Applications for investments in the wholesale and retail sector are considered by the Central Bank of Cyprus alone if the foreign participation is up to 49 percent. For foreign participation above 49 percent or when the investment exceeds CYP750.000 (approx. USD 1,5 million), applications are considered jointly by the Central Bank and the Ministry of Commerce, Industry and Tourism.

In the case of industrial projects, the Central Bank handles applications if the foreign participation does not exceed 49 percent. As with wholesale and retail trade, if a higher percentage is required or if the investment exceeds CYP750.000, applications are considered jointly by the Central Bank and the Ministry of Commerce, Industry and Tourism.

As far as the services sector is concerned, up to 100 percent foreign ownership is permitted and the Central Bank has the sole responsibility for approving applications. Over 70 types of services are divided into two categories so that, depending on the service involved, the minimum capital of each company to be formed is either CYP50.000 or CYP100.000.

Investors in the tourist sector are subject to the tourist policy applicable at the time. The current policy, which was introduced in 1995, provides for up to 49 percent maximum foreign participation in hotels, tourist villages, villas etc. However, up to 100 percent may be allowed for projects which enrich the tourist product such as golf courses, theme parks, etc. In the case of portfolio investment important liberalisations came into effect in 1996. Specifically:

  • for public companies outside the banking sector: normally up to 49 percent of the issued capital may be owned by non-residents. The maximum allowable individual shareholding by a non-resident individual or corporation is restricted to 5 percent of a company's issued capital.
  • for public companies in the banking sector: normally up to 15 percent of the issued capital may be owned by non-residents. Of this, 6 percent may owned by foreign non-residents and the other 9 percent by Cypriot non-residents. The maximum allowable individual shareholding by a non-resident individual or corporation is restricted to 0,5 percent of a company's issued capital.

All the percentages mentioned above may be exceeded in worthy cases.

For a small number of business activities eg establishment of new banks, insurance and financial services companies, publication of newspapers and magazines and the establishment of new airline companies, applications are considered on a case-by-case basis with the extent of allowable foreign participation to be decided on the merits of each individual case.

The list of saturated activities, where no foreign participation is allowed, includes: land development, tertiary education and public utility services such as electricity production, postal services, etc.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances from a local lawyer or accountant.