A recent report by the Cyprus Audit Office has shed light on significant weaknesses within the property acquisition framework for third-country nationals. The findings reveal outdated regulations, legal loopholes, and inadequate oversight that have strategic implications for Cyprus’s property market and national interests.
Legally, third-country nationals can only purchase immovable property in Cyprus for specific uses such as residence, business premises, or industrial activity, with certain limitations on the quantity and type of properties owned.
However, a 2011 legislative amendment intended to harmonize with EU law removed these restrictions for companies registered in the EU or Cyprus—even if those companies are ultimately controlled by third-country nationals. This shift has inadvertently created a notable loophole, allowing acquisition without original restrictions.
Moreover, a 2013 circular that classified property purchases as “investments” encouraged a broader commercial approach to acquisitions. The Audit Office has expressed concerns on the legal validity of such circulars, especially when applied without updating the actual laws.
Data from early 2024 indicates that third-country nationals account for approximately 27.35% of all property transactions. Yet, this figure is likely an underestimation, as many properties are acquired through companies registered within EU or Cypriot jurisdictions but ultimately controlled by individuals from outside the EU or Cyprus.
The Audit Office emphasizes that the current regulations are superficial as they can be easily circumvented through EU-registered entities. Without accurate data reflecting actual ownership, Cyprus risks losing control over strategic property holdings.
Most EU member states impose specific restrictions on property acquisitions by third-country nationals, usually citing public security, health, or geo-strategic interests—measures Cyprus has yet to fully implement.
In light of these findings, the Audit Office recommends a comprehensive overhaul of Cyprus’s property ownership rules. A modernized legal framework aligned with EU standards and clear supervision mechanisms are essential to balance economic growth with national interests.
For those interested in exploring the Cypriot property market, whether looking into cheap houses and villas for sale in Cyprus or auction properties in Cyprus, understanding the evolving legal landscape is crucial.
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