A relaxed lifestyle in a Mediterranean atmosphere has established Cyprus as not only a popular tourist destination, but as one of Europe’s top spots for expats, business professionals and retirees.
Boasting 340 days of sunshine a year, a modern infrastructure and high quality of life, Cyprus has already attracted significant numbers of high-net-worth individuals and wealthy families worldwide looking for a permanent or secondary home. The island’s residency and citizenship schemes have seen an increase in applications over the last year, with significant interest from China, Russia and the Middle East.
Although the warm climate and pristine beaches are a large part of Cyprus’ allure, the country offers many additional advantages for globetrotting foreigners looking for their place in the sun. A safe and friendly environment within the European Union, a transparent and beneficial tax framework as well as a great range of real estate options have all contributed to the rising appeal of Cyprus. The citizenship through investment programme has seen a surge of interest from individuals looking to tap into investment opportunities in Cyprus and gain visa-free entry to 163 countries. An EU passport continues to be one of the most coveted in the world as it offers the right to live, work and study in any EU member state.
Residency in Cyprus
Cyprus often features at the top of the list of best countries to live, work or retire in. The charm of this beautiful Mediterranean island and its rich historical legacy has captured the imagination of many and attracts over 2.5 million visitors a year. The popularity of Cyprus stems from various factors, such as its stable political environment, its EU member state status, efficient taxation system, sophisticated infrastructure and the high quality yet low cost of living. Thanks to its enviable lifestyle, low crime and English-speaking population, Cyprus has attracted foreign residents for decades. With its excellent healthcare and private schools, many families have found an ideal home away from home in Cyprus.
The country hosts a large expatriate community, and has the third highest percentage of foreign citizen residents in the European Union, with 12.5% of the total population originating from EU member states and 7.4% from non-EU countries. As a former British colony it is no surprise that British nationals are the largest expat community, with Russian and other Eastern Europeans a close second.
Cyprus is also a favourite destination amongst many retirees, thanks to its lovely climate and substantial tax benefits. Cyprus imposes very low income tax on pensions and has double-taxation treaties with many countries under which retirees’ pensions are not subject to withholding tax at source. If receiving a foreign pension in Cyprus, it is taxed at a flat rate of 5% with an annual tax exemption of €3,417. Countries such as Canada and the UK have an agreement with Cyprus allowing state pensions to remain index-linked when pensioners are resident in Cyprus. There are also a number of tax-free privileges for retirees, including the tax-free importation of a car and personal effects.
Obtaining residency in Cyprus is relatively straightforward with a processing time of two months and no requirement for Greek language proficiency. An applicant’s spouse and children are also eligible for a permit, with children under 18 years old and financially dependent children up to 25 years old also granted residency. Although many decide to relocate to Cyprus permanently, there is no legal requirement to stay in the country as long as you visit at least once every two years.
The criteria for permanent residency in Cyprus are a secure and steady annual income of at least €30,000 derived from abroad and the purchase of one or two new real estate properties with a total purchase cost of at least €300,000, excluding VAT. Industry professionals say property prices have come down substantially in 2013 and many have seen this an opportune time to invest in real estate. The fall in prices is expected to continue in 2014, but some signs of recovery have already been seen in the market, especially with the launch of a series of landmark projects with luxury residential and commercial real estate such as the Limassol Marina and The Oval.
With new incentives and various investment opportunities, the Cyprus citizenship programme has seen increased interest internationally – most notably from China and Russia. With its strategic location in the Eastern Mediterranean and as a neutral and stable country in an increasingly unstable region, Cyprus has also become a very attractive option for ultra-high-net-worth individuals from the Middle East seeking a second citizenship and a means to secure their assets.
Three EU countries have investor immigration programmes with immediate citizenship, of which Cyprus has by far the fastest application processing time. An applicant and his/her family can receive Cyprus passports in three months in exchange for a €5 million investment for a term of three years. The key benefits of the programme are EU settlement and excellent visa-free travel possibilities, no obligation to renounce existing citizenship and no Greek language proficiency requirements.
An added benefit is that there is no obligation to stay permanently in Cyprus, but individuals applying for citizenship must have a permanent privately-owned residence with a purchase price of a minimum of €500,000, excluding VAT. However, if an applicant invests solely in the purchase of a privately-owned residence worth €5 million, three is no obligation to buy another residence for the €500,000.
With Cyprus’ growing investment fund sector and a new legal framework in place, individuals can also obtain citizenship through a €2 million investment into units of an investment fund. This new sector is set to boost the popularity of the Cyprus citizenship scheme. Non-EU citizens can also obtain Cyprus citizenship through direct investment in the country, with multiple ways and combinations such as investing in government bonds, financial assets of Cypriot companies, real estate, infrastructure projects or deposits in Cyprus banks.
While traditionally Cyprus has been a popular tourist and holiday home destination, its economic growth, advantageous regulatory framework and investment opportunities have long attracted international companies to the island. These factors coupled with its geographical location in the centre of three continents, good air connections and its extensive network of double tax treaties established Cyprus into an international business centre and an ideal gateway into Europe and other high-growth markets.
Cyprus has a strong track record for attracting foreign investment and following the economic crisis many are looking at the country with renewed interest. The country’s expanding scope of investment opportunities in real estate, energy infrastructure and other large scale projects have caught the attention of multinational investors. Cyprus has been through a rough year following its bailout in March 2013, but has made remarkable progress in very little time. The island has met all its targets set out by international lenders on schedule and by a significant margin, and some estimates say Cyprus is projected to come out of recession in 2015. These expectations have boosted confidence in the local economy and although currently battling its way through tough times, Cyprus continues to attract both international business and affluent individuals seeking an ideal Mediterranean lifestyle.
For more information, contact a lawyer in Cyprus.
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Updated: July 2016