Cyprus: The Cypriot CIP falls the first victim of the tightened regulations introduced by the EU authorities. Read more.
"Dreams and freedom are the same. In order for them to be, they come with a price." - Criss Jami
All EU Citizenship by Investment programs that are currently being offered by Cyprus, Malta and Bulgaria are all set to undergo tremendous changes in 2019 and beyond. What the exact consequences will be is still to be seen, however one thing is already certain – the cheap and affordable EU citizenship by investment opportunities will be soon over. Those who have already obtained their European Union passports have every reason to celebrate. For the rest, the ultimate freedom that is given by the EU passport, will come at a price, a hefty one.
In this article, we will outline the measures that the first "victim" of the European Commission – Cyprus, had to undertake in order to bring its legal compliance in order. And of course, what will this all mean to you – the investor and EU citizenship by investment applicant.
The Cypriot CIP falls the first victim of the tightened regulations introduced by the EU authorities
Legends say that the Greek goddess Aphrodite bathed in the natural cave pools of Latchi in Cyprus in order to preserve her beauty. Today, the Cypriot pools and water basins, as well as its sandy beaches attract 4 million tourists a year - an extraordinary achievement for a country with a total population of about 1 million people only.
Cyprus attracts also a lot of wealthy people who can obtain EU citizenship there in just 6 months (real terms may be longer though). In 2019 however, all new candidates for Cypriot citizenship will have to abide by the new rules of the renewed economic citizenship program. And these are much stricter and harder to meet than they were until now (also much more expensive). The list of the main 10 changes, which for the most part come into force on May 15, 2019, includes the following:
- Limiting the number of approved individual and collective citizenship applications to 700 per year (this change has already entered into force). This will greatly increase the demand and competition for the available 700 slots and is expected to hike up the legal cost enormously;
- Compulsory donations are now required to be paid irrevocably to the Research and Development Fund (75 000 EUR) and to the Land Management Fund (75 000 EUR) to finance affordable housing schemes. This automatically increases the cost of the program by at least 150 000 EUR;
- Foreigners whose citizenship applications have been rejected in any other EU country will not be eligible to apply for Cypriot citizenship by investment (this change has already entered into force);
- Investments will have to be maintained for at least 5 years after the naturalization date (instead of 3 years as previously);
- During this 5-year period from the moment of obtaining citizenship, the investor will have the right to change the chosen investment to another form of permitted investment, only with the prior consent of the Ministry of Finance of Cyprus;
- Investing in government bonds will be no longer acceptable under the program (the state doesn’t profit much from similar investments, hence the change);
- If investment is made in real estate in Cyprus, a planning permit or permit for use (for already constructed projects) will be required. In the case when the acquired property is under construction, at least 5% of the total value of the property must be blocked by a bank guarantee, in which case the corresponding amount will be transferred by the investor to the seller only after the construction of the property is completed. If the real estate is used as collateral for a mortgage, a special declaration must be presented by the bank (waiver of claims);
- In the case when the acquired residential property has already been used by another foreign investor to citizenship by investment in Cyprus, the required amount of investment increases from 2 million EUR to 2.5 million EUR;
- All candidates will now have to be in possession of a valid Schengen visa when applying for Cypriot citizenship by investment. If the candidate has ever been refused Schengen visa, the Republic of Cyprus would not grant such a person the right to obtain citizenship by investment;
- Proper due diligence of the candidate and verification of the data submitted by him should be carried out by a specialized international (foreign) firm for each application (the name of this firm will be announced shortly after the public tender). This condition is expected to be not only costly for the citizenship applicant, but also extremely hard to pass through.
There are also other minor changes to the Cypriot CIP in 2019. If you are interested to know more about the Citizenship by Investment program of Cyprus, please liaise with us at your earliest convenience.
The European Union is closing all loopholes of its economic citizenship programs. With Malta virtually "on hold" and Bulgaria’s CIP "making the headlines", it is no wonder that Cyprus has just gotten much, much more expensive, and also quite hard to get.
We can now say with certainty that the affordable EU citizenship by investment is over. From 2019-2020, only those who are really determined to become EU citizens will be able to meet the new criteria and cost of the renewed EU CIP’s. The Bulgarian program remains the cheapest and the easiest one within the EU, however it is also set to be tightened soon.