International Tax Review is part of the Delinian Group, Delinian Limited, 8 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2023

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Cyprus: New alternative investment funds legislation


On July 10 2018, the Cyprus Parliament approved the new alternative investment fund (AIF) legislation which will replace the existing law and which enables, for the first time, the establishment of registered alternative investment funds (RAIF) in Cyprus. This is a major advancement in the field as it will substantially reduce the time and cost involved in establishing an AIF in Cyprus.

The details of the law will become available once the legislation is published in the government's Official Gazette, at which point the law will also come into effect. From the information available, the following criteria and characteristics in relation to RAIFs are expected:

  • Funds will not be regulated by CySEC. Supervision will be at the level of the registered fund manager;

  • Appointment of local depository;

  • No minimum capital requirements;

  • Can be either open or closed ended;

  • Has the option for an umbrella structure;

  • Addressed at professional and/or well-informed investors;

  • Can be structured as a common fund, investment company (variable or fixed capital), or limited partnership;

  • CySEC will register all RAIFs in a register of RAIFs; and

  • Within one month of receipt of all required documents in accordance with the directive, the CySEC will inform applicants in writing of its decision to accept or reject an application.

In addition to the introduction of RAIFs, the new provisions in the Cyprus tax legislation mentioned below have also been introduced in relation to investment funds:

  • No permanent establishment will be deemed to arise in Cyprus in the case of investment into Cyprus tax-transparent funds by non-resident investors and/or in the case of management in Cyprus of non-Cyprus investment funds. As a result, income earned on such investments will be taxed in the country of residence of the investor;

  • Introduction of a special mode of taxation at the rate of 8% and a minimum annual tax payable of €10,000 ($11,700), subject to specific criteria, for certain employees and executives of investment fund management companies. This new mode of taxation will be available for a total period of 10 years; and

  • Persons who are both Cyprus tax resident and Cyprus domiciled will be subject to a special defence contribution at a rate of 17% (instead of 3%, which has been applicable to date) on profits deemed to be received from Cyprus investment funds.

more across site & bottom lb ros

More from across our site

Premier League football clubs are accused of avoiding paying up to £470 million in UK tax, while Malta is poised to overhaul its unique corporate tax system.
Bartosz Doroszuk of MDDP offers insights on Poland’s new tax legislation on shifted profits, as the implementation deadline looms nearer.
Four tax specialists preview the UK’s transfer pricing requirements, which come into effect on April 1.
The rise of the QDMTT will likely change how countries compete on tax and transfer pricing policy, but it may not reverse decades of falling corporate tax rates.
ITR’s latest quarterly PDF is going live today, leading on the EU’s BEFIT initiative and wider tax reforms in the bloc.
COVID-19 and an overworked HMRC may have created the ‘perfect storm’ for reduced prosecutions, according to tax professionals.
Participants in the consultation on the UN secretary-general’s report into international tax cooperation are divided – some believe UN-led structures are the way forward, while others want to improve existing ones. Ralph Cunningham reports.
The German government unveils plans to implement pillar two, while EY is reportedly still divided over ‘Project Everest’.
With the M&A market booming, ITR has partnered with correspondents from firms around the globe to provide a guide to the deal structures being employed and tax authorities' responses.
Xing Hu, partner at Hui Ye Law Firm in Shanghai, looks at the implications of the US Uyghur Forced Labor Protection Act for TP comparability analysis of China.