First, Foreign Direct Investment is particularly important in small economies, and in Cyprus, this is particularly true in the areas of tourism, real estate and the tertiary sector (i.e. services where there has been a marked increase over the years. The main reason why Cyprus remains an attractive and competitive investment destination is that direct investment by foreign nationals has been fully liberalized, with very few exceptions of sectors or industries that remain regulated. These are banking, defense, radio and television, newspapers and magazines, and real estate. Otherwise, there are no general or universal foreign investment restrictions or pertinent screening mechanisms in place, but this is expected to change in the near future due to a new EU-wide framework of foreign direct investment screening, referred to further below.

Secondly. Cyprus is a member of the European Union, and therefore EU/ΕΕΑ nationals have no restrictions on ownership and investment in Cyprus. This is equally applicable to third-country nationals who are free to invest and acquire up to 100% of the share capital in Cypriot companies.

Thirdly, there is no restriction on the acquisition and ownership of real estate in Cyprus by EU/ΕΕΑ nationals. However, the Acquisition of Immovable Property (Aliens) Law Cap.109, imposes restrictions on the acquisition of immovable property by third-country nationals and Cyprus companies controlled by them. Under the said law, any third-country national or a Cypriot company controlled by them, cannot acquire real estate without the prior authorization of the Council of Ministers.

In general, there are no minimum capital requirements for foreign investment, but there are certain exceptions with regard to the capitalization requirements for banks and public limited liability companies.

Cyprus has quite a liberalized FDI policy, with a favorable fiscal and tax regime, with a corporate tax rate of 12.5% and a number of double tax avoidance treaties and bilateral investment treaties. Therefore, the Cypriot regime is mainly aimed at actively attracting and protecting FDI and is not focused on economic protectionism or national security.

There is no universal definition of who or what constitutes a “foreign investor” and different pieces of legislation may simply distinguish between EU/EEA/Cypriots, on the one hand, and third-country nationals, on the other hand.

A definition given by the Central Bank of Cyprus to a “foreign direct investor” is “an entity (an institutional unit) resident in one economy that has acquired, either directly or indirectly, at least 10% of the voting power of a corporation (enterprise), or equivalent for an unincorporated enterprise, resident in another economy.” There is no reference to particular countries.

At the moment, there are no sectors subject to Foreign Investment Restrictions as there are no screening mechanisms in place. However, this is expected to change in the near future following Regulation (EU) 2019/452 of the European Parliament and of the Council of 19 March 2019 which establishes a framework for the screening of foreign direct investments into the Union which will allow the European Commission and the Member States to coordinate their actions on foreign investments by setting necessary operational requirements aiming in protecting Europe’s interests while keeping the European market open to investment.

Currently, there are no relevant thresholds as there are no screening mechanisms in place.

There are no notification requirements for FDI specifically, but, depending on the sector, there may be notification and clearance requirements for the acquisition of qualifying holdings (such as in the case of the financial sector), as well as notification and clearance requirements under merger control provisions.

There is no general FDI supervisory authority or mechanism in Cyprus, hence no requisite approval. However, in certain limited industries, such as real estate, radio and television, approval is required by the Council of Ministers.

Acquisition of qualifying holdings in credit institutions needs to be cleared by the Central Bank of Cyprus and merger control is exercised by the Commission for Protection of Competition. However, these provisions apply across the board and are not limited only to foreign investors.

According to the UN Conference on Trade and Development ("UNCTAD") World Investment Report 2020, Cyprus in 2019 managed to almost quadruple its foreign direct investment. However, with Cyprus’ economy being reliant on tourism, the outbreak of the COVID-19 pandemic adversely affected the country’s foreign direct investment inflows in 2020. After the end of the pandemic, Cyprus experienced a steady rebound with increasing FDI inflows in 2022 and 2023, particularly, in the tech industry. 

Not applicable, as previously mentioned, there is no general FDI supervisory authority or mechanism in Cyprus.

Not applicable. 

At present, a draft FDI screening bill is pending before the Parliamentary Committee on Finance and Budget and it is expected to reach the Plenary within the coming months.