Cyprus is finally making it harder for people to buy their way into the EU

Cyprus is building Europe’s biggest casino with over €500 million from foreign investment. It’s expected to attract more foreign investors.
Cyprus is building Europe’s biggest casino with over €500 million from foreign investment. It’s expected to attract more foreign investors.
Image: AP/Petros Karadjias
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Cyprus has been running one of the most desirable citizenship-by-investment schemes in the world since 2013. That could soon be coming to an end.

Commonly known as a “golden passport” program, the scheme grants foreign investors who spend €2 million ($2.34 million) a passport from the small Mediterranean island country. It takes 90 days. The passport allows investors to live and work in any European Union country, do business in a country with the low corporate tax rate of 12.5%, and enjoy more than 300 days of sunshine a year.

Two million Euro is a high price tag, even for many rich people. The main selling point of the program is its speed. “There’s no other country that offers EU passport in such a quick turnaround time,” said Preeya Malik, the managing director of the investment immigration consultancy firm Step Global. Other “golden passport” programs around the world take longer.

Making it harder to buy an EU passport

Now, the Cypriot government is slowing it down. A series of changes apply more scrutiny to the application process. Starting from August 1, new applicants will have to wait for six months to get the passport application examined and approved—doubling what it takes now.

The Cypriot government is trying to deflect criticism that the program facilitates corruption and money laundering. It changed the name of the program from “Cyprus Citizenship by Investment” to “Cyprus Investment Programme.” It also released new rules (pdf) that prohibit mentions of “fast track procedure”, “sale of passports” or “acquisition of European citizenship” from being touted as benefits of the program in advertising or promotional materials.

An annual cap of 700 passport approvals to main applicants will also be placed on the program, but that’s not likely to hamper the program soon, as the number wasn’t reached in any previous year. Cyprus Business Mail reported that the government issued 503 passports to investors in 2017.

Selling passports helped Cyprus recover from the financial crisis.

The Cyprus citizenship-by-investment program has been in existence since 2002. Before 2013, however, investors had to come up with at least €10 million for a passport. Following the decline of its economy during the global financial crisis, Cyprus lowered the minimum investment requirement to €3 million in 2013. It started the fast-track process to citizenship, as an effort to keep foreign money in the national bank. Cyprus lowered the investment requirement to €2 million in September 2016. At those rates the program has generated billion in investment, representing a significant portion of the country’s economy.

While the current changes in regulations may only stop the most impatient citizenship seekers, Malik thinks that bigger reforms will come eventually. “Once they [Cyprus] have got what they need out of it, in terms of resources and investment into the country,” she predicts, “they will start placing regulations on the program to make it less accessible to people.”