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A 360-degree review of revolutionary Cyprus Citizenship by Investment program

Kristina Kurkuliak
19 November 2018

Security and stability, the two pillars of business management so valued by respectable businessmen and financially independent individuals, may seem more like an elusive dream today. The truth is, it is perfectly possible to eliminate the obstacles, notwithstanding unpredictable life and political turns. Comfort, safety, stability, freedom of movement are all essentially luxury items that have price tags on them.

Why Cyprus citizenship?

Let us skip the obvious enticements such as the Mediterranean Sea, tenderness of the local clime, remarkable culture and history. On top of that, Cyprus guarantees excellent level of comfort for business managers, doers and performers of the world.
To ensure a constant influx of foreign funds into the economy, the authorities of the Republic of Cyprus have initiated the Acquisition of the Cypriot Citizenship by Investment program. Thanks to this policy, Cyprus has received around €4 billion in foreign investments since 2013.

Choosing what suits you most

It is possible to obtain a Cypriot passport in exchange for €2 million investment in one of the following options:

The investments must be held for 3 years and then may be sold. In addition to the options listed above, applicants must purchase and retain indefinitely residential property worth at least €500,000 (excluding VAT).
Cyprus is currently going through the stage of construction boom, which is evident from fluctuations in building permits issuance. According to the official Cypriot statistical agency, Cystat, the number of real estate building permits issued within the year has grown by 56% in 2016; latest report says the total value of building permits issued between January and August 2017 increased by 49%, and the total area by 40% as compared to the corresponding period in 2016.
The Central Bank of Cyprus can be contacted to ensure real estate purchase-related transactions are legal and safe. However, there are multiple other reliable property sellers and developers on the island.

What sets Cyprus passport apart from similar offers

As a member of the European Union, Cyprus allows its citizens to travel visa-free, or get a visa on arrival, to almost 160 countries: other EU countries, the United Kingdom, Switzerland, Canada among them. You and your family will be able to work, study and manage business in any EU country, or the UK. So, you get freedom of movement and freedom to choose where to stay, as there are no requirements to be Cyprus-bound.
Speaking of family members, the main applicant may include their spouse and dependents (financially dependent children under 28 years of age, and financially dependent parents) in the application. The status is then passed on to the next generations.
The processing is quick, too, usually taking from 3 to 6 months.
Cyprus passport holders who were born outside Cyprus and have not been Cyprus tax residents for 17 years out of 20 become non-domiciled tax residents, which means complete relief from worldwide dividend, bank deposit, interest or rental income taxes. Among EU countries, Cyprus has the lowest corporate income tax of 12.5%. There are no inheritance, gift, or net wealth taxes.

On your way to a Cyprus citizenship

Once the investor makes up their mind on which investment plan to follow through, the further steps are:

The principal applicant may include in the application for acquiring the status of a citizen of a Republic of Cyprus:

The main applicant’s spouse may submit the documents simultaneously with the main applicant. Children and financially dependent children over the age of 18 are to apply once the investor completes the process of naturalisation.

Main required documents

Let us go over the package of documents that the applicants are to submit:

Cyprus CBI program requirements for the applicants

The list of requirements imposed by authorities of various countries that are offering their passport in exchange for foreign investment is roughly the same. Here are principal qualifications for future economic citizens of Cyprus:

The applicant is risking rejection in the event of

Total cost of your second passport of the Republic of Cyprus
Let us take a look at property taxes and fees in Cyprus.
Property VAT (Value Added Tax): Buying primary (new) real estate objects in Cyprus is subject to 19% VAT. Secondary (resale) real estate projects, as well as property with building permit obtained before May 1st, 2004, are not subject to VAT.
The said 19% tax rate on new property may be reduced to 5% for the first 200 sq.m. regardless of its total size, on several conditions: the property is to be used as the applicant’s main place of residence in Cyprus during their stay, no renting out, and no previous property purchases at the reduced rate.
Property Transfer Fee: If VAT was not paid while purchasing property, the following transfer fees apply:

Price of a real estate object Transfer fee
≤ €85,430 1.5%
Next €85,430 (€85,431 to €170,860) 2.5%
≥ €170,861 4%

Stamp duty: The property buyer is expected to pay this tax within the first 30 days of signing the sales contract.

Value Rate
€0 to €5,000 zero
€5,001 to €170,000 0.15%
€170,001 and over 0.2%

Same principles apply to commercial real estate objects.
Since we have now overseen the main tax-related points, let’s move on to additional fees imposed on application processing:

Cyprus citizenship: Answering to all your queries

  1. It is possible to retain the first citizenship, as Cyprus legally allows dual citizenship. The information on Cypriot passport acquisition remains confidential, and is never transmitted to the authorities of the primary country of residence.
  2. It is not necessary to reside in Cyprus prior to or after obtaining citizenship. The passport holder still gets to keep the status without permanently relocating to Cyprus.
  3. In September 2016, the Council of Ministers terminated the joint investment option.
  4. Do I have to buy additional residential property worth at least €500,000 for personal use given that I have already invested €2 million (excluding VAT) in residential real estate? – In this case, no additional property purchase is required.
  5. Can I include in my application the real estate that I already own in Cyprus to cover some of the investment amount? – Yes, it is possible to do so, provided that the property was bought not earlier than 3 years prior to applying for the CBI program.
  6. It is possible to re-sell the real estate objects once 3 years pass after passport issuance, but a residential property worth at least $500k should be kept in possession indefinitely. The real estate can be also re-sold within the 3-year period, given that the passport holder simultaneously invests the necessary minimum in another object.

Cypriot passport guarantees protection by effective laws, allows the investor to manage the affairs according to clear and transparent rules, and to augment personal wealth. By obtaining the passport of the Republic of Cyprus, you and your close ones get access to previously unattainable opportunities. Your children and posterity will have the golden gates of Europe and best universities on the planet open before them.

Interested in more detailed information about Cyprus CBI program? Contact us!

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