CYPRUS Trends and Developments Contributed by: Marios Konstantinou and Stalo Konstantinou, George K. Konstantinou Law Firm
approval procedure is a largely technical require - ment; all good-faith applications are approved. Revised Criteria for Permanent Residence by Investment in Real Estate Cyprus has been administering a permanent residence through investment programme for several years with considerable success. Such programmes exist worldwide and, at their sim - plest, provide the right to permanent residence in a state based on specific capital investment, income and other criteria. In Cyprus, two of the investment options involve real estate acquisition. The first option consists of buying residential property, and the second option involves purchasing commercial real estate. Nevertheless, as the Financial Action Task Force (FATF) and the OECD point out in a 2023 joint report, there are concerns that residence by investment programmes may be misused and exploited to perpetrate financial crime and fraud. To this effect, in May 2023, Cyprus introduced amendments to its Permanent Residence by Investment Programme. The aim is to strengthen internal controls and manage risk. Under the new regime, the investment and secure annual income amounts are raised while the number of family members who may benefit from the scheme has been reduced. The invest - ment requirement is now EUR300,000, while the annual income is EUR50,000; the additional requirements for spouses and dependants are also higher. The applicant’s parents and parents- in-law can no longer be included in the perma - nent residence permit.
Moreover, a monitoring and verification mecha - nism has been introduced. To comply with the requirements, the applicant should verify: • on an annual basis, that they continue to maintain the investment, and they have either registered themselves with the General Health System (the Cyprus National Health Service, abbreviated as Gesy) or hold a health insur - ance policy; and • that they and the adult members of their family continue to hold clean criminal records from their country of origin and country of residence, if these are different, every three years. The relevant evidence and supporting documen - tation should be submitted to the Civil Registry and Migration Department of the Ministry of the Interior in Nicosia. Applicants who fail to verify will lose their permanent residence rights. The right is also lost if the applicant is absent from Cyprus for over two years. The programme operates on an accelerated application basis. Applications are examined and determined within a period of two months. Reduced VAT on Property Purchase A significant development in 2023–2024 con - cerned the reduction in the size of property that can be purchased at a reduced VAT rate. Certain real property transactions, including the sale of a primary residence, are subject to a VAT rate of 19%. Under the previous rules, a primary resi - dence’s first 200 sq m were subject to a reduced VAT rate of 5%. On 16 June 2023, the Cyprus House of Repre - sentatives amended the VAT Laws of 2000–2022 with Law 42(I)/2023. Correspondingly, the cur - rent regime for VAT has been modified to the
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