How Cyprus attracts investors
Cyprus is a popular destination for immigration or getting a "safe haven" among wealthy families, entrepreneurs and investors. The island is already a member of the European Union, but is not yet part of the Schengen zone; an application for membership is still pending.
The country has a high standard of living, quality medicine and good education, including several British schools. Cyprus has one of the lowest crime rates in the European Union as it is the fifth safest in the world.
Over the past decade, Cyprus' GDP has steadily increased by several percent per year, which makes the country's economy one of the fastest growing in Europe.
Permanent residence in Cyprus is interesting for investors for many reasons:
- Accelerated receipt of a Schengen visa.
- No taxes on foreign income, investments, inheritance, low rates of property, income and corporate taxes.
- Growing real estate market and stable rental income.
- The ability to do business in Cyprus with the ease of starting a company.
- Free medical insurance.
- You do not need to know Turkish and Greek. For everyday communication, English is enough: 80% of the population speaks English.
- The term for obtaining permanent residence is two months.
- You can apply for status remotely.
- You can get permanent residence immediately for the whole family, including the wife or husband, children under 25 and the parents of the spouses.
- You don't have to live in Cyprus all the time. It is enough, after the approval of the application, to fly to the country to submit the biometric data. Then you only visit the island once every two years.
- The investor retains permanent residence status throughout his life and is passed on to children.
- The opportunity to become a citizen of Cyprus five years after receiving permanent residence. With a country passport, you can travel without visas to 170+ countries including the European Union and the United Kingdom.
The benefits make Cyprus one of the most attractive destinations in the European Union for relocation: the country is comfortable both for life and for doing business.
Investment options for obtaining permanent residence in Cyprus
An investor can apply for permanent residence in Cyprus in a simplified category 6.2. It is the so-called Fast Track Permanent Residency, which will take only two months to complete. This status is issued for life, it does not need to be extended.
The investor chooses any of four investment options for obtaining permanent residence in Cyprus:
- Residential properties.
- Commercial real estate.
- Shares of Cypriot companies.
- Shares of Cypriot investment funds.
All of these options require an investment of €300,000.
Residential properties. Buying housing in Cyprus is one of the fastest and easiest ways to get permanent residence in the EU country.
An investor can buy one or two primary properties for a total amount of €300,000 plus VAT. The standard VAT rate is 19%, but for the only home bought for own use it is 5%.
Real estate should be in new buildings. If the applicant buys two properties, their developers may be different. It is impossible to buy housing on the secondary market. The exception is if the investor bought the secondary property before May 7th, 2013.
An investor can buy real estate as an individual or through a company registered to the applicant or to the applicant’s spouse. It is important that this company is solely owned by the applicant or the spouse.
Real estate must be owned until the expiration of permanent residence or obtaining citizenship. If an investor wants to sell real estate, he is legally obliged to buy another property at the same or higher price.
Commercial real estate. Instead of a residential property, an investor can buy one or two commercial real estate for a total amount of €300,000 excluding VAT. Commercial properties can be bought in both the primary and secondary markets.
Shares of Cypriot companies that make a profit on the island and have five employees.
Shares of Cypriot investment funds are from €300,000. You can buy securities only from collective investment funds of the AIF, AIFLNP and RAIF types.
Requirements for applicants wishing to obtain permanent residence in Cyprus
Just investing money is not enough to obtain status: the applicant is still required to prove the legality of the source of funds, earn enough money and have a permanent registration address in Cyprus.
Requirements for investors when applying:
- The applicant and his spouse have no criminal record.
- No sanctions, restrictions or bans on entry to EU countries and the UK.
- Confirmation of the legitimacy of the source of income.
- An impeccable personal and business reputation.
- You cannot work for hire in Cyprus. But you can own a business. You can only invest money received from foreign sources. But applicants can own a Cypriot company: for example, the one in which they invest money to obtain permanent residence.
- The main applicant earns €30,000+ per year outside Cyprus. For each additional applicant, the income requirements increase by €5,000 for the spouse and children, by €8,000 for each parent. As an example, for a family with two children, the annual income should be €45,000: €30,000 + €5,000 × 3.
- Open a deposit in a Cypriot bank and keep €30,000 on it for three years.
- Buy or rent property in Cyprus. If an investor invests money in commercial real estate or local securities, he must still have an address in Cyprus. It is necessary to buy or rent a property. There are no arearnor cost requirements.
It is not necessary to reside permanently in Cyprus, although, in order to maintain permanent residence, residents must fly to the island at least once every two years. Otherwise, the status may be canceled. However, obtaining a residence permit in another country is prohibited by the terms of the program.
Together with the investor, permanent residence in Cyprus can be obtained by:
- a spouse;
- children under 18;
- unmarried student children under 25 who are financially dependent on the main applicant;
- children of any age with physical or mental disabilities;
- parents of the both spouses.
An adult and financially independent child can be included in the application, but an additional €300,000 will have to be added to the amount of investments, and the child must have an annual income of €30,000 or more.
Permanent residence in Cyprus is reserved for the investor's family for life. Future son-in-law or daughter-in-law and grandchildren do not inherit this status. They must apply for a temporary residence permit.
Documents for applying for permanent residence in Cyprus
You can become the owner of permanent residence in Cyprus by investment in just two months.
Immigrant Invest lawyers will help in the collection and preparation of all papers including translation and apostille, filling out and submitting applications, as well as drafting affidavits for remote submission of documents.
But first you need to collect all the necessary documents:
- Completed application in the MIP1 form.
- Originals and copies of valid passports of the applicant and his family.
- Biography of the main applicant.
- Declaration of income confirming the amount of annual income of at least €30,000.
- A bank confirmation letter for a €30,000 deposit and a bank transfer document as a confirmation that the money came to a Cypriot bank from abroad.
- Proof of investment. When investing in real estate, this is a certificate of ownership or a sale and purchase agreement (if the object has not yet been completed, then a sale and purchase agreement certified by the land department and confirmation of payment of at least €200,000). When investing in local securities, a share purchase agreement, a certificate of the owner of the shares and a certificate of incorporation.
- Proof of permanent address in Cyprus: certificate of ownership, sales or lease agreement.
- Declaration of absence of employment in the territory of Cyprus.
- Applicants’ certificates of no criminal record.
- Marriage certificate.
- Birth certificate.
- Medical insurance for the whole family.
Children over 18 years of age need documents stating that they are studying at a university and financially dependent on the main applicant. We translate these documents into English or Greek and certify with an apostille.
How to get permanent residence in Cyprus by investment
To obtain permanent residence in Cyprus for investment, you do not have to fly to the island: the lawyers of Immigrant Invest will help you go through the entire procedure remotely. The applicant is only required to prepare documents and decide on the object for investment.
The procedure for obtaining permanent residence consists of seven steps:
- Due Diligence. We will conduct Due Diligence: check the source of income to determine whether it can be accepted under the program and whether the income for investment will be approved. All that is required from the applicant is a passport.
- Collection of documents. After passing Due Diligence, we will start collecting documents for the application. When all the documents are ready, we will translate and apostille them and hand them over to our agent in Cyprus.
- Opening an account in a Cypriot bank, transferring €30,000 to it. You will need to go through bank Due Diligence and prove the legality of the origin of the money. We will help you choose a bank and collect documents for opening an account.
- Fulfillment of the investment condition. If an investor buys a property, he pays the developer at least €200,000. Property documents or sales contracts must be submitted to the Cyprus Land Department. We will help you choose an object, prepare a sales contract and conduct a transaction.
- Applying for permanent residence. Submitting an application in Cyprus to the Civil Registry and Migration Department. The investor does not have to fly, everything will be done by our lawyers in Cyprus. When applying, a fee of €500 will be charged for spouses and children under 18 years of age. For parents and children under 25, an additional €500 per person must be paid. You will also need to pay a registration fee of €70 per person.
- Processing of the application. The Migration Department will review the application and forward it to the Secretary of the Ministry of the Interior, who will make a decision within two months.
- Obtaining permanent residence. After the approval of the application, the investor and his family will have to visit Cyprus within a year to submit biometric data and obtain a permanent residence permit in Cyprus.
What taxes do owners of permanent residence in Cyprus pay?
Cyprus has one of the most favourable tax regimes, making it an excellent place to do business in the European Union.
If the investor does not have a Cyprus tax residency, he does not have an obligation to pay tax on foreign income, including income from securities. Non-residents pay taxes only on income earned in Cyprus.
Tax residents of Cyprus pay income tax on all income, including global income, as well as other types of taxes. There is no tax on securities profits and capital gains. When selling Cypriot real estate, you must pay capital gains tax (on the difference between the cost of selling and buying) at a rate of 20%.
Cyprus residents must pay income tax on a progressive scale:
- up to €19,500 per year - 0%;
- up to €28 000 per year - 20%;
- up to €36 300 per year - 25%;
- up to €60,000 per year - 30%;
- from €60,000 per year - 35%.
There is a special regime for retirees - 5% of the amount of pension payments if they exceed €3,420 per month.
The annual property tax must be paid only if its value exceeds €170,000: the rate will be from 0.25 to 0.40%. If the property is cheaper, no tax is required.
Residents are also subject to a special defense tax. It is levied on interest, dividend and rental income at rates up to 15%. If the resident has received dividends from Cypriot companies, no tax is required.
There is no inheritance tax.
There are two ways to obtain tax residency status. The first one is standard: to spend more than 183 days a year in the country. The second is the so-called 60-day rule. An investor can become a resident of the island if:
- He or she is a holder of permanent residence on the island.
- Owns residential property in Cyprus.
- Spent 60 days on the island during the applicable tax year.
- He or she is not a tax resident of any other state (that is, he has not lived in another country for more than 183 days a year).
- Doing business in Cyprus or running a Cyprus tax resident company.
Cyprus has one of the lowest corporate tax rates in the European Union: resident companies are taxed on their worldwide income at a rate of 12.5%. The company does not pay tax if it receives income from dividends, exchange rate differences, securities transactions, or a foreign branch of a Cypriot company.
There are also tax incentives for IT companies and those who make money by selling intellectual property. Non-resident companies pay tax only on income earned on the island. When restructuring a business, almost all of the income is deducted from tax.
Cyprus property market
Having a permanent address is a prerequisite for obtaining permanent residence in Cyprus. Therefore, investors often invest in real estate, preferring it to other investment options.
Until 2020, the Cyprus property market experienced a construction boom, and prices grew steadily by 1 to 4% per year. In 2019, the real estate sector accounted for 16% of the island's GDP. Property tax was abolished in 2018.
In 2020, due to the lockdown, the demand for island real estate was at a minimum: the number of purchases by foreign investors decreased by half, prices stopped growing and even decreased, the number of transactions decreased by 19%, and the volume of new construction projects also decreased slightly. Foreign buyers could not go to select a property in Cyprus, and the closing of the citizenship by investment program also had an effect.
The Cyprus property market stagnated the most in the first half of 2020. Already in the summer, a smooth recovery has been outlined.
We believe this is a great time to buy property in Cyprus. The decline in construction in 2020 and a gradual increase in demand will lead to higher prices. Now the borders of Cyprus are open to tourists, the economy is recovering from the effects of the lockdown. Housing prices have already started to rise. If you are planning to buy a house in Cyprus, we advise you not to postpone while there are still properties on the market at discounted prices.
Housing prices depend on the city and the type of property. For example, in Famagusta in the north of the island you can find an apartment for €100,000 or a house for €300,000, while in Limassol average apartments cost between €150,000 and €300,000. The most popular areas are the main resort cities: Nicosia, Limassol, La aca, Paphos and Famagusta.
Renting out housing and commercial real estate brings an average of 2 to 6% per year. The most lucrative regions for rental housing are Nicosia, Limassol and La aca.
When buying real estate, you will have to pay 1% of the value of the property to a lawyer, €500 for the transaction and VAT of 5, 9 or 19%. The state duty is also charged:
- up to €85,500 is 3%;
- from €85,500 to €170,000 is 5%;
- from €170,000 is 8%.
Non-investment ways to get permanent residence in Cyprus
Investing is the way to fast track permanent residency and the easiest way in Cyprus, but not the only one. Status can also be obtained for the purchase of real estate, as an employee, entrepreneur or financially independent person.
Purchase of real estate under the program of permanent residence of category F (Fast Track Permanent Residency). The owner of real estate in Cyprus can live on the island with a special visa issued on the basis of ownership: 90 days during each half of the year. If he wants to live permanently in Cyprus, he must apply for permanent residence on the island under category F.
Differences between permanent residence in category F from the investment program:
- There are no strict requirements for the price of housing, but its size must correspond to the size of the applicant's family. That is, a studio for a couple with a child will not work, but a one-bedroom apartment will be enough. In practice, we are talking about real estate from €100,000 excluding VAT.
- You can buy both primary and secondary real estate.
- You have to live in the purchased housing on your own, it cannot be rented out.
- The applicant's annual income must be from €9,568 and from €4,613 for each family member.
- You do not need to keep €30,000 in a Cypriot deposit for three years. Before submitting an application, an amount of approximately €15,000 to €20,000 must be deposited into a local bank account; it can be returned immediately after the application is submitted.
- Children over 18 years old lose their permanent resident status and can only return it after purchasing their own property and submitting an application on their own.
- The parents of the spouses cannot get permanent residence with them.
- The owner of permanent residence cannot be employed in Cyprus.
- Registration of permanent residence will take up to 18 months.
- There are no guarantees of approval regarding the application and obtaining permanent residence. The better the financial condition of the applicant is, the more predictable obtaining status will be.
Permanent residence by naturalization can be obtained by those who have held a residence permit in Cyprus for more than five years.
Family reunification permanent residence is suitable for those whose husband or wife is a Cypriot citizen. In this case, a temporary residence permit is first issued, and after five years of living in the country, you can change the status to a permanent one.
How to obtain Cypriot citizenship
From 2013 to 2020, Cyprus offered a citizenship program by investments from €2,200,000 for five years. But since November 2020, the investment citizenship program has been closed.
The owner of permanent residence in Cyprus can apply for the citizenship of the country through naturalization: 5 years after obtaining the status (1,825 days in 8 years), of which he must constantly be on the island for the last 12 months. If the investor often leaves the country, he will be able to apply for citizenship in another 1-3 years. Before applying, you will need to pass a test of knowledge of the language and culture of the country and pass an interview. Cyprus allows multiple citizenship, so the applicant will not have to give up his original citizenship.
The Cypriot passport allows the holder to travel without visas to 170+ countries, including the Schengen zone, the UK and Canada, as well as freely live, work and study in any country of the European Union.
You can also obtain Cypriot citizenship through marriage with a citizen of the island: 3 years after marriage and at least 2 years of life on the island, family reunification and birth in the family of citizens of the country.
Who will benefit from permanent residence in Cyprus by investment
Permanent residence in Cyprus is obtained mainly for the sake of tax benefits when investing and doing business. This is not the case when the status will help you travel without visas. To enter the Schengen countries, you need to apply for a visa, but according to an accelerated procedure.
Cyprus is also a great destination for those seeking a calm and comfortable life in the Mediterranean. The country is actively developing, the island has a mild climate with sun all year round.
Frequently Asked Questions
The applicant can choose one of four investment options:
- Residential properties.
- Commercial real estate.
- Shares of Cypriot companies.
- Shares of Cypriot investment funds.
All of them require an investment of €300,000.
The applicant must earn income outside of Cyprus from €30,000 per year + €5,000 for a wife or husband and children + €8,000 for each parent. You will also need to open a deposit in a local bank and keep €30,000 on it for three years.
Holders of permanent residence in Cyprus can permanently live and conduct business in the country, use free insurance, and quickly obtain a Schengen visa.
Non-residents do not have to pay taxes on foreign income, profits and inheritance. There are low tax rates for residents.
Permanent residence will be given in just two months, the status is maintained throughout life and is passed on to children. It is not necessary to live on the island as it is enough to visit once every two years.
After five years, you can obtain Cypriot citizenship which will allow you to travel without visas to the European Union and Great Britain.
The Cyprus Citizenship by Investment Program has been suspended.
Now the owner of permanent residence in Cyprus can obtain the citizenship of the country through naturalization having lived in the country for five years. To obtain a Cyprus passport, you will need to pass a test on the language and culture of the country, and pass an interview.
It is also possible to obtain Cypriot citizenship through marriage to a citizen of the country, family reunification and by birth in the family of Cypriot citizens.