Cyprus Introduces New FDI Screening Regime – Key Points For Investors

New Foreign Direct Investment (FDI) Screening Framework in Cyprus: What You Need to Know

Cyprus has adopted a new legal framework regulating certain foreign direct investments (FDIs), aimed at safeguarding national security and public order while maintaining openness to international capital. The Law on the Establishment of a Framework for the Screening of Foreign Direct Investments of 2025 (Law 194(I)/2025) was published on 14 November 2025 and will enter into force on 2 April 2026.

The new regime aligns Cyprus with EU Regulation 2019/452, but goes a step further by establishing a full national screening mechanism with defined procedures, timelines, and enforcement powers.

Who Is Affected?

The law applies to foreign investors, meaning:

• Individuals who are not nationals of the EU/EEA or Switzerland; and
• Legal entities established outside the EU/EEA/Switzerland.

An FDI refers to any investment by such a foreign investor intended to establish or maintain lasting and direct links with a Cypriot undertaking, granting control or significant influence. This includes share acquisitions, restructurings, capital injections, or other transactions that give influence over the management or strategy of the entity.

When Is Notification Required?

Prior notification to the Ministry of Finance is required where all of the following apply:

• Ownership/Control Threshold: The investor acquires 25% or more of the company's shares or voting rights, or increases an existing holding so that it results in the investor's participation reaching or exceeding 25% or 50%, or the transaction otherwise grants decisive influence over the entity;
• Value threshold: The total investment, including related transactions over a 12-month period, is €2 million or more;
• Strategic sector involvement:  The investment concerns a company active in sectors of strategic importance, including:
  • energy, transport, telecommunications, digital infrastructure;
  • water, health, education, tourism;
  • financial infrastructure, defence and dual-use technologies;
  • land or real estate linked to critical infrastructure.

Certain exemptions apply (e.g. ships), though floating storage and regasification units (FSRUs) for natural gas remain in scope.

Screening Procedure:

• Phase I (Initial Review): The Ministry decides within 20 working days whether a full screening is required.
• Phase II (Full Screening): If triggered, a detailed review must be completed within 65 working days. These timelines may be suspended if additional information is requested.

There is no deemed approval if deadlines expire. Approval is effective only upon written confirmation.

Ministerial Oversight

The Ministry of Finance is the competent authority for receiving notifications, conducting reviews, and coordinating with the EU screening cooperation mechanism. An Advisory Committee supports the Ministry, comprising senior officials from relevant ministries (Defence, Energy, Foreign Affairs, Interior, Justice, Transport) and, where necessary, external experts.

Assessment Criteria

The authorities assess:

• the strategic importance of the sector;
• the investor's ownership and foreign connections;
• access to sensitive data or technology; and
• potential impacts on supply chains or EU projects.

Powers and Sanctions

The authorities may:

• approve investments (with or without conditions),
• prohibit, unwind, or terminate transactions,
• conduct ex-post reviews (up to 15 months for non-notifiable FDIs and 5 years for non-notified notifiable FDIs).

Penalties for Non-Compliance

Administrative fines apply for breaches, including:

• Failure to notify a notifiable FDI: €5,000–€50,000
• False or misleading information: up to €100,000
• Failure to provide requested information: up to €50,000
• Failure to comply with imposed conditions: up to €100,000 plus daily fines up to €8,000

Authorities may also block the investor's voting or management rights arising from the investment.

Practical Takeaways

• Carefully assess early whether a transaction triggers FDI notification.
• Include conditions precedent for FDI approval in transaction documents if needed.
• Plan timelines to accommodate the 20 + 65 working day assessment periods, including possible extensions.
• Coordinate FDI requirements with AML/KYC and sector-specific approvals.

Conclusion

Cyprus' new FDI screening framework marks a significant regulatory development, introducing targeted scrutiny for investments in sensitive sectors while preserving the country's investor-friendly profile.

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.