The updated investment program of Cyprus attracts attention: the procedure for buying property, obtaining permanent residence and moving to the island.
About changes in the rules for obtaining permanent residence
Updates in the permanent residence program in Cyprus: positive, negative and neutral changes
Changes made to the investment program for obtaining permanent residence in Cyprus in early May can be divided into three categories: positive, negative and requiring clarification.
Positive changes:
Firstly, the very fact that the program continues its work in a modified form, and is not closed.
Secondly, the amount of required investment has remained unchanged and still ranges from €300,000 (+ VAT) when acquiring new real estate or shares of Cypriot companies.
Thirdly, obtaining permanent residence is possible both for minors and for adult children under 25 years of age (if they are not married and are students). This remains an important consideration for many applicants.
Finally, fourthly, applications will be considered within two months, which is a positive change that speeds up the process, since previously the processing time for applications was at least six months.
Negative changes:
Firstly, the parents of the main applicant and his spouse or spouses can no longer obtain permanent residence. However, it is worth noting that initially there was no mention of parents in the law, and their addition was made later. Despite this, this restriction is not critical, as elderly parents can obtain a long-term F visa in order to be near their children. Moreover, such applicants are often ready to apply for permanent residence on their own.
Secondly, now documents for obtaining permanent residence can be submitted only after the full payment of the required amount, while earlier it was possible to start the procedure after paying €200,000. For example, if a family of four applies for permanent residence, they will not be able to purchase only a one-room apartment.
Thirdly, the requirements for the income of the applicant, who must confirm his income annually, have increased. The new requirements look like this:
€50,000 per year for the main applicant (previously €30,000),
€15,000 per year for a spouse (previously €5,000),
€10,000 a year for each child (previously €5,000).
These figures are likely to be revised, as although Cyprus is not a cheap place, it does not require €65,000 per year for a couple to live, and a smaller amount may be sufficient.
Fourth, the new rules require that the number of bedrooms in the property being purchased matches the number of applicants. For example, if earlier a family of four or five people could purchase a one-room apartment, now they will need to purchase housing with at least two rooms.
What raises questions
First, it is not clear what rules will apply to those who received permanent residence prior to the changes. That is, what requirements will be imposed on persons who have become residents before May 2023.
Secondly, it is not clear how annual checks for permanent residence holders will be carried out. For example, a resident can entrust this procedure to his lawyers. Another option is to extend the status through the state portal, that is, the obligation of the resident to provide data to the system. While all these options are under discussion.
In any case, much will become clear in the coming months, once the details are clarified and practice has been established.
What has remained unchanged
Acquisition of permanent residence in Cyprus still has a number of advantages that should be considered:
- Relatively low investment threshold.
- No need for interviews, medical examinations or language exams.
- The minimum requirement to visit the country is just one day every two years.
- No tax liability.
About closing accounts
In mid-April, it became known that the largest bank in Cyprus – Bank Of Cyprus – plans to close the accounts of many Russian clients. Russian customers receive appropriate notifications. The reason for this decision is the fear of possible sanctions from the UK and the United States.
It is important to note that in Cyprus there are now a large number of accounts opened by people who have not had a strong connection with the island for a long time: they do not live here, do not use the account, and so on.
If you have a connection with the island, then the bank will check it. A long stay in Cyprus can be confirmed, for example, through utility bills. In that case, you probably have nothing to worry about.
The reason for closing the account may be the presence of income from the sanctioned business in Russia (for example, dividends or salaries for employees working in the sanctioned companies remotely), as well as the presence of an unusual type of residence permit, for example, type F or “visitor”.
In any case, the first thing you need to do when receiving a “chain letter” is to contact the bank manager in person and explain your connection to the island. You have two months to find out all the circumstances.
What is interesting about Cyprus today for those who WANT TO LIVE on the island
Benefits of tax accounting
For individuals, there is the possibility of passive income without paying taxes for the next 17 years (with the status of a non-resident), as well as exemption from property and inheritance taxes. The pension tax rate is 5%.
Cyprus, although not an offshore zone, is still a tax haven and has transparent tax laws. Last year, a large number of companies, more than 1,000 according to official figures, moved to the island. They enjoy the following benefits:
- optimization of taxation;
- the possibility of opening company accounts in a European payment institution;
- official commercial activity in the European Union;
- cooperation with European partners;
- obtaining the status of a tax resident of Cyprus (for the beneficiary and employees);
- the possibility of transporting employees and their families to Cyprus.
Price formation and market liquidity
Cyprus, although a small country, applies the same laws as large markets. For example, when demand exceeds supply, prices rise, and this has been the case in the last year. In recent months, the value of real estate corresponding to the permanent residence program and estimated at about €300,000 has especially increased.
For example, a year ago in Limassol for half a million euros it was still possible to buy property within walking distance from the sea. Today, buyers with such a budget have to look inland.
As for liquidity, there are universal indicators. If the object is within walking distance from the beach and the main infrastructure, it will always be in demand and cost more than a property 3 km from the sea.
Here are the factors that affect the cost:
- Location, proximity to the sea and infrastructure.
- Property type.
- Year of construction.
- Construction quality (materials used, finishes, insulation, technical equipment). It should be noted that the quality of construction is constantly growing. Today, primary and secondary housing differ not only in price, but also in the quality of construction.
- Internal infrastructure (the presence of a swimming pool, playground, gym, parking, etc.) – the pandemic has shown their importance.
- Floor.
- View from the windows.
- Area (total, residential, plot size, if any).
- The state of the object.
- Legal cleanliness of the object.
