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14 Feb 2019

Cyprus Approves Changes to Golden Visa Scheme, After EU Criticism

Golden Visa SchemeThe cabinet of the Cypriot Government has approved several changes to its golden visa scheme. After a report of the European Council criticizing investor citizenship and residence schemes, Cyprus is the first EU country to take concrete steps to update its program.

The cabinet approved a series of changes this week, in a bid to make the program more specific and credible. These changes include:

  • Stricter criteria for applicants who will undergo background checks by a specialized foreign firm, which has not been hired yet.
  • Applicants need to be in possession of a Schengen visa.
  • Applicants who have already been rejected by other EU states will be rejected automatically.

According to the new changes, an amount of €75,000 from the scheme will be allocated for research and development. An equal amount will go to the land development organization to fund affordable housing schemes.

“We ensure that for every naturalization of a foreign investor, funds will also go towards an affordable home for our fellow citizens who are in need,” Cyprus Finance Minister Harris Georgiades said.

Upon the meeting, Minister Georgiades revealed some statistics regarding the scheme.  According to him, the contribution of the scheme to the economic growth of Cyprus in the past three years was just 1.2 per cent of 13 percentage points.

In January this year, the European Commission presented a report on investor citizenship and residence schemes operated by a number of EU countries. The report identified the risks coming from such schemes as money laundering, tax evasion and corruption.

It also outlined the steps that need to be taken to address these concerns. The reports highlighted that in the EU, Bulgaria, Cyprus and Malta are the only countries granting investors with citizenship without the obligation of physical residence.

Previously, the anti-corruption organization Transparency International had published an analysis pointing out the risks arising from insufficient diligence, conflicts of interest, and wide discretionary powers in the citizenship- and residency-by-investment schemes.

While Cyprus decided to change the rules for getting a golden visa, Portugal has turned down a bill proposed by the opposition parties to abolish the Golden Visa Scheme. Instead, the MPs voted pro the widening of the scheme by adding a new category called “green visas”.

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