Fast Track Economic Citizenship Program - Update

A number of refinements have been made to the "economic citizenship" programme described in our news item dated 22 April 2013. The main changes are as follows:

• The minimum amount to be invested in government funds has been reduced from €3 million to €2.5 million and the requirement that the investments should remain blocked for at least five years has been dropped. However, €0.5 million of the amount to be paid now takes the form of a donation rather than an investment;
• Qualification by acquisition of shares of Cyprus-registered companies is no longer limited to shares in public companies;
• Applicants may now qualify by holding deposits in Cyprus banks, or by a combination of bank deposits, investments in government funds and other assets in Cyprus;
• Additional flexibility has been introduced to the requirements regarding business activities in Cyprus; in particular the requirement to employ at least 10 Cypriot citizens has been dropped. Business activities not satisfying the minimum criteria may be supplemented by other qualifying investments.
• Individuals who suffered losses in Bank of Cyprus and Laiki Bank of less than the previous qualification threshold of €3 million may make good the shortfall by other investments.

For ease of reference the amended terms of the programme are summarised below:

• The applicant has invested at least €2 million in the purchase of shares or bonds (or a combination of the two) issued by the National Investment Company that is to be established and has donated €500,000 to the government Research and Technology Fund. Pending the establishment of the National Investment Company the funds may be deposited with the government.
• The applicant has invested at least €5 million in Cyprus in the following:
  • acquisition of immovable property (residential properties, commercial properties, hotels, and other similar types of properties). Undeveloped land does not qualify;
  • acquisition of businesses or companies based and operating in Cyprus;
  • acquisition of shares of companies registered in Cyprus;
  • acquisition of financial assets such as bonds registered and issued by the Republic of Cyprus including those which will be issued by the Solidarity Fund in accordance with the National Solidarity Fund Law of 2013);
  • participation in a company or a joint venture which is undertaking the execution of a project in Cyprus.

The investments concerned must be retained and not fall below the specified minimum for at least three years.

• The applicant has deposits in Cyprus banks amounting to €5 million for a minimum term of 3 years. The deposits may be personal or corporate or held by a trust of which the applicant is the beneficiary.
• The applicant has a combination of the investments specified in the preceding paragraphs amounting to at least €5 million.
• The applicant has significant business activities in Cyprus, being a substantial shareholder or beneficial owner of a company incorporated and doing business in Cyprus which has paid at least €500,000 per year to public revenues or for professional services over the preceding three years. If the company concerned is based in Cyprus and employs at least 5 Cypriot citizens the annual payment requirement is reduced to €350,000. If it is based in Cyprus and employs at least 10 Cypriot citizens the annual payment requirement is reduced to €200,000. If the annual payments fall short of the required minima the shortfall may be made good by financial investments described in earlier paragraphs. Up to two applications for naturalisation may be submitted in respect of a company.
• The applicant was the holder of deposits in Bank of Cyprus or Laiki Bank at 15 March 2013 and incurred losses of €3 million or more as a result of the measures imposed on the two banks during March 2013. If the loss was less than €3 million the shortfall may be made up by investment in government funds or assets in Cyprus.

Apart from satisfying the criteria set out above, applicants must own a permanent residence in Cyprus with a value of €500,000 or more excluding VAT and have a clean criminal record and no asset freezing orders outstanding against them.

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.