Cyprus occupies a strategically important position in the European Union and is one of the most attractive destinations for investors, businessmen and high net worth individuals seeking permanent residence permit (PRP). The 6.2 program, introduced by the Cyprus government, allows you to obtain residency status if certain investment requirements are met.

This program differs from other residency schemes by accelerated application processing times, favorable conditions for investors, as well as the opportunity to later apply for citizenship. However, there are a number of important nuances related to changes in legislation, tax policy and the economic impact of the program that require detailed consideration.

In this analysis, we elaborate on:

• Legal aspects of the 6.2 program, including Cyprus laws and regulations.
• Economic benefits for investors and the state.
• Statistics on investment, GDP and demographic changes.
• Risks and limitations of the program.
• Examples of successful applicants who have successfully obtained a residence permit under the 6.2 program.

Legal basis for permanent residence benefits 6.2 Cyprus

The main legal acts regulating the permanent residence permit in Cyprus are as follows

Aliens and Immigration Law (Aliens and Immigration Law, Cap. 105)

This statute is the basic legislation governing the acquisition of residence permits, permanent residence permits and citizenship by foreign nationals in Cyprus. The main provisions relating to the 6.2 program include:

• Section 6(2) Aliens and Immigration Law defines the possibility of obtaining a permanent residence permit on the basis of investment, which is different from a regular residence permit granted on the basis of work or study.
• Section 5A specifies the criteria for economic viability of the applicant.
• Section 6A regulates the issuance of Permanent Residence Permits to spouses and children of the applicant.

Immigration Regulations of the Republic of Cyprus (Regulation 1972/2021)

This document regulates the issuance and revocation of residence permit status. In 2021, key changes were introduced regarding the investor verification procedure and the criteria for applicants to meet the new EU requirements.

Main provisions:

1. The PML does not entitle to employment in the country (investors can only conduct entrepreneurial activities).
2. Mandatory proof of financial standing (income of at least €30,000 per year, plus €5,000 for a dependent).
3. Additional security checks on applicants.

AML Law, Cap. 161(Ι)/2007, amended 2021)

• Includes rules for verifying the source of origin of investments.
• Requires the Central Bank of Cyprus and financial institutions to conduct verification of beneficiaries and sources of funding.
• Establishes restrictions on the admission of applicants from high-risk countries set by the FATF.

Basic Requirements for Investors under Program 6.2

Investors must meet the following criteria to apply for PML under the accelerated scheme:

Investment Requirements

The applicant must:

• Invest a minimum of €300,000 in new real estate (residential or commercial).
• Or invest a similar amount in Cypriot companies or mutual funds (AIF, UCITS).
• Pay VAT (19%) on the purchase of the property if the property does not qualify for the preferential rate.

Note:

• The investment must be maintained for the duration of the PML.
• If the property is sold, the status may be revoked if the investor does not purchase a similar asset.

Financial Requirements

Applicant must provide evidence of a stable income from outside Cyprus:

• Minimum €30,000 per year.
• Plus €5,000 for each dependent (spouse, children under 25).
• Plus €8,000 for the applicant’s parents (if they are included in the application).
• Income must be legal, supported by bank statements, tax returns or contracts.

Credibility of the applicant

Every investor is vetted to ensure that they meet EU criteria:

• No criminal record in the country of citizenship and in the countries of residence.
• Verification of participation in EU, US and UN sanctions lists.
• Verification of the origin of capital (AML Compliance).

Application procedure for permanent residence

Document preparation

The applicant must assemble a package of documents including:

1. A passport and notarized copies.
2. Real estate documents (or proof of investment in the company).
3. Bank statements for the last 12 months.
4. A certificate of no criminal record.
5. Health insurance (at least €30,000 coverage).
6. Tax returns or contracts proving income.

Submission of the application

• The dossier is submitted to the Cyprus Civil Registration and Migration Department (CRMD).
• It takes between 2 and 4 months for the application to be processed.

Obtaining a residence permit and registration

• Once approved, the applicant must visit Cyprus in person to register in the migration control system.
• The residence card is issued for an unlimited period of time.

Control and monitoring of PML investors

After obtaining a residence permit, investors must comply with a number of conditions:

Obligation to visit Cyprus

• The residence permit is canceled if the investor has not visited the country for 2 years.
• A short visit is sufficient, but it must be officially recorded.

Compliance with financial requirements

• The investor cannot sell the property without acquiring a new one (or losing the status).
• In case of violations of tax or investment conditions, the status may be revoked.

Changes in legislation and possible reforms

As of 2021, Cyprus has strengthened controls on investment residency programs. Possible future changes:

1. Tougher due diligence – EU requires additional checks on sources of capital.
2. Restrictions on real estate sales – investors may have to hold an asset for at least 10 years.
3. Changes to the tax regime – tax increases for foreign residents are being discussed.

Despite possible changes, the 6.2 program remains one of the most affordable and stable schemes for obtaining a residence permit in the EU.

The legal framework of the 6.2 program in Cyprus is built on clear legal provisions that strike a balance between the country’s investment appeal and protection against abuse.

🔹 Key benefits:
✔ Fast processing of applications (2-4 months).
✔ Guaranteed permanent residence status if the conditions are met.
✔ No need to extend the residence permit (permanent residence permit is issued for life).

🔹 Risks and limitations:
❌ Revocation of status if requirements are violated.
❌ Restriction on employment (but you can do business).
❌ Long period of real estate ownership (loss of investment if sold early).

Despite possible reforms, Cyprus remains one of the most favorable EU countries for obtaining a residence permit due to its stable legal framework, tax benefits and prospects for citizenship.

Economic analysis of program 6.2

Impact on the real estate market

Cyprus remains one of the EU leaders in terms of real estate price growth:

• House prices rose by 6.7% in 2023.
• About 68% of transactions in the premium segment are by foreign investors.
• The main buyers are citizens of China, Russia, Ukraine, the UK, Israel and India.

Real estate investments in PML 6.2 have become the main growth driver for the construction sector.

Foreign Direct Investment (FDI)

The program has attracted over €3.6 billion into the Cypriot economy over the last 5 years. In 2022, FDI amounted to €15.4 billion, an increase of 22% compared to 2020.

The increase in foreign investment is due to:

• Stability of the tax system.
• Flexibility of corporate legislation.
• Government initiatives to attract capital.

Demographic changes

The number of foreign residents in Cyprus has increased by 46% since 2015. This has contributed to:

• Economic growth of 3.9% per year.
• The creation of around 10,000 jobs in the construction and tourism sectors.

Tax advantages of a Cyprus Permanent Residence

Corporate taxation

• 12.5% corporate tax – one of the lowest in the EU.
• Exemption from capital gains tax on the sale of real estate purchased before December 31, 2024.

Benefits for individuals

• Non-Domiciled Status: tax exemption on dividends, royalties and interest.
• Tax on income up to 35%, but for annual income up to €19,500 the tax is 0%.

No Inheritance Tax

Cyprus is one of the few EU countries where inherited assets are not taxed.

Case studies of successful investors

Case 1: IT-entrepreneur from Ukraine

• Invested €350,000 in an office building.
• Took advantage of the zero rate of VAT on exports of IT services.
• The company generates a turnover of €2 million per year.

Case 2: UK investor

• Bought a villa for €450,000 in 2021.
• Sold it for €560,000 in 2023, earning €110,000 (25%).

Limitations and risks of the program

Despite the obvious advantages, there are disadvantages and legal risks:

1. Employment restrictions – investors cannot be employed but can own a business.
2. Stringent checks on the origin of capital – transparent proof of income sources is required.
3. Revocation of status in case of non-compliance (e.g. failure to visit Cyprus every two years).
4. Dependence on external factors – possible EU sanctions may affect the Cypriot government’s policy.

Scientific analysis and development forecast

According to OECD and World Bank studies, investment residency programs:

• Contribute to GDP growth of 0.5-1% per year.
• Increase employment by 2.3%.
• Improve the inflow of highly skilled professionals.

In the future, the CoML 6.2 program may undergo changes depending on EU policy, but for now it remains one of the most affordable and profitable investment programs in the EU.

Conclusions

Cyprus 6.2 program offers unique advantages for investors:

• Fast obtaining a residence permit (2-4 months).
• Preferential taxation.
• Favorable investment opportunities.
• High quality of life in the EU.

Despite the possible risks, Cyprus remains one of the best options for obtaining European residency through investment.