Cyprus Golden Visas under Scanner

The Audit Office Report published recently has identified serious defects with golden visa scheme operating in Cyprus, which was prone to abuse by investors. The office examined applications filed from 2012 to 2022. According to the report, Under the Golden Visa regulations, immigration permits were granted to approximately 5,800 investors.

Immigration permits were granted to approximately 5,800 investors.

Audit Office of Cyprus Report

It is worth mentioning that Cyprus has abolished controversial golden passport scheme in 2020 following an investigation by Al Jazeera. The golden visa scheme was not closed remains open for investments till today.

The Program “Expedited process for granting Immigration Permits to applicants who are nationals of third countries and invest in Cyprus” (hereinafter “the Golden Visa Program” or “the Program”), was established based on Regulation 6(2 ) of the Aliens and Immigration Regulations, amended by the decision of the Minister of the Interior, with information to the Council of Ministers, dated 25.7.2012.

Long term Immigration permits for Investors under scheme were issued with ten years validity, to foreign investors who purchased 300,000 euros worth of properties, offices, shops, hotels, company shares etc. They must visit Cyprus once in two years to prevent the permit from expiring. Holders of immigration permit can also naturalise for citizenship in Cyprus under Civil registry law after a residence period of 5 years.

We note that 7,000 applications for naturalization are pending, dating from 2019 to date.

Audit Office Report

Flaws Identified

• Investments were not maintained or completed (compliance checks were not done by department after granting immigration permits).
• Investors were not spending enough time in Cyprus (some only come to Cyprus for two days). No check compliance with the provisions of the Regulations for cancellation of the immigration permit in cases where foreign investors acquire permanent residence in another country or remain outside the Republic for a period of more than two years
• VAT abuse – Properties sold for 5% reduced VAT rate instead of 19%, by not meeting residence should be used “as a main and permanent place of residence in the Republic” is not satisfied.
• Checks on Payments without ascertaining whether the money came from abroad as provided for in the Program’s criteria and applicants/spouse bank account.

Stricter Rules

Since the report came out, the Interior Ministry has announced new stricter rules to investors applying for golden visas preventing from exploitation.

1. Applicants are required to provide evidence on an annual basis to demonstrate that the beneficiary continues to maintain the original investment and the required income. In cases where the necessary information is not provided, the immigration permit of himself and his family is cancelled.
2. A clean criminal record from the investor’s country of origin is required every three years.
3. Present evidence that confirms that the money for the investment comes exclusively from the applicants themselves and/or their spouse and not from third parties, due to sanctions imposed due to Ukraine war.