Thanks to its prodigious location –straddling the regions of Europe, the Middle East and North Africa and with access to Eastern Europe, Russia and former Soviet republics –Strong and dynamic legislation and lower costs, international funds are using Cyprus for their original European Union citizenship for across-the-board investment.
“We are witnessing an increasing trend for funds from countries that don’t have strong economic ties with Cyprus. These countries are China, India and Japan. They tend to establish a base in the country as their gateway to the EU,” Andreas Yiasemides, Vice President of the Cyprus Investment Funds Association (CIFA), said in an interview in Nicosia.
Due to the Central Bank of Cyprus, the number of investment funds and assets under management have hit record highs. At the end of the first quarter, the number of funds rose to 123 from 110 at the end of December 2017. The overall assets under management rose by around 29 per cent to 4.45 billion euros ($5.24 billion) from 3.45 billion euros. While in December 2008, there were 55 funds with 1.23 billion euros in assets under management.
According to a previous statement by its Chairwoman Demetra Kalogerou, the interest for the setup and authorisation by the Cyprus Securities and Exchange Commission of alternative investment funds runs strong.
“At the moment, we have received 60 applications for different fund structures,” she said. “Of these, 44 have been pre-approved, subject to fulfilling certain conditions.”
Strong and Dynamic Legislation
According to a previous statement made by Marios Tannousis, Board Member and Secretary of CIFA, Cyprus is on the happy process of introducing some changes intending to make the island even more appealing for investors as well as fund and asset managers to register and manage funds.
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These changes include legislation that is set to entitle investors to be aware of the tax regime applied to the diverse types of funds, a fast-track procedure for launching registered alternative investment funds, in addition to the establishment of a new category of investment managers known as mini-managers who will, in turn, be licensed to operate below current alternative investment fund manager thresholds.
Due to Yiasemides, Cypriot legislation relating to establishing funds is considered as the most appealing one in Europe—investors remain well protected, though. Yiasemides stressed the fact that price tag in Cyprus is the lowest in the EU and that is very important for small and medium-sized fund managers that Cyprus is seeking to lure.
Domestic investment
A physical presence in Cyprus means funds contribute to the country’s local economy, renting or buying offices and paying fees to the state. Investors can carry out investments, particularly in real estate.
“We have so far received many inquiries from China and India for domiciling funds. We are also receiving inquiries from the Middle East and Europe including Germany, Switzerland, Italy and Greece,” Tannousis commented. “A similar interest also comes from U.K. funds managers to have back up funds in the country as their EU base,” he said.
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