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Cyprus has taken a major step in implementing its first national screening framework on foreign direct investments (FDI), aligned with EU Regulation 2019/452. The new FDI Law was approved by the House of Representatives on 30 October 2025 and will enter into force on 2 April 2026.
This milestone marks a pivotal development for Cyprus's investment landscape, introducing a formal mechanism to screen foreign investments that may affect national security or public order. It is therefore crucial that foreign investors understand how this framework may impact their investment strategies going forward.
Key Takeaways from the New FDI Framework
Under the new law, foreign investors (i.e. natural or legal persons from outside the EU/EEA/Switzerland) will face mandatory filing requirements before investing in enterprises operating within strategically important or sensitive sectors.
Key sectors covered by the law include:
- Energy & water supply
- Transport & communications
- Media
- Financial services
- Healthcare
- Digital infrastructure and dual-use technology
- Education
- Tourism
- Defence
- Land and real estate of critical importance
To ensure comprehensive coverage, the law also provides that even where an FDI is made through an EU-based entity, the obligation to notify will still arise if that EU-based entity is 25% or more owned or controlled by third-country investors.
When Is an FDI Filing Required?
The obligation to notify an FDI transaction arises where:
- The acquisition concerns 25% or more of the voting rights or share capital in (or the corresponding ability to exercise decisive influence over the activities of) Cypriot entities active in the sensitive sectors (e.g., energy, transport, media, health, defence); and
- The value of the FDI equals or exceeds €2 million, whether through a single transaction or cumulative transactions between the same parties within a 12-month period.
A notification is also required where there is a subsequent increase in participation from:
- less than 25% to 25% or more, or
- less than 50% to 50% or more,
regardless of the investment value.
Exceptions
The law provides for certain exceptions from mandatory notification. Notably, it excludes FDIs involving ships under construction or subject to sale or purchase, except for floating storage and regasification units (FSRUs) of natural gas, which remain subject to review.
Who Will Review the Investment?
The Ministry of Finance has been designated as the competent authority responsible for evaluating all notifications. It will be supported by an Advisory Committee composed of seven members appointed by the Ministry.
The competent authority will have the power to:
- Approve the transaction,
- Impose conditions, or
- Prohibit or reverse investments that may affect national security or public order.
What This Means for Investors
While Cyprus remains committed to attracting high-quality foreign investment, the new framework introduces a crucial compliance step for investments in key sectors.
From 2 April 2026, when the law enters into force, investors will need to assess early whether their planned investment triggers a notification requirement. If so, they must notify the Ministry of Finance in writing at least 10 days before the investment is made.
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.
