Key Updates on Cyprus CIP.

The ruling party of Cyprus proposes additional investments of €500,000 for relatives

Amid growing pressure from the EU on Citizenship by Investment Programs (CIP) in European countries, which they label as potential risks for money laundering, the Cyprus government hopes that a new series of reforms can ease the increasing tension. Members of Parliament indicate they are leaning towards expedited consideration of bills related to CIP. The Parliament plans to vote on these bills before the summer recess at the end of July.

The bills will address several aspects of the program that are at risk by further tightening the vetting process for granting citizenship to foreign investors, formalizing procedures for revoking citizenship from investors involved in criminal activities, and possibly introducing large additional investments in exchange for including the spouse’s parents in the application.

Additional Investments for Relatives

The Democratic Rally (Disy), the ruling party of Prime Minister Nicos Anastasiades, seeks to reinstate a provision that previously allowed investors to include their parents in their applications.

Disy proposed a measure that would require additional investments of €500,000 per additional person included in the application. It was not immediately clear whether this option would be available only to parents added to previously approved applications or if it could also apply to other family members from the start.

Streamlining Citizenship Revocation

New laws will also grant the government the authority to revoke citizenship from foreign investors convicted of serious crimes in Cyprus or elsewhere, involving a prison sentence of five years or more. Individuals wanted by Europol or Interpol after obtaining citizenship would face similar consequences. This provision would remain in effect for 10 years from the date the investor receives Cypriot citizenship, and their behavior would be reviewed annually.

No doubt shaken by their inability to revoke citizenship in cases previously deemed unintentional due to legal reasons, lawmakers aim to simplify the revocation process and make it discretionary. In their current proposals, they expand the grounds for revocation to include what they termed crimes of a moral nature. These crimes will cover offenses such as theft, fraud, sexual crimes, and false information, as stated by the Attorney General earlier this week.

Interior Minister Nicos Nouris indicated that the legislation should serve as a security guarantee for the CIP, affirming the program’s stringent procedures.

"These rules best reinforce trust in the investment scheme, with key provisions primarily concerning the scheme’s connection to anti-money laundering laws. Applicants undergo thorough checks when submitting their applications, and companies providing them services are also vetted. After approval, the behavior of successful applicants as residents of Cyprus is reviewed annually for 10 years, and if they break our laws or engage in other undesirable activities, their passport can be revoked."

— Nicos Nouris

The House of Representatives Interior Affairs Committee will review the government’s bills at its upcoming session next week, and lawmakers will have the opportunity to prepare any further amendments at their discretion.

New CIP Rules: Increased Donation Amount, Spouse’s Parents Now Eligible

This Tuesday, after months of political procedures, Cyprus’ Official Gazette published the country’s new CIP rules. Our expert explains the changes in detail.

The Cyprus Investment Program (CIP) has granted citizenship to an increasing number of qualified applicants over the years. Specifically, the CIP approved:

The Cyprus Council of Ministers, under the Civil Registry Laws of 2002-2013 (Subdivision 2, Section 111A), first introduced the program in its current form in 2013.

Earlier this month, the Cyprus Parliament voted on the revised legislation and new program rules. The House of Representatives reviewed existing provisions and made necessary amendments to adjust the program to ensure its continuity and safeguard the country’s reputation.

The Parliament’s Interior Affairs Committee began a series of discussions on the program on June 29 and concluded on July 31, just in time for the summer recess. Some provisions were retained, while others were modified to enhance the CIP’s reliability.

Provisions for honorary naturalization on public interest grounds and naturalization of foreign business owners and investors from 2020 (Regulation) were established by the Council of Ministers under Sections 111A and 117 of the Civil Registry Laws of 2002-2020 (law). The provision implements the objectives of the law and outlines matters included in the amended law. The House of Representatives approved the Regulation, which was then published in the Republic’s Official Gazette on August 18, 2020.

Mandatory Donation Increased by €50,000.

Most of the previously existing CIP investment criteria remain unchanged, with a slight increase in the required total donation amount from €150,000 to €200,000. This mandatory donation is payable only after the citizenship application is approved, right before the investor receives the certificate.

The investment retention period remains unchanged: the investment must be completed within three years before submitting the CIP application and held for at least five years after the naturalization date.

Minimum Investment Amount Unchanged

Contrary to claims, the minimum investment amount has not increased. A minimum investment of €2 million is required if investments are exclusively in residential properties (as long as the property has not been previously used by a CIP applicant, in which case the minimum investment increases to €2.5 million). Or a minimum of €2.5 million for any other investment option.

If the investor decides to create, acquire, or participate in companies operating in Cyprus, these companies must employ at least nine EU citizens (instead of the previous five).

Investments in Alternative Investment Funds (AIF) or Registered Alternative Investment Funds (RAIF) remain available. In addition to investments in real estate, tourism, and infrastructure, options for investments in research and technology, education, healthcare, and renewable energy were included. Various investment types can still be combined.

Investment funds must be deposited in a Cypriot financial institution from accounts registered solely in the investor’s name or in the name of their overseas companies.

Regarding supporting documentation, it is worth noting that the validity period of police clearance certificates has been extended to six months (previously three).

The investor and their family members must not fall into high-risk categories, which include:

• Individuals whose assets have been frozen within the EU.
• Politically Exposed Persons (PEP) under the AML Law 188(I)/2007 who hold political office at the time or have held office within 12 months (instead of 5 years) before application.
• Individuals convicted of serious crimes or under criminal investigation for such crimes as specified in the Regulation.
• Individuals currently or previously linked to any person or entity subject to EU sanctions.
• Persons subject to EU or UN sanctions within 12 months before their application.
• Persons wanted by Europol or Interpol abroad.

Positive Changes for Dependents

A positive aspect is that family members of the investor can now apply for citizenship alongside the primary applicant or at a later stage if they wish. This amendment is welcomed, as it is expected to significantly reduce overall examination times for families.

Another much-anticipated change is that the spouse’s parents of the primary applicant can now apply for Cypriot citizenship under the new Regulation, meaning citizenship can now be granted to both the investor’s parents and the spouse’s parents. As with the primary applicant’s parents, the spouse’s relatives must own a residence in Cyprus valued at at least €500,000.

The amended Civil Registry Law of 2002-2020 clarified the grounds for citizenship revocation and addressed any recent gaps in the law. Moreover, the Regulation introduces several obligations for service providers regarding the promotion of the program and their services to applicants to maintain a high level of transparency in all related transactions.

Creation of an Organization Similar to CIU

At the same time, a special unit for the investigation of naturalization applications has been established to review each application and monitor whether successful candidates meet the approval conditions, as well as to compile statistics on approved and rejected applications.

The new CIP rules are believed to further protect the integrity of the scheme and enhance transparency at all levels: before, during, and after the submission of a CIP application.

During discussions in Parliament, all political parties emphasized the program’s importance and its contribution to Cyprus’ economy. At the same time, many noted that the program should be regulated.

"These rules best strengthen confidence in the investment scheme. When applying, candidates undergo thorough vetting, and service providers for candidates are also checked."

— Cyprus Minister of the Interior.

No Extension for Cyprus CIP Despite Official Closure

Cyprus’ CIP officially ended on November 1, 2020. Earlier this week, the Ministry of the Interior (MOI) issued notices to the island’s CIP service providers, informing them that it would not accept any citizenship applications from foreign investors if the documents were not fully submitted by November 1.

According to Kathimerini, MOI officials prepared for a surge of final citizenship applications, and applicants also rushed to publish their requests for citizenship in local newspapers, a program requirement. Before the program’s conclusion, the MOI requested some employees to work additional hours to help complete all successful applications.

Local news reports state that the government remained firm in its decision to deny any deadline extensions for incomplete applications, despite pleas from lawyers for some flexibility due to missing financial documentation or notarized documents from abroad.

Reports indicate that hundreds of citizenship requests have been published in local newspapers over the past two weeks. However, government sources stated that the number of notifications does not accurately reflect the number of successful applications.