“In order to enhance foreign investment intensity, the FDI policy has
been liberalized for both EU and non-EU nationals.”
In order to attract foreign investment and enhance economic prosperity in
Cyprus, the Government has liberalized the Foreign Direct Investment (FDI)
policy for both EU and non-EU nationals. Administrative procedures have been
simplified and no limitations apply in most sectors of the economy, as per the
minimum level of investment and the foreigners’ participation percentage.
Moreover, bureaucratic intervention has been reduced, fostering investment
opportunities by non-residents.
Consequently, foreign companies now have the opportunity of investing and
establishing business in Cyprus on equal terms with local investors; no
distinction is being made between foreign and Cypriot companies.
Direct Investment
Foreign investors
have the opportunity of participating in most sectors of the economy, with
equity participation of up to 100% in any Cypriot enterprise, without a minimum
level of capital investment. Foreigners considering of registering companies,
acquiring shares of existing companies, or setting-up business activities in
Cyprus, no longer need approval from the Central Bank of Cyprus.
As from 1st October 2004, 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. Investors may
address to the Foreign Service Centre of the Ministry of Commerce, Industry, and
Tourism for further guidance and direction.
Portfolio Investment
Trading of
shares by foreigners on the Cyprus Stock Exchange (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 approval. Banking
companies are also required to obtain the Central Bank’s approval before
registering more than 50% of their share capital in the name of
non-residents.
Non-residents only need to remit foreign funds either to an account in their
own name or in the name of their stockbroker in Cyprus. The stockbroker is
entitled to possess the necessary documentary evidence for the acquisition of
shares; in case of liquidation, the stockbroker will remit the original
investment, adjusted to the investment’s return.
Acquisition of Real Estate
According
to the “Acquisition of Real Estate (Amendment) Law” of 2003, which is in force
as from 1st of May 2004:
- No restrictions are imposed on EU nationals and EU registered companies for
the acquisition of real estate linked to primary residence and Foreign Direct
Investment, or the acquisition of real estate by EU real estate agents and land
developers.
- The acquisition of residence for secondary use is prohibited without prior
authorization by the Council of Ministers, for a period of five years following
Cyprus’s accession to EU, to 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.
- As regards non-EU nationals, legal entities registered in non-EU countries,
and legal entities registered in Cyprus with share capital controlled by non-EU
nationals, real estate may be acquired subject to the approval of the council of
Ministers. 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, and industrial sectors
deemed beneficial for the Cypriot economy.
Exchange Control
As of 1st of May
2004, the Exchange Control Law has been abolished; 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 bank on the island.
Other Laws and Regulations
The
liberalization of the FDI policy should not be interpreted as conferring the
right to 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, organizations 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:
- Private tertiary education institutions can be founded and operated only by
EU nationals.
- Based on the registration framework 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: Dentist, Dental
Technicians, Psychologists, Opticians, Chemists, Dieticians, Physiotherapists,
and Psychiatrists.
- Non-EU nationals can obtain up to 5% of the total share capital of
broadcasting corporations (television & radio stations), while the total
percentage of share capital owned by non-EU nationals may not exceed 25%
“Foreign companies now have the opportunity of investing and establishing
business in Cyprus on equal terms with local investors”
