Cyprus has cemented its commitment to European security standards with a freshly passed bill that mandates rigorous vetting of certain foreign capital inflows. The legislation, approved by Parliament on Thursday, creates a formal mechanism to monitor Foreign Direct Investments (FDI) in sectors deemed strategically critical, thereby achieving full adherence to the European Union’s FDI Screening Regulation which became operational in late 2020.
A Framework for Greater Control
This pivotal measure introduces a new layer of oversight, empowering a national body to review investments that could potentially compromise the nation’s security or public order.
Criteria for Mandatory Scrutiny
- Value Threshold: Investments from foreign sources that reach or surpass a €2 million valuation will automatically trigger an examination by the national FDI monitoring authority.
- Property Exception: While primarily targeting financial investments, the law includes real estate acquisitions only if the property is vital to critical national infrastructure, a map of which the government is set to outline, with the Finance Ministry offering interim instructions.
- Dual Nationality Exemption: Citizens holding dual nationality are specifically excluded from the definition of a ‘foreign investor’ under this law.
Investor Obligations and Penalties
Foreign investors covered by the framework are now legally bound to pre-notify the national authority of their investment intentions. The authority possesses the power to stipulate conditions or impose penalties for any failure to comply with the notification requirement. The legislative move proceeded despite the rejection of proposed alterations by the opposition party AKEL during the final debate.
Industry Praises Transparency and Credibility
The Cyprus Land and Property Developers Association (CLPDA) quickly released a statement applauding the new directives. The developers’ lobby views the framework as a significant achievement for enhancing investor confidence and market clarity.
According to the CLPDA, the new law strengthens Cyprus’s standing by effectively balancing economic openness with strategic protection, making the island a more credible and modern choice for international investment. They believe that transparent procedures are essential for maintaining long-term stability in the investment and property markets and have pledged to cooperate with authorities to ensure a sustainable and balanced implementation.
Source: Cyprus Property News