The Council of Ministers in Cyprus has announced several changes to its ‘golden visa scheme’ to be implemented by May 2019. Such schemes can allow wealthy individuals to obtain citizenship or residence in another country, often through the purchase of property or by investing capital into that particular country’s economy.
Currently, Cyprus is one of three EU countries that grant investors citizenship without requiring them to physically reside in the country. The changes come in the wake of a warning issued by the European Commission in January this year, which stated that golden visa schemes offered by a number of EU states could be used as a channel for illicit activity, raising the risk of money laundering, corruption and tax evasion. It is envisaged that these changes will provide additional scrutiny into the background of applicants and the origin of the funds being invested in Cyprus.
Changes to the Cypriot ‘golden visa scheme’ include the following:
- The minimum investment for the purchase of re-sale property will increase from €2 million to €2.5 million (the minimum investment for purchase of new real estate will remain at €2 million);
- A mandatory donation of €75,000 to Cyprus’ Research and Development fund and €75,000 to the Land Development Organisation;
- The period for maintaining investments after naturalisation will increase from 3 years to 5 years;
- During the 5-year period the investor will only be permitted to change his investment provided he has been granted consent from the Ministry of Finance;
- Investments in the shipping industry will qualify;
- Investments into government bonds will no longer qualify;
- A planning permit will be required for properties under construction;
- Applicants must hold a valid Schengen visa at the date of application;
- Applications made by individuals who have previously been rejected by another EU county will automatically be rejected;
- A specialised firm will undertake mandatory background checks on all applicants.
In December last year, the UK Government announced their own proposals to reform the UK’s own ‘golden visa scheme’ – the Tier 1 (Investor) visa route. The proposals include a new requirement for applicants to provide audits of their financial and business interests, which will be carried out by independent, regulated UK auditing firms. In addition to this, applicants will be required to prove that they have had control of the £2 million investment funds (currently required for a Tier 1 (Investor) visa) for at least 2 years prior to the date of application. The Government has also stated that it will seek to “increase the benefit to UK companies by excluding investment in Government bonds and strengthening the rules to ensure investments are made in active and trading UK companies”. It remains unclear, however, whether further restrictions will be placed on the origin of the investment funds under both the current and proposed rules.
Gherson are currently liaising with the Home Office regarding the proposed reforms to the Tier 1 (Investor) route and monitoring changes to EU golden visa schemes. It is very clear that steps are being taken to restrict the number of potential investors in the UK and the EU, and whilst the UK heads towards Brexit, we can only trust that these changes will indeed benefit the UK’s economy.
Should you wish to obtain legal advice in relation to any aspect of the current Tier 1 (Investor) route, please do not hesitate to contact us.
The information in this blog is for general information purposes only and does not purport to be comprehensive or to provide legal advice. Whilst every effort is made to ensure the information and law is current as of the date of publication it should be stressed that, due to the passage of time, this does not necessarily reflect the present legal position. Gherson accepts no responsibility for loss which may arise from accessing or reliance on information contained in this blog. For formal advice on the current law please don’t hesitate to contact Gherson. Legal advice is only provided pursuant to a written agreement, identified as such, and signed by the client and by or on behalf of Gherson.