Cyprus has tightened procedures for applicants to its citizenship-by-investment scheme in a bid to make it more trustworthy after it was criticised by the EU for lack of transparency.
Under the new golden visa rules, a Cyprus passport will now be granted in exchange for an investment of €2.5m, up from €2m, including the purchase of a residency.
The investment amount is €2m if the investment is made solely in residential real estate, at least a quarter of which must be spent on a residence for life. If not, the threshold is €2.5m, at least €500,000 of which must be spent on a permanent residence. In both cases, the requirement of a permanent residence ensures the investor remains closely engaged with Cyprus even if not actually obliged to live on the island.
We ensure that for every naturalisation of a foreign investor, funds will also go towards an affordable home for our fellow citizens who are in need"
Cyprus Finance Minister Harris Georgiades said the new criteria would ensure procedures are more stringent as an international agency will review each application and applicants will be required to obtain a Schengen visa. Applicants who have already been rejected by other EU states will be excluded.
According to Georgiades, the scheme launched by Cyprus in the aftermath of the island's 2013 economic crisis has granted 1,864 citizenships and raised €6.6bn.
During the 2016-2019 period, the programme accounted for almost 10% of the island's total GDP growth of 13p.p., according to Georgiades.
Speaking after the cabinet meeting, Georgiades said the scheme proved important for the construction and real estate sectors with 24 per cent of total transactions linked with it "but with relatively little impact on the economy".
The changes include a €75,000 contribution to research and development and an equal amount to the land development organisation to fund affordable housing schemes.
"We ensure that for every naturalisation of a foreign investor, funds will also go towards an affordable home for our fellow citizens who are in need," he said.
In January this year, the European Commission presented a report on investor citizenship and residence schemes operated by a number of EU countries. The report identified the risks coming from such schemes as money laundering, tax evasion and corruption.
It also outlined the steps that need to be taken to address these concerns. The reports highlighted that in the EU, Bulgaria, Cyprus and Malta are the only countries granting investors with citizenship without the obligation of physical residence.
The warning was contained in the first report the EU executive produced over the multi-billion-dollar industry of so-called "investment migration", which allows rich individuals to buy citizenship or residence in countries that put them on sale.
Cyprus, Malta and Bulgaria are the only EU member states which run schemes selling citizenship, while 20 countries sell residence permits. Malta and Bulgaria have both stated that they will stop selling passports in exchange for investment.