What has happened? On October 13, the Council of Ministers of Cyprus held a meeting. Following the meeting, the government representative Kyriakos Koushos said that the current version of the “Citizenship by Investment” program will be suspended starting with November 1, 2020. The authorities will make inspection of questionable passports, and possibly announce the new rules for the investment program.
Reaction. The world's media were quick to report that the program had already been cancelled. But such statements are premature. At least because it will formally stay active until the beginning of November.
Important! The current version of the government program will not exist anymore. What exactly will change is still unknown. It may be a question of policy considerations such as stricter security checks or i other agencies involvement in the process. Prian continues to monitor the situation, the material will be updated.
The program will run without any changes until November 1, 2020. To participate in the current version of the program, you must sign a contract for the purchase of real estate, pay Stamp Duty tax and register the contract with the Land Committee before November 1. The procedure is carried out by the developer, personal presence in Cyprus is not required from the buyer.
Sergey Smolensky, the CEO of the investment and construction holding Empire Property Cyprus:
"While we can only judge by the words of a government representative, no official documents on this matter have been published yet. But even according to his statements, it is clear that there is no question of cancellation, and a "freeze" is being discussed for conducting inspections.
All major developers in Cyprus received a letter from the Cabinet of Ministers, which says that explanations will be provided soon. It is also clear that a transition period will be established so that possible changes in the program do not apply to those who are already engaged in citizenship registration.
On the sidelines, the government discusses the replacement of the program with another one. Until November 1, the Cypriot authorities will conduct an investigation to develop mechanisms for detailed checks of applicants, which would avoid accusations of corruption in the future. They will also check the objectivity of the Al Jazeera investigation itself, there are lots of questions about the video they published.
I don't think the program will be canceled. The economy of Cyprus is already under pressure due to the consequences of the coronavirus pandemic, and the authorities have already poured a lot of money into supporting businesses and affected industries. Now it is extremely unprofitable to abandon a program that provides an influx of foreign investment. Everyone here understands this. Therefore, I believe that the procedural issues will be reviewed, and the costs of conducting checks on applicants may increase."
Previously. Two months ago, the Al Jazeera channel published an investigation about Cyprus passports that were obtained by people with a criminal past through the mediation of officials. The authorities defended the program, saying that several mistakes have been made in recent years, but stricter laws and verification of applicants ' data will be enough to prevent criminals from obtaining a passport in the future. On the last day of July, the Cyprus Parliament has already made a series of amendments to the program, which provide for a more thorough audit of applicants.
According to the BBC, the speaker of the Parliament of Cyprus involved in the Al Jazeera report, Demetris Syllouris is resigning his duties that since October 19. He released a statement apologizing for the "unpleasant image conveyed to the Cypriot public ... and for the disappointment that it may have caused."
The state program "Citizenship by Investment" of Cyprus exists since 2013. More than 3,000 investors have already received second passports, which have brought more than €7 billion to the country's economy.
From the editor. Dissatisfaction with the Cyprus program on the part of the European Union is growing in the past two years. Another question is that it has never led to such radical and sudden decisions. Even last year's changes only made the program more expensive (slightly), and participation in it longer (not critical). Moreover, the first half of 2019 was the best time for realtors in Cyprus.
Now the whole scheme is put on pause, and in the next few days the largest Cypriot developers will not be in the mood. Obviously, they will try to offer a different program for investors, probably stricter, but more transparent for the European Union. If this does not work out, the Cyprus luxury real estate market will face difficult times.
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