Cypriot citizenship attracts the attention of investors, entrepreneurs and individuals interested in global mobility and tax optimization. This is due to its favorable economic conditions, strategic location and Cyprus’ membership in the European Union. However, apart from the obvious advantages, the legislative aspects, economic dynamics and development prospects of the country should be taken into account.

The legislative framework for the granting of Cypriot citizenship

Until November 2020, Cyprus offered a Citizenship Investment Program (Cyprus Investment Program, CIP), which allowed foreign investors to obtain citizenship through large investments in the country’s economy. However, after a number of irregularities and corruption scandals were uncovered, the program was suspended.

Currently, citizenship can be obtained on the following grounds:

• Birth (jus sanguinis – right of blood)
• Naturalization (on the basis of residence for at least 7 years, or 5 years in case of permanent residence status)
• Marriage to a Cypriot citizen (within 3 years of cohabitation)
• Special merits before the state (rare exceptions concerning outstanding figures of science, culture, economy)

Legislative changes and their consequences

Law No. 141(I)/2002 “On Citizenship of the Republic of Cyprus” regulates the naturalization process. Important amendments were introduced in 2023:

• Tougher requirements on the financial solvency of applicants.
• Increased control on the origin of capital.
• Expanded Greek language requirements (B1 level).

Economic and tax advantages of Cypriot citizenship

Cypriot citizenship offers a number of economic and tax advantages that make it attractive to individuals, entrepreneurs and investors alike. The main factors are low taxation, favorable business conditions, access to European markets and attractiveness to highly skilled professionals.

Cyprus tax system

The tax regime of Cyprus is considered one of the most favorable in the European Union. This makes it a popular destination for international companies and high net worth individuals. Key features of the tax system include:

Corporate tax

• The corporate income tax (CIT) rate is 12.5%, which is one of the lowest rates in the EU (e.g. in Germany it is 29.9% and in France 25.8%).
• According to a report by the Ministry of Finance of Cyprus, about 70% of registered companies on the island are foreign and enjoy tax exemptions.

Personal Income Tax (PIT)

• Income up to €19,500 per year is not taxable.
• Tax rates are progressive:
  • €19,501 to €28,000 – 20%;
  • from €28,001 to €36,300 – 25%;
  • from €36,301 to €60,000 – 30%;
  • above €60,000 – 35%.
• However, non-residents can take advantage of the “some tax resident” status, which reduces the tax burden.

Capital Gains Tax

• Refers to profits from the sale of real estate or shares in companies that own real estate.
• The rate is 20%, but an exemption applies to:
  • sale of primary residence;
  • property inherited or gifted.

Tax on dividends

• Dividends received by Cyprus residents are subject to a special defense tax (SDC) of 17%.
• However, for non-residents, dividends are not taxed, making Cyprus one of the most convenient places to do international business.

VAT (VALUE ADDED TAX)

• The standard rate is 19%.
• Preferential rates:
  • 9% – on hotel business, restaurants, passenger transportation.
  • 5% – for electricity, water supply, some types of medical services.
  • 0% – export of goods.

Tax residency: 60-day program

One of the most attractive aspects of the Cyprus tax system is the opportunity to become a tax resident when residing for only 60 days per year. This program was introduced in 2017 and allows you to:

• not pay tax on worldwide income if it comes from outside Cyprus;
• not to pay inheritance tax;
• pay no tax on dividends if the person is not resident in Cyprus for more than 183 days per year.

The following conditions must be met to become a tax resident:

1. Reside in the country for at least 60 days per year.
2. Have a rented or purchased home in Cyprus.
3. Be self-employed or work in a company registered in Cyprus.
4. Not be a tax resident of another country.

Example: In 2023, more than 12,000 foreign entrepreneurs became tax residents of Cyprus under the 60 days program, reducing their tax liabilities in other countries.

Business benefits

Due to its favorable tax system and ease of company registration, Cyprus attracts many international businesses.

Ease of business registration

• It takes 5-10 days to register a company.
• No authorized capital is required.
• The director of the company can be a non-resident.
• It is possible to open a “nominee company”, where the real owner is hidden behind a trust structure.

Доступ к европейскому рынку

As an EU member, Cyprus provides access to the Single European Market (approximately 450 million people), making it convenient for companies wishing to operate in Europe without additional licenses.

Example: Cyprus is one of the largest centers of international shipping. More than 1,000 shipping companies are registered on the island and more than 2,200 ships fly the Cypriot flag.

Banking system and financial instruments

The Cypriot banking system is considered to be one of the most developed and protected in the EU.

Access to international banking services

• Ability to open multi-currency accounts.
• Remote account management via internet banking.
• Flexible conditions for business loans.

Investment opportunities

Cyprus offers favorable conditions for holding companies, as:

• exempts from taxation income from the sale of shares;
• allows you to minimize taxes on dividend payments;
• allows the use of 64 double tax treaties.

Example: Large companies such as Wargaming (creator of World of Tanks) and Exness (financial broker) have their headquarters in Cyprus, taking advantage of favorable conditions.

Real estate and investment

The Cypriot real estate market remains stable and promising.

Growth in real estate prices

According to RICS (Royal Institution of Chartered Surveyors):

• Average house price growth in 2023 was 7.8%.
• The average cost of housing in Limassol is €2200 per m².
• The rental market grew by 11% in 2023, making it attractive for investors.

Investment programs

Although the citizenship-for-investment program has been closed, investment in real estate allows you to obtain a residence permit, and after 5 years – citizenship.

Example: In 2023, more than 1,500 foreign investors purchased real estate in Cyprus, taking advantage of the opportunity to obtain a residence permit.

Right of residence and movement in the EU

Cypriot citizenship opens visa-free access to 176 countries (Henley Passport Index 2024 data), including all EU countries, the UK, Canada and Australia. It allows you to:

• Live and work freely in any EU state.
• Receive European standard health care (EHIC – European Health Insurance Card).
• Access to European education (e.g. studying at universities in Germany, France and the Netherlands on preferential terms).

Social and health benefits

Standard of living and security

Cyprus is ranked 35th in the Human Development Index (HDI) with a high standard of living, well-developed infrastructure and security. According to Numbeo, Nicosia has a crime rate of 34.7 out of 100, which is below the EU average.

Healthcare System

In 2019, Cyprus implemented the National Health System (GESY), providing high level medical services at affordable prices. Insurance premiums are 2.65% of a citizen’s income.

Housing market and investment

According to the RICS Cyprus Property Index 2024, real estate in Cyprus continues to rise in price:

• Residential property price growth of 7.8% in 2023.
• The average price of an apartment in Limassol is €2200 per m², which is lower than the average prices in other European seaside cities.
• High demand from foreign buyers supports the liquidity of investments.

Potential risks and disadvantages

Despite the obvious advantages, Cypriot citizenship has a number of limitations:

• The threat of “golden passports” – Brussels is cracking down on countries handing out citizenship to investors.
• The country’s debt burden – Cyprus’ public debt is 85.2% of GDP.
• The need to integrate into the local environment – Greek language is increasingly required for social adaptation.

Conclusion

Cypriot citizenship is a powerful tool for global mobility and tax planning. In 2024, the main advantages remain ease of doing business, access to the EU market and an attractive tax policy. However, stricter legislation requires a more careful approach to the naturalization process.

Conclusion: for those who view Cyprus as a platform for international investment or a comfortable place to live, citizenship remains a lucrative opportunity, especially given the tax residency and stability of the economy.