CyprusProfile talks to Angelos Gregoriades, President of CIFA about the investment funds sector developing, and their expectations for Cyprus in 2017
“The high level of net inflows in Europe into UCITS and AIFs recorded in 2016, confirm the high level of confidence investors have in European investment funds.
In Cyprus, we look forward in 2017 to see growth levels in the establishment of alternative investment funds in particular and assets under management due to various upcoming reforms aiming to optimise the regulatory, legal and tax framework.
Indeed, Cyprus has determined to introduce in the AIF Law, a list of non-management safe harbours for limited partners, which should help give confidence and legal certainty to investors being admitted to a Cyprus limited partnership for the first time. Cyprus also aims to go one step further and, like the limited partnerships of Guernsey and Jersey, allow the general partner to elect upon establishment for a limited partnership to have separate legal personality, while maintaining tax transparency status. This is a key consideration for structuring funds of funds or establishing internally managed Limited Partnerships.
Aside from focusing on the limited partnership, of particular note is Cyprus’ introduction of a regime for ‘registered’, but not authorised, AIFs to facilitate quick and cost efficient fund launch. Similar to the Luxembourg RAIF, the Cyprus RAIF will be able to market to professional investors and/or well-informed investors and will be managed by a full scope Cyprus or EU Alternative Investment Fund Manager (AIFM). The regulated external AIFM will be entrusted by the Cyprus Securities and Exchange Commission (CySEC) to provide indirect supervision and ensure compliance.
It has also been decided to further introduce a licensing requirement and supervision regime for the Cyprus so called sub-AIFM (or Mini Manager) which will provide a lighter regime for small managers.
Finally, specific provisions for the taxation of fund managers and employees working in the funds industry, the taxation on Net Asset Value for Common Funds and clarification to the taxation provisions regarding funds structured as Limited Partnership are envisaged”.