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Cyprus open for Chinese business

As US President Donald Trump builds barriers to Chinese trade, Cyprus is throwing open the gates, according to a recent report by Bloomberg. Chinese investment is flooding into Cyprus across many sectors from real estate to shipping, financial services, tourism and renewable energy.

Lawrence Ho, the billionaire owner of Hong Kong-based Melco Resorts & Entertainment Ltd., visited Cyprus in January to lay out his plans for what’s being billed as Europe’s biggest integrated casino resort, a $670 million project. China’s JimChang Global Group is investing €100 million in a five-star hotel and housing development near Ayia Napa, via a joint venture with Cyprus property group Giovani.

And at Larnaca, site of Cyprus’s main airport, state-owned China Communications Construction Group is one of two bidders shortlisted to take control of the port and adjacent marina. There are also plans to start direct flights to Beijing after Cypriot airline Cobalt Air received a capital injection from Aviation Industry Corp. of China.

Writing in the Cyprus Mail at the end of March, China’s Ambassador in Cyprus Huang Xingyuan placed all this activity firmly in the orbit of China’s ‘Belt and Road’ initiative, citing the economic opportunities it opens to all “regardless of their size and wealth”.

Part of Cyprus’s pitch is that the island has a European legal and institutional framework that’s familiar to Chinese investors from Hong Kong. It also has a geographical advantage. With its proximity to the Middle East, China tends to see Cyprus as a gateway to Europe. And then there is the highly competitive tax regime. Cyprus has a uniform 12.5% corporate tax rate which is one of lowest in Europe but which is fully compliant with EU and international standards and provides access to an extensive network of more than 60 double tax treaties worldwide.

In addition, there is 0% tax on interest income, dividend income and profits from disposal of shares, bonds, debentures or other securities. No tax is paid for corporate re-organisations, such as divisions, transfer of assets and exchanges of shares, with the exception of capital gains related to immovable property in Cyprus. The same applies for profits earned from subsidiaries abroad, subject to certain restrictions, an royalties paid from Cyprus to non-resident companies.

What else is attracting the Chinese? Cyprus citizenship. While just a few hundred strong, the fledgling Chinese community in Cyprus is making its presence felt on an island, particularly around Paphos where billboards advertising prime property stud the highway, in English, Russian – and now Chinese.

The Cyprus Citizenship by Investment programme enables foreign investors to obtain full citizenship of an EU-member state. It requires the amount of €2 million to be invested in Cyprus – in real estate or specified financial assets – for a minimum period of three years. The investor must also own a permanent privately owned residence in Cyprus with a value of at least €500,000. The citizenship can be granted within just three months.

The investor’s spouse or partner and dependent children may also acquire the Cypriot citizenship. After the investor has acquired Cypriot citizenship, his or her parents, parents-in-law and non-dependent children also have the right to apply for citizenship in return for further investment.

A Cyprus passport is a full EU passport offering visa-free in 157 countries in total. The investor and his/her family can freely reside, work, study and conduct business in any of the EU member states as well as in Switzerland, Liechtenstein, Norway and Iceland. Dual-citizenship is permitted and holders are not obliged to reside in Cyprus.

Perhaps the most compelling evidence for the attractions of a Cyprus passport can be found in the figures. Between 2008 and 2018, 3,336 foreign nationals – including the investors’ family members – and scheme has raised Cyprus some €5 billion. And interest shows no sign of tailing off, with 92 citizenships granted so far this year.

If you are considering taking advantage of the citizenship by investment programme in Cyprus, Sovereign Trust (Cyprus) can be of assistance.

George Ayiomamitis

Managing Director, Sovereign Trust (Cyprus) Limited

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Tel: +350 200 76173