Areas of Practice

FDI Policy

Foreign investment has long been considered as one of the most important elements of the country's economic prosperity. All efforts have therefore been made to facilitate and further enhance the attraction of foreign investments, and create a friendly environment for foreigners to establish business on the island.

 

Within these lines, the government has liberalised the Foreign Direct Investment (FDI) policy for both EU and non-EU nationals. Administrative procedures have been simplified and as far as the minimum level of investment and the percentage of foreign participation are concerned, no limitations apply in almost all sectors of the economy.

 

Consequently, foreign companies may now invest and establish business in Cyprus on equal terms with local investors; no distinction is being made between foreign and Cypriot companies.

 

Direct Investments
Cyprus offers a friendly environment to foreigners interested in establishing business on the island. Foreign investors have the opportunity of participating in almost all sectors of the economy, with equity participation of up to 100% in any Cypriot enterprise, without a minimum level of capital investment.

 

Moreover, foreign investors can register a company directly with the Registrar of Companies, and obtain any license, if needed, from the appropriate authority according to the nature of investment.

 

There are no exchange control regulations, hence residents and non-residents may hold and manage assets and liabilities in any foreign currency and in any foreign country, including freely convertible and transferable balances with banks on the island.

For further info: www.centralbank.gov.cy

 

Portfolio Investment
The Cyprus Stock Exchange (CSE) is a regulated exchange where all transactions concerning corporate and public securities are carried out. Trading of shares by foreigners on the CSE is as easy as on any modern stock market. Foreign investors are subject to the same rules and regulations of the CSE as Cypriots or other EU nationals regarding capital distribution.

 

Provided that the investment is in line with the CSE’s laws and procedures, investors may acquire up to 100% of the share capital of all Cypriot companies listed on the CSE, except companies operating in specific sectors, such as the banking sector.

 

As far as the banking sector is concerned, no person, either resident or non-resident, may own directly or indirectly 10% or more of a banking company's share capital or voting stock without the Central Bank's approval.

Non-residents only need to remit foreign funds to an account in their own name. A stockbroker is entitled to possess the necessary documentary evidence for the acquisition of shares.

 

Real Estate Acquisition
According to the Acquisition of Real Estate (Amendment) Law of 2003, which has been in force since 1 May 2004:

  • • No restrictions are imposed on EU nationals and EU registered companies for the acquisition of real estate linked to primary residence and FDI, or the acquisition of real estate by EU real estate agents and land developers.
  • • The acquisition of residence for secondary use by EU nationals not permanently residing in Cyprus and EU registered companies not having their registered office, central administration or principal place of business in Cyprus, is prohibited without prior authorisation by the Council of Ministers, for a period of five years following Cyprus’ accession to EU. Note that for simplification purposes, the powers of the Council of Ministers for the acquisition of immovable property, in the above-mentioned context, have been delegated to the District Officers.This restriction will be lifted on 1st May 2009.
    For further info: www.cse.com.cy
  • • As regards non-EU nationals, legal entities registered in non-

 

EU countries, and legal entities registered in Cyprus with the share capital controlled by non-EU nationals, real estate may be acquired subject to the approval of the Council of Ministers (issued by the District Officers). In case the real estate concerned exceeds 2 donums, approval may be granted only for the purposes of:

  • • primary or secondary residence not exceeding an area of  3 donums
  • • professional or commercial premises
  • • industrial sectors deemed beneficial for the Cypriot economy

 

Other Laws & Regulations
Cyprus' legislation guarantees an equitable and fair treatment to foreign investors. However, the liberalisation of FDI policy should not be interpreted as onferring the right on the companies' foreign shareholders, principals/directors or employees' representatives to secure residence and/or work permits.

Furthermore, it will not prejudice the stance of other governmental departments, organisations or authorities regarding the issue of any other permits or consents which may be required under separate laws or regulations.

Examples of such regulations include:

  • • With the exception of universities, all other private tertiary education institutions can be founded and operated only by EU nationals.
  • • Based on the registration requirements of certain medical professions, only Cypriots or other EU nationals are allowed to exercise their profession in Cyprus. Such professions include but are not limited to: dentists, dental technicians, psychologists, opticians, chemists, dieticians, physiotherapists, and psychiatrists.
  • Non-EU nationals can individually obtain up to 5% of the total share capital of broadcasting corporations (television and radio stations), while the total percentage of share capital owned by non-EU nationals is limited to 25%.