On 13 October, 2020, in an extraordinary meeting, the Council of Ministers in Cyprus handed down a decision to cancel the Citizenship by Investment Program. For the sake of clarity, the Cyprus Investment Programme (CIP), as it’s officially referred to, has been cancelled, and not simply suspended, as some media have incorrectly reported.

The official press release states the date of cancellation of the Citizenship by Investment Program to be the 1 November, 2020, meaning CIP applications can be submitted up to 31 October 2020. It is unclear at this stage whether or not an extension will be granted, or exceptions made for investors who can provide a valid property purchase contract, duly stamped and submitted to the relevant Land Registry.

The decision to cancel the CIP was largely in response to an Al Jazeera exposé which publicly aired on 12 October, 2020, revealing procedural deficiencies and abuse by applicants. In a statement posted on Twitter, the office of Cypriot President Nicos Anastasiades said the proposal to cancel the CIP was put forward in response to weaknesses in the scheme that could be exploited.

The cancellation of the CIP comes at an unfortunate time where Cyprus economy is in dire need of the much needed foreign investment that is generated by investors seeking Cypriot citizenship. In 2020 many conditions of the CIP were modified in order to reach compliance levels on par with current anti-money laundering legislation. At the same time, instances of revocation of citizenship were clarified in the revised law, and the first cases of revocation were initiated after an investigation showed applications were filed under false pretenses.

The CIP, which has been in operation in its current form since 2013, allowed foreign individuals to invest €2 to €2.5mln in Cyprus in exchange for citizenship, raising a reported €8bln to sustain the country’s economy, especially during a difficult period following the 2013 banking crisis.

Unfortunately the CIP fell victim to the same abuses witnessed in most citizenship by investment jurisdictions, namely Malta, the Caribbean, Bulgaria, and even recently in the UK where in 2018 the British government announced the UK’s “tier 1 investor” visa scheme would be suspended over corruption concerns, only for the suspension to be dropped less than a week later.

It is possible that at some future point in time a new CIP will be introduced in Cyprus, considering the dependence the overall economy has to such a widely successful FDI program as the CIP has been since its introduction in 2013. Many business leaders are already speculating that the Cyprus government will take the next few months to reflect, and draft a comprehensive, transparent, and viable CIP that can be introduced to foreign investors, learning from the mistakes of the past. A similar occurrence has been observed in other countries with citizenship by investment programs, both within the EU and outside.

C. Savva & Associates Ltd  is the Cyprus leader in Investor Immigration services, focusing on the Cyprus Permanent Residency permit and the Greek Permanent Residency (Golden Visa), serving as Trusted Advisor to HNWIs, entrepreneurs and their families and some of the largest multinational companies, investment firms, family offices, legal, real estate and private banking firms worldwide.

For further information please contact Mr Charles Savva at c.savva@savvacyprus.com

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