Cyprus’ government has set up several levels of incentives attractive to foreign investments. One is the citizenship-by-investment plan which gives full citizenship to qualified individuals investing over 2 million EUR in real estate. Successful applications earn the right to live work and study in all 28 EU member states.

In September 2016, Cyprus made changes to its CIP. The modifications include a reduction of the minimum investment — from 2.5 million EUR down to 2 million. Also added is the potential to include the primary applicant’s parents as long as an additional 500,000 + VAT EUR will be invested in buying a private residence within Cyprus.

Any non-Cyprus citizen is allowed to apply for citizenship through Naturalization by Exception of the meet one of the investment criteria. A significant change included in the 2016 revision was the allowance for investment in Alternative Investment Funds or financial assets of Cyprus’ enterprises or organizations licensed by the SEC.

The primary application would purchase units totaling at least 2 million EUR from AIF and covers the acquisition of financial assets of Cyprus’ businesses.

The qualifications are either be done in person or through a company in which the primary applicant acts as a shareholder or high-ranking senior executive.

What are ‘Alternative Investment Funds’?

In July 2014, the AIF’S enactment was approved. The AIF law brings the Cypriots Investment Funds into line with the EU Alternative Investment Fund Managers.

AIFs are set up under the domestic Cyprus fund legislation and allows three different types to be registered:

  1. AIFs which are available to the public in the form of a Common Fund or a Limited Liability Partnership.
  2. AIF’s are made available to professional investors in the form of a business — with fixed or variable capital — a Common Fund or a Limited Liability Partnership.
  3. AIF’s with Limited Number of Persons (AIF-LNP) in the form of a Company or Limited Liability Partnership. Both forms permit legally segregated funds to be created as a subset of the maximum number of investors limited to 75. The AIF-LNP is a regulated investment und which represents the most flexible legal form allowable by low.

The passage of the AIF law has revoked and superseded the ICIS Law of 1999. According to the current AIF Law, a well-informed investor is one who is a non-professional investor and meets these criteria:

  1. Affirms, by signing, that he is knowledgeable of the perils attached to the proposed investment.
  2. Invests either a minimum of 125,000EUR in the AIF or is assessed as a well-advised investor by:
  3. Credit institution in Cyprus or EU
  4. An investment firm in Cyprus or EU
  5. A UCITS management business

The intent of an AIF-LNP is the investment of funds within an ascertained investment strategy. These vehicles permit an arrangement enabling a group of investors to add to their assets collectively.