€4 billion raised from Cypriot government EU citizenship scheme allows government to relax rules even further.
October, 23rd, 2017
High net worth individuals and property investors can now take further advantage of a scheme created by the Cypriot government designed to grant citizenship through property investment.
The Cyprus government has long been on a path dedicated to rebuilding its economy since the 2013 bailout by the European bank. Since then, the Cypriot government has sought a variety of ways in which to rebuild its finances and one way in which it identified it could do this and, at the same time, benefit recipients, was to offer a scheme which would attract foreign direct investments and high net worth individuals to base themselves in the country.
As a result, cash rich investors became eligible for an EU passport giving them the right to live and work in Europe via investing in Cyprus. Under an innovative investment scheme launched by the Cypriot government, property investors willing to pay €2 million for a property or invest €2.4 million in a company, were offered a Cypriot passport through naturalisation. Under this fast track scheme, successful applicants had their passport issued within 3 months and there was no requirement for residency. This makes the scheme far more attractive than other equivalent schemes in the EU, where it may take a period of several years (typically 6 - 8 years) for citizenship and a passport to be issued.
The scheme is of great interest to families with children up to the age of 28 (provided they are in full-time education) as passport holders are entitled to travel visa free to more than 140 countries; Cyprus passport holders may enter, reside, study and work in the European Economic Area (European Union, Iceland, Liechtenstein, Norway) and Switzerland without a visa. Cyprus also has the benefit of allowing dual citizenship; in addition, the scheme brings with it all the associated legal rights and privileges of naturalised EU citizens.
While the scheme has faced some criticism, the Cypriot government is keen to point out that it does not financially benefit under the scheme, emphasising that the programme is intended for genuine investors who establish a business base and acquire a permanent residence in Cyprus. One of the key benefits of the Cyprus citizenship programme is that it involves a secure investment, rather than a donation like in many countries. Original applicants selected to buy a single luxury property for €2.5 million or invest €2.5 million in real estate plus €500,000 in a permanent residence.
The permanent residence must be kept and declared as a permanent residence while any remaining investment can be sold after 3 years.
Since the launch of the scheme, land and property development has secured over €4 billion which, in turn, has also had a positive knock-on effect into other areas of the economy, including retail, education, transport, tourism and hospitality.
Although long-favoured as a tourist destination, now the spotlight is very much on economic growth with investment in government bonds (up to a ceiling of €500,000), or a combination of investment in business, organisations, property and other infrastructure projects being promoted by the government. The citizenship through property scheme has been designed so that investors may flip investments as long as they hold onto their investment for the designated period and as long as it is of a comparable or increased value to the original investment - this applies to the permanent residency.
The success of the scheme has now resulted in further financial inducements being offered to investors, namely a reduction in the amount of the investment from €2.5 million to €2 million and the extension of the scheme to include parents of investors as well as their children, becoming eligible for permanent residence in Cyprus; this represents an additional value of €500,000 (ex. VAT).
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