included in the sanctions lists, provided that they were associated with these companies when the sanctions were imposed.
- Applicants that are wanted at a European level by Europol or at an international level by INTERPOL.
The validity of the Criminal Record of the applicant has now been extended from 3 months to 6 months from the date of issuance.
The applicant or the applicant’s family members must act in any way that it suggests that they accept or acknowledge in any way the illegal administration in the uncontrolled areas of the Republic of Cyprus. They must also not hold any office in the uncontrolled areas and they must not have illegally entered or in any way cause damage or interference to immovable property located in those areas that belong to another rightful and lawful owner.
2. Two-Stage Screening Process
In addition to tightening the eligibility requirements, the amended CIP rules introduce a new, stricter applicant vetting procedure. From now on, candidates will go through screening twice. First, when making the application and then a second time prior to its approval.
3. Revocation of Citizenship
Citizenship can be revoked from a successful applicant if, pursuant to specific grounds applicable for such revocation, that individual no longer meets the economic criteria or requirements of CIP.
4. Increase of Mandatory Donation
The mandatory donation has been increased to a total of €200,000. Following the approval of the application for naturalization by the Council of Ministers and prior to the issuance of the Cyprus Naturalisation Certificate, the investor is obliged to make a donation amounting at least €100,000 to one of the following causes:
- the Research and Innovation Foundation; or
- the Service of Industry Technology in order to materialize of targeted sponsorship plans for small and very small businesses; or
- the Funds for Renewable Sources of Energy and Conservation of Energy; or
- the National Solidarity Fund
AND
To make a donation amounting at least €100,000 to the Cyprus Land Development Corporation.
5. Naturalization Control Unit
A “Naturalization Control Unit” has been established composed of suitably trained staff of the Ministry of Interior in order to expedite the procedure of examining the Citizenship applications. The Unit has the following main responsibilities:
- examine applications for naturalization by exception under Section 111A of the Civil Registry Law;
- the verification that persons who have obtained the naturalization by exception remain compliant with the applicable rules and regulations under which they obtained the Cyprus citizenship;
- drafting and publishing guidelines, rules or circulars for the better implementation of the CIP;
- prepare and publish an annual report in relation to the implementation of the CIP and any other documentation as required from the Council of Ministers;
- publish on the website of the Ministry of Interior figures regarding the approved and rejected filed applications as well as investments made under each category.
6. Supervision and Control of Registered Service Providers
A “Supervision and Control Committee” has been established by the Cyprus Government in order to further supervise and regulate registered CIP Service Providers and sanction them for non-compliance. The Committee’s composition shall include the General Director of the Ministry of Interior, the General Director of the Ministry of Finance and the representative of the Cyprus Investment Promotion Agency or their representatives provided that they hold managerial positions as well as suitably trained administrative personnel.
To ensure compliance with applicable regulations and CIP Code of Conduct, detailed and stricter provisions have been introduced for the guidance and supervision of the registered Service Providers, and the authorities, restrictions and obligations of the registered Service Providers have been clarified and defined.
7. Honorary Naturalization
A new category has been introduced where Honorary Naturalization can be granted to foreigners for reasons of public interest such as the provision exceptional services to the Republic of Cyprus. Such Honorary Naturalizations will be granted upon the recommendation of Cyprus Government bodies and institutions, as well as sports organizations, religious bodies in Cyprus.
8. Source of Funding
All funds from the investment must originate from the applicant’s bank account or a company or companies of the applicant based overseas. All payments need to be made in financial institutions in Cyprus that are regulated by the Cyprus Central Bank. Copies of bank remittance are to be included in the CIP application.
9. Eligibility and time of submitting CIP applications for family members
The application/s of the investor’s family members, including parents-in-law of the main applicant, can now be submitted either simultaneously with the investor’s application or after the submission of the investor’s application.
10. Parents-in-law
An amendment that will be popular among investors is that the parents-in-law of the main applicant/investor may now apply for Cyprus citizenship in addition to the parents of the main applicant/investor, provided they own a permanent private residence in Cyprus that is worth at least €500,000 (five hundred thousand euros) plus VAT.
11. Development Companies
The investor can no longer incorporate a Construction/Development company for channelling the investment and the permanent residential property. Investment in a no-building zone is not a qualified investment.
12. Investments through incorporation or through participation in Cyprus companies
Investments through incorporation or through participation in Cyprus companies and/or corporations and/pr businesses based on an investment plan is still a qualifying investment for CIP purposes provided that:
- such entities have physical presence in Cyprus; and
- have operations in Cyprus; and
- have substantial activity and have significant turnover; and
- employ a minimum of 9 Cypriot or European Union nationals
Need help with your CIP Application?
If you are interested for more information about the Cyprus Investment Programme and whether you or your family is eligible for the Cyprus Investment Programme we can give you a detailed description of the process and our services. Please feel free to contact us for a consultation via phone at +357 22030555 or via email at info@mavronichis.com.
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The material contained herein is provided for informational purposes only and does not constitute legal advice nor is it a substitute for obtaining legal advice from an advocate. Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced advocate. PARIS MAVRONICHIS & CO LLC will be glad to assist you in this respect.
