Blockchain: Cyprus on the doorstep of the new digital age

Legal support as a prerequisitein efforts to develop blockchain technology

by Antonis Michaelides*

The hype around bitcoin shone a spotlight on the technology which supports this and similar types of currencies. The much-talked about blockchain technology is expected to play a leading role in the so-called Fourth Industrial Revolution, changing drastically the way that modern societies work at the state and public level as well as at the private level.

Blockchain can transform the way we exchange information and carry out transactions, so that everything is executed without intermediaries, faster and cheaper. It is essentially a series of transaction-related entries in a public, shared, and decentralised digital ledger. Each device on the blockchain network can keep a copy of this ledger. The blocks are created through a verification process called “proof of work”, during which a complicated mathematical problem is resolved through an algorithm. Each new group of entries (block) is connected with previous groups, thereby creating a blockchain.

The great potential of this technology lies in its features, since the public access to blockchain ensures information dissemination as well as security and transparency of transactions. As a result, blockchain has been adopted by a quite significant number of businesses, organisations, and governments around the world, who use it in various services, while their number is expected to increase significantly in the near future.

At the same time, the EU launched a Blockchain Observatory and Forum in the beginning of 2018, with a view to monitor developments and promote blockchain technology, while 26 EU member-states together with Norway signed a Declaration creating the European Blockchain Partnership, committing to cooperate on developing blockchain-based technologies. In October, the European Parliament adopted a resolution on distributed ledger technology (DLT) and blockchain, estimating that it can be a useful tool for companies and organisations, which will ensure legal certainty in various processes of their services. 

Malta, as an EU member-state, has already established a regulatory framework for companies active in cryptocurrencies, blockchain, and DLT by enacting three new laws. Apart from this, the Maltese government has created a detailed state strategy on blockchain based on six main pillars, which prove a deep understanding of blockchain technology and its evolution. This strategy entails provisions on the transfer of public registers to blockchain as well as on e-residency, digital identities, and smart governance.

Estonia has since 2016 digitised all its citizens’ data (tax, medical, pharmaceutical etc.) as well as almost all of its public services data, adding them to blockchain. At the same time, the adoption and establishment of e-residency attracted more start-up companies active in cryptocurrencies than in any other European country, since ICOs (Initial Coin Offerings) are now being launched only by persons whose backgrounds have been checked and approved by the Estonian government and police, and have been rated as “trusted ICOs”. This gives a sense of security and trust to potential investors towards the persons who launch ICOs.

On a broader scale, Singapore has been the first Asian country who introduced blockchain to the aviation industry, allowing all interested parties (cabin and ground crews, airport employees, and passengers) to gain access to the continuously updated airport system on arrivals, departures, and delays. In this way, it managed to reduce the risk of contradicting information that users can find online by airlines and/or at the airport website. Singapore airlines have also restructured recently their clients’ payment and reward system by adopting blockchain. Singapore’s Ngee Ann Polytechnic (NP), a higher education institution, has also introduced blockchain to its educational system, as a way of verifying the authenticity of its diploma certificates. By using the blockchain-based student IDs, potential employers are able to retrieve important academic information about the students and their educational background. There are also evident administrative and financial benefits from blockchain adoption, since by using blockchain-based student IDs, universities can retrieve original certificates of their students on their own, thereby reducing the possibility of certificate forgery by the students.

Blockchain can also be used by the land registry department for the registration of property rights, reducing significantly bureaucracy and the possibility of human error, since by registering and validating a title deed through blockchain, title owners can be sure of the accuracy and permanency of their titles. Blockchain ensures that they will never experience what the citizens of Haiti experienced during the deadly earthquake of 2010, when a large amount of state and citizens’ data, documents, and information were destroyed and citizens were left without title deeds. The UK, Georgia, Sweden, and Ukraine have already started working towards this direction. Blockchain is also a useful tool in electoral processes, preventing potential electoral fraud and/or manipulation of results, thereby restoring public confidence in the electoral system. After adding the votes to blockchain, there is no possibility of any kind of manipulation, as this was evidenced in the mid-term elections of 2018 in West Virginia, USA, where this technology was used. 

However, as with all kinds of technologies and innovations, blockchain is not a panacea, since it may be risky in many ways and has several disadvantages. The verification process before adding an activity to blockchain requires a huge amount of energy. Another significant disadvantage is that it can be used for illegal transactions and activities, as was the case with “Silk Road” in the USA, an online platform on the “dark web”, where users were carrying out illegal bitcoin transactions and could not be traced. As a result, US regulations today prevent users active in cryptocurrencies from remaining completely anonymous, obliging such online platform owners to collect clients’ information while registering, validate their identity, and confirm that their names are not included in any terrorist group list. Additionally, although this technology is safer and can reduce drastically the possibility of human error and/or information manipulation, the complete exclusion of human intervention will undoubtedly bring about several negative results in both society and economy, which need no further elaboration here.

Without a doubt, blockchain is a new and continuously evolving technology under evaluation, which is not yet sufficiently regulated. As a result, citizens who use blockchain technology usually act outside the law, while others even avoid using it, fearing possible violations of the law. Therefore, the establishment of a progressive and proactive legislation on blockchain will enhance citizens’ confidence in this technology and make it safer and attractive to more people. At a time when citizens’ direct involvement in public service activities through digitisation is becoming more and more common as well as necessary, and when public dissatisfaction with data manipulation and/or hacking is increasing, blockchain is viewed as a necessary evolution in their daily interaction. Of course, any such effort requires full respect for personal data protection, especially in EU countries, where detailed legislations imposing extremely high fines have been established on this issue.

Cyprus, following the above examples and on the basis of a more modern and progressive understanding of global developments, far from practices and ideologies of the past, can also play a leading role in the regulation of certain aspects of blockchain, establishing a framework that the regulatory authorities and users can trust. A regulatory framework based on a sufficient and effective legislation can make Cyprus an attractive destination for investment and the establishment of companies using blockchain. More specifically, the adoption of blockchain technology can contribute positively to different aspects of the society, including economy, education, and health, provided that blockchain legislation will be established and the existing legislation will be updated, to ensure that blockchain technology will not be used for illegal activities. However, such an initiative requires legal advisors specialised in such issues as well as experienced Information Technology professionals, to ensure that legislators sufficiently understand blockchain technology, in order to guide and protect citizens through such legislation.  

As this was analysed above and is evidenced by the aforementioned examples, Cyprus is yet in the early stage of blockchain understanding and, even more, of blockchain use. Nevertheless, the adoption of this technology and the establishment of sufficient legislation on several areas of interpersonal relations and everyday life will soon be a necessity instead of a choice. The adoption of innovative and technologically advanced services and applications, as well as of legislation governing such issues, will be the only way for Cyprus to remain a possible destination for such investments in a rapidly developing and chaotic world, which constantly offers new options.

*Advocate at Clerides, Anastassiou, Neophytou LLC

Blockchain: Cyprus on the doorstep of the new digital age

Legal and technological support as a prerequisite in efforts to develop the country’s technology sector

by Antonis Michaelides*

The hype around bitcoin shone a spotlight on the technology which supports this and similar types of currencies. The much-talked about blockchain technology is expected to play a leading role in the so-called Fourth Industrial Revolution.

Blockchain can transform the way we exchange information and carry out transactions, so that everything is executed without intermediaries, faster and cheaper. It is essentially a series of transaction-related entries in a public, shared, and decentralised digital ledger. Each device on the blockchain network can keep a copy of this ledger. The blocks are created through a verification process called “proof of work”, during which a complicated mathematical problem is resolved through an algorithm. Each new group of entries (block) is connected with previous groups, thereby creating a blockchain.

Due to its great potential, this technology was adopted by many businesses, organisations, and governments around the world, who are using it in various services. At the same time, the EU launched a Blockchain Observatory and Forum in the beginning of 2018, with a view to monitor developments and promote blockchain. Subsequently, EU member-states signed a Declaration creating the European Blockchain Partnership, committing to cooperate on developing blockchain-based technologies. 

Malta has already established a regulatory framework for companies active in cryptocurrencies and blockchain. Estonia has since 2016 digitised its citizens’ data (tax, medical, pharmaceutical etc.) as well as almost all of its public services data, adding them to blockchain. Singapore has introduced blockchain in the aviation industry, allowing interested parties to gain access to the continuously updated airport system on arrivals, departures, and delays. In this way, it managed to reduce the risk of contradicting information that users can find online. Singapore’s Ngee Ann Polytechnic (NP) has also adopted blockchain as a way of verifying the authenticity of its diploma certificates. By using the blockchain-based student IDs, potential employers are able to retrieve important academic information about the students.

Blockchain can also be used by the land registry department for the registration of property rights, since by registering and validating a title deed through blockchain, the title will be more accurate as well as permanent. Many countries have started working towards this direction. Blockchain is also a useful tool in electoral processes, preventing potential electoral fraud, as this was evidenced in the mid-term elections of 2018 in West Virginia, USA, where this technology was used.

Without a doubt, blockchain is a new, continuously evolving technology under evaluation, which is not yet sufficiently regulated. At a time when citizens’ direct involvement in public service activities through digitisation is becoming more and more necessary and when public dissatisfaction with data manipulation and/or hacking is increasing, blockchain is viewed as a necessary evolution in their daily interaction.

Cyprus, following the above examples and on the basis of a more modern and progressive understanding of global developments, can proceed to the regulation of certain aspects of blockchain, establishing a framework that the regulatory authorities and users can trust. The regulation of blockchain technology can contribute positively to different aspects of the society (e.g. economy, education, health). However, such an initiative requires experienced legal advisors as well as experienced Information Technology professionals, to ensure that legislators sufficiently understand blockchain technology, in order to guide and protect citizens through such legislation.  

*Advocate at Clerides, Anastassiou, Neophytou LLC

Mr. Antonis Michaelides, advocate at CLERIDES, ANASTASSIOU, NEOPHYTOU LLC writes on the importance and development of the alternative investment funds in Cyprus

Alternative Investment Funds: A Tool for Growth

Since the 2013 banking crisis, Cyprus has made a concerted and multi-faceted effort to restore confidence and growth in the financial system. One of the most successful measures was the adoption by the Cypriot parliament in 2014 of the Alternative Investment Funds Law 113(I)/2014, based on relevant EU directives which regulates the establishment and operation of alternative investment funds in the Republic, creating a regime that can offer Cyprus multiple economic benefits and further its reputation as a financial centre.

Legal framework
Alternative investment funds may be established in the Republic under the Alternative Investment Funds Law 113(I)/2014, (the “AIF Law”), which replaced the International Collective Investment Schemes Law. The Cyprus Securities and Exchange Commission (CYSEC) is the competent regulatory and supervisory authority of AIFs in Cyprus.

Types and characteristics

An AIF is a collective investment undertaking, including investment compartments thereof, which raises capital from a number of investors with a view to investing it in accordance with a defined investment policy for the benefit of those investors. It is not authorised as an Undertaking for Collective Investments in Transferable Securities (“UCITS”) in accordance with section 9 of the Open-Ended Undertakings for Collective Investments Law of 2012 (“UCITS Law”). An AIF may be set up as (i) a mutual fund, (ii) an investment company in the legal form of a limited liability company with shares, or (iii) as a limited liability partnership.

Benefits and advantages

Cyprus AIFs are licensed and supervised by CYSEC which strictly follows EU directives and guidelines, thereby offering investors the level of protection and supervision one would expect to enjoy in a EU country. At the same time, Cyprus enjoys a developed system of law supported by a knowledgeable judiciary and an extensive list of agreements for the mutual protection of investments. When it comes to tax treatment, Cyprus AIFs enjoy all the tax benefits the Cyprus tax regime has to offer, including, inter alia, access to its extensive double tax treaty network and relevant EU directives.Importance

With a total estimated growth of approximately 150% since 2014, the ever-increasing establishment of AIFs and the insulation of investments in the country through the vehicle of AIFs, undoubtedly demonstrates that Cyprus retains essential advantages and remains an attractive investment destination.  CYSEC expects that  the anticipated tapping  of a range of financial technologies, innovations and applications such as the application and operation of Finch  blockchain, Robo portfolio management and Robo advice, as well as the establishment of Crowdfunding,  will bring  new momentum  to AIFs in Cyprus.

Developments and growth

Following the examples of other EU countries, the government is currently working on a new bill that aims to modernise and upgrade existing legislation, transforming it to a much more attractive piece of legislation. The new bill shall, inter alia, provide for the establishment and operation of registered alternative investment funds that will be free of the obligation to obtain the authorisation of CYSEC, provided that their manager is a licensed and regulated entity.

It goes without saying that the government is on the right track as concerns the re-establishment of investors’ trust in the Cyprus economic and financial system. However, there is always more that can be done. A more holistic modification and upgrade of the general legal system for a more efficient and quicker administration of justice in economic and related matters should be examined. Moreover, combatting red tape more robustly so as to reduce procedural delays, would underscore the government’s determination to position Cyprus as a leading regional and international financial centre.

By Antonis Michaelides, Attorney at Clerics, Anastassiou, Neophytou LLC

Εναλλακτικά Επενδυτικά Ταμεία: Εργαλείο για την ανάπτυξη

Μετά την τραπεζική κρίση του 2013, η Κύπρος προέβη σε μια συντονισμένη και πολύπλευρη προσπάθεια με σκοπό την αποκατάσταση της εμπιστοσύνης και την ανάπτυξη του χρηματοπιστωτικού της συστήματος. Ένα από τα πιο επιτυχημένα μέτρα ήταν η υιοθέτηση από τη Βουλή των Αντιπροσώπων, το 2014, του περί Οργανισμών Εναλλακτικών Επενδύσεων Νόμου 131(I)/2014 με βάση σχετικές οδηγίες της ΕΕ. Ο εν λόγω νόμος ρυθμίζει τη δημιουργία και λειτουργία των ταμείων εναλλακτικών επενδύσεων στη Δημοκρατία, δημιουργώντας ένα καθεστώς που μπορεί να προσφέρει πολλαπλά οικονομικά οφέλη στην Κύπρο και να ενισχύσει περαιτέρω τη φήμη της ως χρηματοοικονομικό κέντρο.
 

Νομικό πλαίσιο

Οι Οργανισμοί Εναλλακτικών Επενδύσεων δύνανται να συσταθούν στη Δημοκρατία δυνάμει του περί Οργανισμών Εναλλακτικών Επενδύσεων Νόμου 113 (Ι)/2014 (ο «Περί ΟΕΕ Νόμος»), ο οποίος αντικατέστησε τον περί Διεθνών Συλλογικών Επενδυτικών Σχεδείων Νόμο. Η Επιτροπή Κεφαλαιαγοράς Κύπρου (η «Επιτροπή») είναι η αρμόδια ρυθμιστική και εποπτική αρχή των ΟΕΕ στην Κύπρο.
 

Τύποι και χαρακτηριστικά

Ο ΟΕΕ είναι οργανισμός συλλογικών επενδύσεων, συμπεριλαμβανομένων των επενδυτικών τμημάτων του, ο οποίος συγκεντρώνει κεφάλαια από αριθμό επενδυτών με σκοπό την επένδυσή τους σύμφωνα με καθορισμένη επενδυτική πολιτική προς όφελος των εν λόγω επενδυτών. Δεν αδειοδοτείται ως Οργανισμός Συλλογικών Επενδύσεων σε Κινητές Αξίες (ΟΣΕΚΑ) σύμφωνα με την πρόνοια 9 του περί του Ανοικτού Τύπου Οργανισμών Συλλογικών Επενδύσεων Νόμου του 2012 (ο «Περί ΟΣΕΚΑ Νόμος»). Ο ΟΕΕ μπορεί να συσταθεί υπό τη μορφή (i) κοινού κεφαλαίου, (ii) εταιρείας επενδύσεων με τη νομική μορφή εταιρείας περιορισμένης ευθύνης με μετοχές, ή (iii) ετερόρρυθμου συνεταιρισμού.
 

Οφέλη και πλεονεκτήματα

Οι ΟΕΕ στην Κύπρο αδειοδοτούνται και επιβλέπονται από την Επιτροπή, η οποία ακολουθεί αυστηρά τις οδηγίες και τις κατευθυντήριες γραμμές της ΕΕ, προσφέροντας στους επενδυτές το επίπεδο προστασίας και εποπτείας που ένας αναμένει να συναντήσει σε μια χώρα της ΕΕ. Ταυτόχρονα, η Κύπρος διαθέτει ένα ανεπτυγμένο νομικό σύστημα που υποστηρίζεται από μια εξειδικευμένη δικαστική εξουσία και έναν εκτεταμένο κατάλογο συμφωνιών για την αμοιβαία προστασία των επενδύσεων. Όσον αφορά τη φορολογική μεταχείριση, οι ΟΕΕ στην Κύπρο απολαμβάνουν όλα τα φορολογικά οφέλη που προσφέρει το κυπριακό φορολογικό καθεστώς, συμπεριλαμβανομένης, μεταξύ άλλων, της πρόσβασης στο εκτεταμένο δίκτυο συμβάσεων για αποφυγή διπλής φορολογίας και στις σχετικές οδηγίες της ΕΕ.
  

Σημασία

Με τον συνολικό ρυθμό ανάπτυξης να υπολογίζεται γύρω στο 150% από το 2014, η συνεχώς αυξανόμενη ίδρυση ΟΕΕ και η εισχώρηση επενδύσεων στη χώρα μέσω των ΟΕΕ αποδεικνύει αναμφισβήτητα ότι η Κύπρος διατηρεί ουσιαστικά πλεονεκτήματα και παραμένει ένας ελκυστικός επενδυτικός προορισμός. Η Επιτροπή αναμένει ότι η αξιοποίηση μιας σειράς χρηματοοικονομικών τεχνολογιών, καινοτομιών και εφαρμογών όπως η εφαρμογή και λειτουργία της Fintech, του blockchain, η υπηρεσία διαχείριση χαρτοφυλακίου τύπου Robo και η συμβουλευτική υπηρεσία τύπου Robo, καθώς και η ίδρυση της Crowdfunding, θα δώσουν νέα ώθηση στους ΟΕΕ στην Κύπρο.
 

Εξελίξεις και ανάπτυξη

Ακολουθώντας τα παραδείγματα άλλων χωρών της ΕΕ, η κυβέρνηση επεξεργάζεται ένα νέο νομοσχέδιο που αποσκοπεί στον εκσυγχρονισμό και την αναβάθμιση της υφιστάμενης νομοθεσίας, μετατρέποντας την σε ένα πολύ πιο ελκυστικό νομοθέτημα. Το νέο νομοσχέδιο προβλέπει, μεταξύ άλλων, τη δημιουργία και τη λειτουργία καταχωρημένων οργανισμών εναλλακτικών επενδύσεων, που θα απαλλάσσονται από την υποχρέωση αδειοδότησης από την Επιτροπή, υπό την προϋπόθεση ότι ο διαχειριστής τους είναι εγκεκριμένη και ρυθμιζόμενη οντότητα.

Είναι αναμφισβήτητο ότι η κυβέρνηση βρίσκεται στον σωστό δρόμο όσον αφορά την αποκατάσταση της εμπιστοσύνης των επενδυτών στο οικονομικό και χρηματοπιστωτικό σύστημα της Κύπρου. Ωστόσο, πάντα υπάρχουν περιθώρια βελτίωσης. Πρέπει να εξεταστεί μια πιο ολιστική τροποποίηση και αναβάθμιση του γενικού νομικού συστήματος για αποτελεσματικότερη και ταχύτερη απονομή της δικαιοσύνης σε οικονομικά και συναφή θέματα. Επιπλέον, η επιτακτική καταπολέμηση της γραφειοκρατίας με σκοπό τη μείωση των χρονοβόρων διαδικασιών, θα ενίσχυε την αποφασιστικότητα της κυβέρνησης να αναδείξει την Κύπρο ως κορυφαίο περιφερειακό και διεθνές χρηματοπιστωτικό κέντρο.
 Δικηγόρος στο Κληρίδης, Αναστασίου, Νεοφύτου ΔΕΠΕ.
Αντώνης Μιχαηλίδης

MRS RODOULLA ACHILLIDOU, ACCREDITED MEDIATOR AND LAWYER AT CLERIDES, ANASTASSIOU, NEOPHYTOU LLC WRITES IN THE PRESS ABOUT THE ADVANTAGES OF MEDIATION.

NATURALIZATION OF PERSONS & RESIDENCY PERMIT

Naturalization of Persons

The Republic of Cyprus has established a scheme for naturalization of investors in Cyprus by exception (hereinafter the “Scheme”) as part of its policies to encourage foreign direct investments and attract high net worth individuals to reside and do business in Cyprus. The Scheme, as revised on the 13^th of September 2016, provides for the granting of citizenship to non-Cypriot high-net worth individuals, investors and entrepreneurs subject to the fulfillment of certain criteria, terms and conditions as set out below. 

Who can apply?

A non- Cypriot citizen may apply for naturalization by exception either personally or through a company/companies.

In case of an application through a company/ies, the applicant must either (a)participate in such company/ies as a shareholder – in proportion to his holding percentage, or (b) through investments done by his/her spouse or jointly with the spouse or (c)  as a high-ranking senior manager of such  company/ies that she/he receives such a remuneration that generates for Cyprus tax revenues of at least €100,000 over a three (3) year period and provided that this tax has already been paid or prepaid.

Economic Criteria

According to the Scheme, the applicant shall meet one of the below economic criteria:

1.      Investment in real estate, land development and infrastructure projects:

The applicant must have made an investment of at least €2, 0 million for the purchase or construction of buildings or for the construction of other land development projects (residential or commercial developments, developments in the tourism sector) or other infrastructure projects.

It shall be noted that investment in land under development is included in this criterion, provided that an investment plan for the development of the purchased land will be included in the application. It is understood that investment in land that is situated in a building zone of zero development, is excluded.

2.      Purchase or Establishment or Participation in Cypriot Companies or Businesses:

The applicant should have made a purchase or should have participated in companies or organizations established and operating in Cyprus with investment costs of at least €2,0 million. The invested funds shall be channeled towards the financing of the investment objectives of these companies exclusively in Cyprus, based on a specific investment plan.

The applications shall be evaluated to verify that the companies or organizations have proven physical presence in Cyprus, with significant activity and turnover and employ at least five (5) Cypriot or citizens of European Union member-states. The minimum number of employees shall increase, if more than one applicant invests simultaneously or almost simultaneously in the same business or company. In addition, the employees of the companies need to have legally and continuously resided in Cyprus during the five (5) years preceding the application submission date.

3.      Investment in Alternative Investment Funds or financial assets of Cypriot companies or Cypriot organizations that are licensed by Cyprus Security and Exchange Commission (hereinafter “CySec”)

The applicant should have bought units of at least €2,0 million from alternative investment funds (AIF) established in Cyprus, licensed and supervised by the CySec and whose investments are made exclusively in Cyprus, in investments that meet the criteria of this Scheme or in areas approved by the Minister of Finance.

 In order to confirm that the investments that meet the criteria of the current Scheme will be kept for at least three years, the manager or the auditor of the Fund shall inform in writing and on an annual basis, the Ministries of Finance and Interior with reference to the value of the initial investment.

The purchase of financial assets of Cypriot companies or organizations of at least €2,0 million, such as bonds, bills and securities, issued with the approval of the CySec, by companies that have proven physical presence and substantial economic activity in  Cyprus, and have as a purpose the financing of the investment plans of these companies or organizations exclusively in Cyprus, based on an investment plan, fall under this criterion.

Finally, it shall be noted that the purchase by an AIF of units of other AIFs is not considered eligible.

4.      Combination of the aforementioned investments

The applicant may proceed with a combination of the above investments, provided that the total investment will amount up to at least €2,0 million. Within this criterion, the applicant may purchase special government bonds of Cyprus, up to €500.000, which will be issued by the Public Debt Management Office of the Ministry of Finance, on condition that the investor will retain these bonds for a three year period. The characteristics and the terms of these special bonds will be determined by the General and Special Issue Terms of the Government Bonds of Cyprus. Investments in government bonds through the secondary market are not considered eligible.

Terms and conditions

1.       Clean Criminal Record;

2.       Residence in the Republic of Cyprus:

·      the applicant must possess a permanent privately-owned residence in Cyprus, the purchase price of which must be at least €500.000, plus V.A.T. ,

·      members of the same family, who apply separately, can collectively acquire a residence, provided that the total value of such home-property covers the amount of €500.000, plus V.A.T. per each applicant ; and

3.       Residence permit:

·      the applicant, prior to his/her naturalization as a Cypriot citizen must hold a residence permit in Cyprus as below,

·      in case the applicant does not already hold a residency permit, he/ she may apply for one simultaneously with the application of naturalization. If application for residency permit is solely for naturalization purposes, there are no other conditions other than the ones stated in the Scheme.

Submission of documents

Specific documents must be submitted and, depending on the case, additional documents will be required.

Further to the list provided by the ministry of interior of Cyprus, additional documentation may be requested by either the Ministry of Interior or the Ministry of Finance for evaluation purposes.

General notes

·      in addition to the above-listed criteria, terms and conditions,  it is required that the necessary investments should have been made by the applicant during the three (3) years preceding the date of the application and the applicant must retain the said investments for a period of at least three (3) years as from the date of the naturalization;

·      the Cabinet of Ministers has absolute discretion in deciding whether or not to grant a citizenship to the applicant;

·   in the case where, following a periodic inspection, it has been established that a criterion, term or condition of the Scheme has been breached, the granted naturalization may be revoked; and

·      the Scheme provides for the grant of the Cypriot citizenship to the spouse or partner of the applicant, to the parents of the applicant (subject to the requirements set out therein) and to the financially dependent adult children of the applicant as well (as these are defined therein). The spouse or partner of the applicant may acquire the  Cypriot citizenship after filing the relevant application but it is understood that the Council of Ministers allows for the submission of the spouse’s or partner’s application along with the applicant’s application so that they will both acquire the Cypriot citizenship simultaneously. As regards the minor children, the adult children and the applicant’s parents their application shall be submitted after the applicant has acquired the Cypriot citizenship. Moreover, it shall be noted that the adult family members of the applicant prior to their naturalization as Cypriot citizens must hold a residence permit in Cyprus.

Residency Permit

A residency permit may be issued to any person who is a third country nationals (the “Applicant”), provided that such person fulfills the following criteria:

(a)               The Applicant must prove that he/she has at his/her disposal a secured minimum annual income of €30,000, from sources other than employment in Cyprus. The required income of €30,000 could derive from salaries of employment abroad and not in Cyprus, pensions, stock shares, rents, etc. The necessary minimum annual income is increased by €5.000 for each dependent person of his/her family (spouse/partner and children) and by €8.000 for every dependent parent or parent-in-law.

(b)               The Applicant must submit the application form accompanied with a Title of ownership or contract of sale, of a property in Cyprus, a house, apartment or other building, in his/her name and/or the name of his/ her spouse, of a minimum market value of €300,000 and proof of payment for at least €200,000. The contract of sale should already have been submitted to the Department of Lands and Surveys.

                Further it is noted that the real estate purchase may be accepted even when made in the name of a legal person, provided that (i) the applicant and/or his/her spouse are the sole shareholders or the ultimate beneficial owners of it, and (ii) the legal person is legally established in the Republic of Cyprus or other member state of the European Union or European Economic Area. 

            Also, it shall be noted that the purchase must be in relation to a property sold for the first time by a development company.

(c)                The Applicant must submit a confirmation letter from a Cypriot Bank stating that he/she has deposited a minimum capital of €30.000 in an account, which will be pledged at least for a three year period.

It is noted that the amounts mentioned in paragraphs (b) and (c) should be proven to have been transferred to Cyprus from abroad.

(d)               The applicant must submit a Criminal Record Certificate (if the applicant resides abroad), which must be issued by the Authorities in his country of origin, and he should not constitute in general any threat against public order or security in Cyprus.

(e)                The applicant should submit a Statement that he does not intent to work or be engaged in any form of business in Cyprus.

(f)                 The applicants should visit Cyprus at least once every two years.

The application should be submitted on the prescribed form to the relevant authority personally or through post or through a representative.

It is estimated that when applying the procedure described above, the period for the examination of the application, shall not exceed a period of 2 months.

The residency permit issued to an applicant covers his/her spouse and children under the age of 18.

Note however that the residency permit does not provide visa-free travel to other EEA Member States.

For further information please contact us at:

Clerides, Anastassiou, Neophytou LLC

Ergoserve Building

Limassol, Cyprus

Tel: +357 25 274050

info@cyplaw.com

This material has been prepared by professionals of Clerides, Anastassiou, Neophytou LLC. It is intended as a general guide only, and its application to specific situations will depend on the particular circumstances involved. Accordingly, we recommend that readers seek appropriate professional advice regarding any particular problems that they encounter. This information should not be relied upon as a substitute for such advice. While all reasonable attempts have been made to ensure that the information contained herein is accurate, Clerides, Anastassiou, Neophytou LLC accepts no responsibility for any errors or omission it may contain or any opinions contained herein whether caused by negligence or otherwise, or for any losses, however caused, sustained by any person that relies upon it.

Clerides, Anastassiou, Neophytou LLC provides corporate and commercial legal services, to public and private international and local clients spanning multiple industries. Please visit our internet site at www.cyplaw.com for a full description of our services and representative transactions. 

All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without prior permission of the publisher.

International honours for Clerides, Anastassiou, Neophytou LLC

Clerides, Anastassiou, Neophytou LLC has been again selected and ranked by the highly regarded international rating directories for law firms, LEGAL 500 and Chambers and Partners, as among the best law firms in Cyprus for 2016.

Specifically, Clerides, Anastassiou, Neophytou LLC achieved a high distinction by LEGAL 500 for its experience and expertise, as well as for the high standard of quality services it offers in three categories of law, namely, Commercial, Corporate and Mergers & Acquisition, Tax, and Banking & Finance.

Chambers and Partners also gave high praise to the law firm in its annual evaluation. The law firm excelled in the categories of Commercial and Corporate law , Banking and Finance, as well as in the category of Tax. Chambers and Partners stresses that the firm is well known for its knowledge in the areas of private equity and venture capital funds, capital markets and financial transactions, particularly on a cross-border level. It adds that the firm is also recognised for its experience in the area of corporate bonds and structuring of commercial transactions, thus achieving maximum security for its clients. It also notes the firm’s expertise in a wide range of cross-border matters, such as mergers, restructurings and Initial Public Offerings (IPO).

Lawyers Effie Anastassiou, Stavros Clerides and Stephanos Evangelides also received highly honourable personal mentions, regarding their expertise and the high level of quality services they provide.

The two international rating agencies base their evaluations on a large sample of independent research work and choose and evaluate the most established law firms globally by area of expertise. It is worth noting that Clerides, Anastassiou, Neophytou LLC has received similar honorary distinctions in previous years from these particular agencies, as well as others.

THE ALTERNATIVE INVESTMENT FUND MANAGERS REGIME – A NEW ERA FOR THE FUNDS INDUSTRY

On July 5, 2013 Cyprus transposed into law the EU Alternative Investment Fund Managers (AIFM) Directive by introducing the Alternative Investment Fund Managers Law (AIFML).

Choosing Cyprus as the place of establishment of an AIFM holds multiple benefits, such as the local favorable tax regime, Cyprus network of double tax treaties, comparably low establishment and maintenance costs and of course taking advantage of the passporting features of the directive itself across the EU.

Our firm has already auspiciously assisted in the successful application of a major European Institutional Group for an Alternative Investment Fund Manager licence in Cyprus under the AIFM law, and facilitated with all relevant EU passporting procedures.

Moreover, our firm maintains a specialised team of associates, who stand ready to assist you with high-value, cost-efficient services, undertaking all necessary arrangements and steps for the successful application of an AIFM license.

To obtain the full brochure on the AIFML, you may email us at: info@cyplaw.com and we shall provide you with the pdf version of this file.