Cyprus: Investment Funds In Cyprus – A Guide For Global Investors

Last Updated: 21 September 2018
Article by Angelos Paphitis

Most Popular Article in Cyprus, September 2018

An investment fund that is registered in Cyprus is a vehicle that allows investors to raise capital through various financial instruments. Cyprus law provides various investment options which allows investors to reap significant benefits in terms of profits, risk mitigation, tax planning opportunities, and greater safety in business due to transparency in laws and financial regulations.

Under Cyprus law, there are two distinct types of investments funds: Alternative Investment Funds (AIF) and Undertakings for Collective Investment in Transferable Securities (UCITS).

What are Cyprus Alternative Investment Funds (AIF)?

An "AIF" is a collective investment fund designated for raising external capital from a number of investors with a view to investing funds in favor of those investors according to a defined investment policy. The Law provides two types of "AIFs" – a.) with a limited number of persons ("AIF-LNP") up to 50 persons (which is considered to be more flexible); and b.) an unlimited number of persons ("AIF-UNP").

The legal basis for regulating the respective relationships is the Alternative Investment Funds Law of 2014, which is aimed at updating local legislation in accordance with EU Directives- especially with respect to investor protection and transparency. After enactment of the 2014 Law, Cyprus became more attractive for the international investors by providing a comprehensive spectrum of the legislative framework for all types of funds. Moreover, the Alternative Investment Funds Legislation of 2018 has been enacted and will come into effect as soon as it is published in the official Government Gazette. This legislation will allow for the establishment of the Registered Alternative Investment Funds ("RAIF") in Cyprus which investors may find particularly attractive given that:

  • it has no minimum capital requirements;
  • it may be open- or closed-ended;
  • appointment of the local depository is required;
  • the number of the investors is unlimited;
  • it is available only for well-informed and/or professional investors (see below);
  • it is subject to registration in the Central Register, but it will not fall under the direct supervision of CySEC.

The RAIF may operate with multiple compartments provided that it is envisaged by its constitutional documents.

The AIF with a limited number of persons is not subject to the minimum share capital requirements and other investment restrictions and can invest in any assets (real property, derivatives, equities, etc.). This type of AIF may be marketed only to "Professional" and/or "Well-informed" investors. "Professional clients" are regarded as clients who possess the experience, knowledge and expertise to make their own investment decisions and who are able to properly assess related risks. "Well-informed" clients are "non-professional" investors who have confirmed in writing that they are aware of the nature of their investment operations and assume the appropriate risks. In addition, they shall invest at least €125,000 in an AIF or be successfully assessed by a bank, investment firm or UCIT management company as a well-informed investor with the required level of expertise and knowledge.

Typically, there are low registration and maintenance costs for AIF-LNPs. Unlike any other types of AIFs, this particular one does not involve any restrictions with respect to investment patterns and mandatory investment diversification. The operation of the AIF-LNP requires the appointment of an Investment Manager, an auditor, a Custodian and a Fund Administrator. However, if the operation of the AIF-LNP is not in excess of the established financial criteria then no minimum initial capital requirements and investment diversification requirements are required. This type of AIF is suitable for wealthy families and private clients.

The AIF-LNP may exist either as an:

  • Investment Company (as a limited liability company with fixed or varied capital); or
  • a Limited Partnership.

The AIF with unlimited number of persons may be subject to investment restrictions (depending on the type of investors) for the purpose of reducing the investment risk and is subject to the minimum share capital requirements (at least €125,000 or €300,000, where it is formed as a self-managed investment company). This type of AIF may be marketed to any type of investors, including professional, well-informed and retail investors. A "retail" investor is an investor who does not fall within the category of a professional or a well-informed investor. The AIF-UNP may be either self-managed when it is established as an Investment Company, or managed externally by a portfolio manager. Both options are subject to registration in the special register maintained by CySEC.

The AIF-UNP may be registered as a(n):

  • Common Fund;
  • Investment Company as a limited liability company with fixed or varied capital; or
  • Limited Partnership.

What is an Undertakings for Collective Investment in Transferable Securities ("UCITS")?

A UCITS is a collective investment consisting of publicly collected capital in transferable securities, money market instruments, deposits and any other investments via stock markets and bank deposits. UCITS offer a variety of advantages and perhaps the most important benefit is that every investor enjoys professional management of his/her assets. Other benefits include having access to those investments instruments which he/she would not have access to as an independent investor. UCITS also provide a high level of safety and high institutional protection.

General Characteristics of the UCITS:

  • The UCITS shall be an open-ended investment undertaking and shall be marketed to the public in Cyprus or other EU member states in accordance with the law.
  • Its units shall, at the request of holders, be repurchased or redeemed, directly or indirectly, out of the assets of undertakings.
  • UCITS mainly operate to diversify risk.
  • Its objects are strictly limited to collectively investing capital raised from the public, in securities and/or in other liquid financial instruments.
  • Its regulations or constitutional documents must provide for the sale of its units to third countries / the public in Cyprus.
  • Its borrowing policies shall comply with the conditions set out in Directive 2009/65/EC.

A UCITS may act either as a Mutual Fund or a Variable Capital Investment Company.

Mutual Funds are one of the most popular types of collective investment vehicles. The investors, instead of acting separately, combine their capital and create a common asset to invest in securities (such as equities, bonds and other market instruments) within the concept of the UCITS. The manager of the fund and the custodian of this type of the UCITS shall satisfy the criteria required by the CySEC.

A Variable Capital Investment Company is typically a public liability company with a variable capital depending on subscriptions and redemptions performed in conjunction with the valuation of the assets. Custody of the assets is normally assigned to an approved custodian. The management of the assets is carried out by the fund manager assigned by the CySEC.

What are the advantages of investing money in Cyprus?

  • Being an EU member state, Cyprus has implemented all EU standards, directives and regulations including those with respect to investments funds and schemes;
  • Cyprus is advantageously located between three continents and is economically connected with Europe and Asia;
  • Cyprus has an economically and politically stable environment;
  • Cyprus can offer an up-to-date regulatory framework that conforms to the relevant EU directives and provides full transparency and flexibility for those who are interested in making investments in Cyprus;
  • Registration and operational cost with respect to the various types of investment vehicles in Cyprus are among the lowest in the EU;
  • Investors are offered a quite favorable tax regime and tax planning opportunities, as there are no specific tax requirements with respect to the Cypriot AIFs and UCITS. The above investment funds enjoy all of the tax advantages offered by the Cypriot tax legislation. which include but are not limited to:
  • Double taxation treaties with more than 60 countries;
  • Foreign dividends are exempted from taxation (subject to some conditions); and
  • No withholding taxes on repatriation of dividends, interest and royalties to non-residents.

Cyprus is now one of the fastest growing centers of investment funds in Europe due to the continuous development of its legal and financial regulatory framework.  Moreover, Cyprus's thriving financial services sector makes it one of the leading jurisdictions in Europe in the investment domain. Through our highly-qualified lawyers, who have in-depth experience working with local and international investment funds, our company is proud to offer our clients a wide range of services including tax planning, registration and administration of various types of investment funds, reporting and compliance with legal and regulatory requirements based on the individual requirements of clients in accordance with the highest professional standards.

Please review our latest article about RAIF |  New type of funds (Cyprus): The Registered AIF (RAIF).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions