Foreign Direct Investments in Cyprus

Foreign investment can generally be performed freely with the exception of certain sectors for which restrictions apply predominantly on public interest, security or safety grounds and prior authorisation by the competent authority might be required.

Foreign direct investment from non-EU countries is liberalised with the exception of strategic sectors such as:

• Limitation on ownership of real estate property for private use to up to two properties (the limitation does not apply where the property is owed by a local or EU company).
• Restrictions on investments in the production, transfer and provision electricity and the granting of licences for prospecting, exploration and exploitation of hydrocarbons may be refused where reciprocal treatment not applied by third country of origin to Cyprus and EU investors.
• Restrictions on ownership of television and radio stations.
• Restrictions on ownership in education centres/universities.
• Restrictions on ownership of construction companies and the right to register as a building contractor.

Eurozone rules ensure minimal exchange control.

Generally, there are no restrictions on investments by European Union residents.

There is no single clearance process as the different legislations governing the various sectors often imposing distinct criteria and processes and allocate competence for authorisation/licensing/clearance to different authorities. There is no single centralised authority overseeing foreign investments.

There is no single set of conditions that may be imposed on the foreign investment by Cyprus authorities applicable to all sectors. Instead different criteria might be imposed depending on the provisions of the applicable legislation governing the relevant sector. The most common conditions would be: clean criminal records, change of ownership to be approved in advance, no accusations for money laundering and or terrorist financing.

Employee issues:

• Legislation on entry and stay of EU and third country citizens is aligned with EU rules.
• Authorities need evidence that investors have genuinely sought local staff before engaging third-country labour.

Antitrust clearances:

• Anti-trust clearance by the EC Commission required if the transaction has a European dimension.
• National competition authority clearance required if the transaction meets the jurisdictional thresholds:
•  the aggregate worldwide turnover achieved by at least two of the undertakings concerned (in relation to each undertaking and taking the groups to which they belong into account) exceeds €3.5 million;
• at least two of the undertakings concerned achieve a turnover in Cyprus; and
• at least €3.5 million of the aggregate turnover of all undertakings concerned is achieved in Cyprus.

UBO disclosures: Register of beneficial owners is to be established (regulatory framework not in place at the time of preparation of this publication). Generally the beneficial owner is any natural person who ultimately, directly or indirectly, owns or controls the company and/or the natural person on whose behalf a transaction or activity is being conducted i.e. 25% plus one share or an ownership or interest of more than 25% in a company held by a natural person or a corporate entity, which is under the control of a natural person, or by multiple corporate entities, which are under the control of the same natural person or persons