Wednesday 21 August 2019
Pelecanos and Pelecanou LLC
Dedalos Corporate and Fiduciary Services

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Interview with Maria Kontari regarding the changes to the Cyprus Citizenship by Investment Program

1. How will the recent changes on the Cyprus investment scheme such as the restrictions on the annual number of applicants and the establishment of the supervisory and control committee effect the interest of potential investors in choosing Cyprus?

I feel it is something that should have happened long ago. The amendments intend to further reassure the Foreign Direct Investments by attracting individuals to settle and carry on business activities in Cyprus and to further improve the Cyprus economy. Moreover, they intend to enhance the scheme, regulate the procedures and the service providers, and essentially protect the reputation of Cyprus. Those revisions are something that will bring back the control to the Program. Furthermore, the restrictions are not considered a subject to affect the investors. On the contrary, they should feel more secure with the below mentioned ones such as:

a) New Annual Quota Restriction to apply for the Cyprus Citizenship by Investment Program

The number of investors to be granted citizenship under the Cyprus Investment Program will be limited to 700 applicants per year. It’s a fact that the number of applications has increased steadily, however it has never passed the 700 annually so regarding this restriction nothing affects the investors.

b) Stricter Due Diligence Process to apply to Cyprus Citizenship.

With the new amendments, the citizenship programme will also see the implementation of enhanced due diligence procedures. The new due diligence examinations will extend the application process to a six-month period for approval.

c) Only authorized service providers approved to represent the Program in Cyprus.

d)  A Code of Conduct to be adhered to by individuals and legal entities that are involved in Cyprus investment program.

e) Advertising the Cyprus investment program and promoting photos of the Cypriot passport is no longer allowed.

f) Publishing the names of investors who have been issued a Cyprus passport can now be considered a criminal offense. Confidentiality is of the outmost important for the future investors.

 I find it a good opportunity for the market to expand and a chance to be given to different trust worthy developers to enter the market as well, without limiting on only specific ones due to their ability to advertise heavily.

2. The new restrictions to promote the programme including pictures of the Cyprus passport is now fact; will it limit the potential of all service providers handling with the programme to attract investors?

I cannot believe that advertising the Cypriot passport with referrals to the above naming as well as to photos of Cypriot passport is what attracted them the most. It is the benefits of the Program in general as well as comparing to those of other countries’ Programs that attracted the investors initially and this will be what will keep their interest in the future as well. Since its implementation, a significant number of individuals from across the globe have invested in the program thank to the numerous benefits of the Cyprus scheme compared to similar schemes offered by other countries, including inter alia the simple and efficient application procedure, the short timeframe for approval and the investment element of the scheme which allows the exit from an investment after the 3-year lock up period.

More strict rules will definitely reduce any kind of service providers offering the program, but this is a good indication that the government takes this whole issue very seriously and no amateurs will be allowed to jeopardise the quality of the services provided.

3. Are the recent changes to the program related to the flow of Cyprus passport holders to Europe? Are they any statistics of how many investors that obtains the Cyprus passport uses it to immigrate to other European countries?

Being a Cypriot citizen is an advantage which entails a plethora of benefits. Immigrating to another EU country is not their main point. The benefits of the program are so many and valuable that at the first place this is what basic attracts an investor to apply through the Cyprus Investment Program.

  • They can move capital within the European Union.
  • They have the advantage of VISA-free travel to 157 countries worldwide, including Canada and Australia and all European Union countries.
  • Moreover, by becoming a Cyprus citizen, one can obtain a visa to travel to non-EU countries.
  • Taxation benefits as well! Cyprus has developed a competitive tax system taking into consideration all EU and international regulations. 

Finally, those that have the chance to get a Cypriot Citizenship would prefer to live in a place like Cyprus, comprising of wonderful climate and a healthy environment, low crime rates, high living standards, excellent infrastructure, quality education, great investment opportunities, and most important ample sunshine and warm temperatures all year long.

As for how many of those who obtained a passport travelled to other EU countries, it is also hard to estimate due to the freedom of movement.

4. All service providers working with the CIP must be listed in the Registry of certified service providers, does this fact increase the confidence of potential investors to receive high value services from Cyprus service providers? Does it also imply that in the past there were service providers abusing the programme in a way?

Only authorized service providers can represent and promote the Program in Cyprus. Going forward, only registered individuals and companies will be able to submit applications on behalf of investors which are likely to serve their best interest. There will also be a Code of Conduct to be adhered to by individuals and legal entities that are involved in Cyprus investment program – this includes lawyers, real estate advisers, developers, and other service providers. Specific details regarding penalties for offenders of the Code of Conduct will be announced as soon as they are provided by the Cypriot authorities. It will definitely improve the quality of the service from the providers. In my humble opinion, yes, the program was sort of abused by some who promoted it in a way that made it look like everybody can get a passport.

5. The requirement of a due diligence report of the applicant seems one of the most important steps in order to inspect the investors prior the granting of the Cyprus passport. Do you believe that this amendment has decreased the number of non-serious enquiries?

With the new amendments, the citizenship program will also see the implementation of enhanced due diligence procedures. The new due diligence procedure will add 3 months to the application process. There will be a six-month period for clearance instead of three. A 3 months extra period could not make a huge difference considering that is needed to secure the investor’s best interest. Moreover, yes it eliminates the possibilities of non-serious enquiries and targets to investors that are 100% sure of their decision. With the strict legal framework put into place, it will allow to filter out some candidates according to Anti money laundering policies and other.

6. As per the Decision of the Council of Ministers, the Minister of Finance is authorized to carry out an evaluation study on the CIP and its effects on the economy. Has any studies came out recently? What is your professional opinion of the CIP’s effects on the economy?

The growing popularity of these programs will certainly attract more individuals, however, as mentioned before with the strict legal framework put into place, it will allow to filter out some candidates. As for evaluating the effect of the program, I believe this is hard to estimate exactly since every potential investor affects different sections of the economy with various impact. It creates demand, direct or indirect, for legal services, real estate, banking, travelling, house appliances and furniture, etc.

Citizenship by Investment Program, if executed within the lawful structure and control, is not only beneficial at enabling global mobility, but effective at optimizing the nation's growth. Following the economic depression experienced during the financial crisis, the Cyprus property market is now showing clear signs of revival. Purchasing Cyprus property is becoming an increasingly attractive investment, and this is attributed to Cyprus’ recovering economy.

Maria Kontari
Real Estate & Immigration Consultant at A. G. Paphitis Law Firm


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