Ioannou: New strategic investments law simplifies licensing process and reduces red tape

Interior Minister Constantinos Ioannou said the newly-introduced Strategic Investments Law aims at simplifying the licensing process for strategic investments and reducing bureaucracy, as part of the government’s overall effort to improve Cyprus’ business environment for its foreign investors.

“At the Ministry of Interior, we focus on combining investors’ activity with our citizens’ needs, in a blend that could create a reciprocating framework for both sides,” the minister explained addressing the “Foreign Investors Dialogue with Government: From feedback to action” at the Presidential Palace. “Our aim is to create investment opportunities while, at the same time, introduce measures and policies that will improve the overall investment framework.”

To this end, he added, the Ministry of Interior has put forward four policies and proposed legislation measures in an attempt to improve the overall business environment for local and foreign investors and address major problems faced by such investors in their attempt to relocate to Cyprus.

“Within the above-mentioned framework, we have recently put into effect the facilitation of strategic development projects law,” said Ioannou. “The new legislation aims at simplifying the licensing process for strategic investments and reducing bureaucracy.”

Overall, through the new process, the government is creating a statutory mechanism that will allow the characterisation of a project proposal as a strategic development, based on objective criteria, including the nature, the size of the project and its added value to the economic activity.

“Projects eligible to be categorised as Strategic Investments must fall under at least one of the strategic areas of health, social care, education, culture, sports, environment, rural development, industry, tourism, energy, research, development and technology,” the minister elaborated. Furthermore, they must include a minimum investment of €25m, or an investment of €15m plus the creation of at least 30 new job positions.

“We are now at the stage of completing the establishment of the Strategic Developments Sector in the Department of Urban Planning and Housing of the Ministry of Interior, under which the Project Management Branch and the Licensing Branch will operate,” said Ioannou.

The BFU of the Ministry of Energy Commerce and Industry will continue to act as the one-stop shop, where all information will be provided to potential investors and anyone that may be interested in proposing a specific project.

Applications will be submitted electronically through Hippodamus Platform with an initial administration fee of €10,000. After their approval by the Council of Ministers with the first submission for licensing, the second instalment, which will vary depending on the project, shall be paid.

As the Interior Minister pointed out, a key feature that will reduce bureaucracy is the fact that a project manager will be assigned for each strategic development project. “The project manager will act as a central point of reference for the applicant’s interaction with the public services, will be involved from the initial stage of the evaluation of the application and will be the applicant’s single point of contact with all services for licensing purposes,” he said, adding: “It is important to note that these projects will be dealt with through a fast-track process and based on the flow chart we have drawn, the issuance of planning permission and building permit will be provided by the Strategic Developments Sector, within a maximum period of one year. Based on our timeline, the full implementation of the Law will begin by the second quarter of 2024.”

Another important initiative was his ministry’s new Housing Policy.

“The increase of prices of raw materials due to inflation coupled with the increase in demand for residential units in the last couple of years have resulted in sharp increase of prices of residential units for sale or rent and a general lack of supply compared to actual demand and a lack of affordable housing,” said Ioannou. “In order to address this challenge, in October 2023, we announced the introduction of a package of measures, incentives and policies aiming to address the affordable housing crisis, especially amongst young people. The package includes mainly schemes or other incentives that aim at increasing the supply of residential units, including the supply of affordable housing.”

Investment Opportunities in Housing – Built to Rent Scheme

In the context of formulating an integrated framework for housing, the government approved schemes that offer floor area bonuses in exchange for the creation of affordable housing, on-site or off-site, for sale or for rent, principally for middle-income households, Ioannou explained. “All aforementioned schemes allow investors the additional option to benefit from the floor area bonuses by paying a fee in lieu.”

Of particular interest to investors is the Built to Rent Scheme, which offers a 45% increase of the buildable floor area in exchange for providing the number of the additional housing units for rent at affordable prices for a pre-scripted period. “The said scheme offers a number of financial benefits and incentives, including 100% tax exemption on rent collected for affordable units, 3% exemption of extraordinary defence levy, increase to 5% in the discount on capital expenditure, and increase to 15% in the discount for the equipment,” said the minister.

A similar scheme, he added, provides for the benefit of the additional increase of the buildable floor area for up to 45%, with the obligation of selling the 25% of the 45% coefficient to affordable prices according to the building costs as set by the Cyprus Land Development Agency.

Progress on the adoption of the EU Blue Card

Another important initiative was the drafting of legislation to introduce the EU Blue Card. According to Ioannou, the Blue Card is an excellent tool for attracting more highly-skilled personnel and facilitating their access to the labour market of EU countries, as well as their movement within the EU.

“Blue Cards will be valid for at least two years and Blue Card holders will enjoy a set of important benefits,” the minister explained. These include:

a) they are allowed set periods of unemployment without the withdrawal of their permit,

b) they have access to family reunification with their spouses and underage children under favourable provisions,

c) they can enjoy facilitated intra-EU, short-term mobility, allowing them to stay in other member states for a period of 90 days within a 180-day period, without any further administrative formalities, and

d) the possibility for obtaining the EU long-term residence permit.

“The proposed legislation has been approved by the Council of Ministers in January 2024 and was just submitted to the House of Representatives for its approval,” said Ioannou.

The Blue Card applies to non-EU nationals applying for highly qualified employment in member states. For this, they must present a valid work contract for highly qualified employment of at least six months, as well as documents confirming their high professional qualifications.

In the revised bill, high professional qualifications are defined as qualifications attested by a university degree of at least three years’ duration, or, especially for ICT professionals, relevant professional experience of at least three years within the seven years prior to applying for a Blue Card.

The volumes of admission of third country nationals for highly qualified employment purposes will be determined taking into account economic development priorities, the situation in the labour market and the Republic’s reception capacities, said Ioannou.

According to the Law, applications for a Blue Card have to be examined within 90 days from the date of submission, but the effort is to be able to issue the Blue Cards within six weeks. Implementation will start as soon as the House of Representatives ratifies the proposed legislation. “We anticipate this to be in the coming weeks,” said Ioannou.

Amendment of the Civil Registry Law

“As far as the naturalisation process is concerned it is inarguable that there have been important delays in the process of the applications and as a result an important backlog has been created,” said Ioannou. “This was mainly due to the shortage of staff at the Civil Registry and Migration Department, but also because of the unprecedented increase in the number of applications in the last years.”

According to the minister, from around 1,100 applications in 2015, the number shot up to 2,400 in 2019 and from then onwards, it has been around 1,500 a year.

“To address this issue, we have already started implementing an overtime working scheme for examining the backlog, while at the same time by 1st of March a number of newly appointed employees will be assigned to the Department,” said Ioannou.

The minister also referred to the amended Civil Registry Law, which now does not only streamline the naturalisation process for highly-skilled employees of companies that fall under the Council of Ministers’ Decision for attracting companies to operate and/or expand their activities in the Republic, and for the members of their families, but also introduces a new pathway for naturalisation based on years of residence in Cyprus.

The scope of the amending Law is to introduce modernised and rational eligibility criteria for the acquisition of Cypriot citizenship, and also to attract and retain foreign investments and talented individuals who possess highly specialised knowledge and qualifications, the minister said.

“Specifically, highly-skilled individuals may obtain and be granted Cyprus citizenship by naturalisation when they complete four or three years of cumulative physical presence in the Republic, compared to seven years which is the general requirement, depending on the individuals’ academic level of the Greek language,” said Ioannou.

In addition, periods of absences not exceeding a total of 90 days per year are not considered as absence.

Beside the language requirements, in order for applicants to be eligible to obtain the Cypriot citizenship as highly-skilled employees, based on the new legislation, they should also meet the following criteria:

• Twelve (12) months of legal and continuous physical stay in the Republic preceding the naturalisation application, with permitted absences abroad not exceeding a total of ninety (90) days,
• Good character and clean criminal record,
• Suitable residence in the Republic and financial self-sufficiency,
• Entry in the Republic should not be from any illegal port of entry,
• Knowledge of the basic elements of Cyprus contemporary political and social reality, and
• Intention to reside in the Republic.

As the minister explained, in order to facilitate the process for special categories of applicants, a “fast-track” process is offered to highly qualified individuals (upon payment of a relevant fee), where the examination period will not exceed eight months.

“We strongly believe that the new process as described will give the opportunity for new applications to be examined in a swifter and quicker way, thus upgrading our citizenship scheme,” said Ioannou.

In conclusion, the Minister of Interior said these policies and proposed legislative measures are the key actions put forward by the Ministry of Interior. “The list however is by no means exhaustive,” he added. “These policies were drafted following consultation and dialogue with, amongst others, organisations representing investors, entrepreneurs and other interested parties. We firmly believe that for our policies to be successful and have a positive impact, we will always have to listen to suggestions and recommendations from interested parties and I want to assure you that we will continue to do so moving forward.”