The Strategist

Cyprus to reduce amount of investment required to obtain citizenship

09/15/2016 - 15:25

Government of Cyprus announced its intention to lower financial requirements to investors as part of its program Citizenship-by-Investment. Now, an individual investor may invest € 2 million, compared to previous € 5 million, to become the citizen.

Government of Cyprus intends to make local passports more accessible and more attractive for foreign investors. It announced significant changes to its Citizenship-by-Investment program adopted in 2013.

In particular, minimum investment amount for granting the citizenship has been reduced from € 5 million to € 2 million. Range of people who can receive citizenship has also been expanded. Earlier, the spouse of an investor and their children up to 18 years were eligible for the citizenship along with the investor citizenship. Now, the list includes parents of the investor, but only upon condition of acquisition of real estate for the parents in the amount of € 500 thousand, or joint property for € 1 million.

Investors wishing to obtain citizenship under the program are invited to invest in financial assets of Cypriot companies, real estate investment or in both of them. It is also possible to invest in your own company in Cyprus, if it gives job to five citizens of Cyprus.

Cyprus held 25th place, ahead of US citizenship, Japan and Canada, in The Henley & Partners Visa Restrictions Index 2015. Late last year, Minister of Internal Affairs of Cyprus Socrates Hasikos reported that the program has attracted € 2.5 bln into the country since its launch.

According to the Cyprus Land Department, in 2015 purchasing activity increased in all regions of the country, with exception of Famagusta, which recorded an annual decline of 40%. The strongest growth was noted in Nicosia (+ 70%), Limassol (+ 41%), Larnaca (+ 29%) and Paphos (+ 9%), says Cyprus Property News.

During the first seven months of 2016, real estate sales jumped by 28% compared to the same period of 2015. The most significant rise was recorded in Limassol (+ 37%), Larnaca (+ 30%), Nicosia (+ 23%), Paphos (+ 20%) and Famagusta (19%).

According to RICS, cost of apartments and houses in Cyprus increased by 1.2% and 1.5% respectively in the first quarter. The greatest increase in price of apartments was registered in Famagusta - 1.5%.

Compared with the first quarter of 2015, real estate prices have not changed much. Apartments fell by 0.2%, and houses was added 0.6% to the cost.

As noted by local observers, Cyprus showed steady growth of the market real estate after the country left the financial assistance program in March. Recall that Cyprus received from the EU € 10 billion in aid after the 2008 financial crisis. Successful completion of the banking sector reform and exit from the assistance program strengthened investors' confidence in the economy of Cyprus. 

The real estate market has become even more active after the government in June introduced changes to the tax legislation. The changes include abolition of the real estate tax starting from 1 January 2017. In addition, those who pay the tax until October 31, 2016, will get 75-percent discount on it.