Cyprus is becoming an increasingly popular choice for wealthy Indians looking for citizenship or permanent residency in an EU member state, as well as Non-Resident Indians (NRIs) based in cities like London or Dubai.
The most high profile Indian is the real estate billionaire Surendra Hiranandani, co-founder of the Hiranandani Group, who confirmed in April that he had given up his Indian passport to become a citizen of Cyprus. He said the primary reason for becoming a citizen of Cyprus was not tax but the difficulty he had in getting work visas on an Indian passport.
Freedom of movement is a major selling point for investors enticed, in the case of Cyprus, by visa-free access to 163 destinations. Access to the EU’s single market, the island’s business-friendly climate, one of the lowest corporate income tax rates in the EU at 12.5% and varied investment opportunities are an added bonus for investors.
However, the Cyprus Council of Ministers announced in May that its citizenship-by-investment scheme is to be renamed the ‘Cypriot Investment Scheme’ and that, as of 2018, the number of naturalisations will be capped at 700 per year.
Introduced in 2014, the ‘golden visa’ scheme allows investors to receive Cypriot citizenship for an investment of €2 million in real estate, stocks, government bonds or Cypriot businesses. Investors have to remain owners of their investment for a minimum period of three years.
In 2014, the government issued 214 passports to investors and an additional 186 passports to investors’ family members. The numbers have since grown to 337 and 342 respectively in 2015, 443 and 461 in 2016, and 503 and 510 in 2017.
The introduction of the cap came after the European Commission announced in March that it would be investigating ‘golden visa’ schemes across all EU member states, following complaints that such schemes were vulnerable to abuse.
In addition to the new cap, the Cyprus government said that every new application will be subject to an enhanced due diligence procedure. A code of conduct has been adopted with clear provisions to avoid any abusive practices.
Cyprus also offers a Permanent Residency Visa for which applicants are required to invest €300,000 in real estate, and comply with minimum annual income criteria. There is no obligation to reside in Cyprus, a short visit once in two years is sufficient; and after seven years of residency in Cyprus, visa holders are entitled to apply for naturalisation and obtain a Cyprus passport.
Provided that holders of citizenship or residency spend at least 60 days a year in Cyprus and less than 183 days in any other country, they are also eligible to be a tax resident in Cyprus. There is no capital gains, inheritance or estate tax in Cyprus, and significantly, there is zero withholding tax on dividends.
Family members of the primary applicant can also easily acquire Cyprus residency or citizenship; spouses and children under 18 years are included. Even adult children are eligible until the age of 28 if they can show that they are still financially dependent.
India had the second highest outflow of millionaires globally after China, with 7,000 high net worth individuals changing their domicile during 2017, a 16% increase over 2016. It will be interesting to see how the new cap will impact on Indians wanting to relocate to Europe. Perhaps it will make Cypriot citizenship even more desirable.
For more information on Cyprus citizenship or residency, please contact George Ayiomamitis.