Investment Fund Cyprus

Cyprus Fund Advisory Services

Cyprus fund industry is growing rapidly during the past few years due to the harmonisation with the EU regulatory framework, the attractive tax schemes and the extensive network of highly skilled and educated professional service providers. Globalserve can support you with the following services:

Our aim is to understand the needs of our clients to provide them with the highest quality of investment solutions and advise them on the structuring of their funds after analysing the implications of the AIF/AIFLNP/RAIF regimes.

 

Fund set up

 

After deciding the structure and the type of fund that the client needs, we undertake the procedure of obtaining the license from Cysec. The procedure includes the following:

  1. Preparation and submission of the application of Cysec.
  2. Preparation of review of Memorandum and Articles of Association, Common rules and Prospectus
  3. Assisting in the appointment of Depositary and Legal Advisor including drafting and reviewing agreements
  4. Communicate with Cysec

 

On-going support

 

  1. Accounting and payroll
  2. Internal audit
  3. External audit
  4. Tax structuring and tax compliance
  5. Fund registry maintenance
  6. Transaction advisory
  7. Valuation services

Why Cyprus?

Why to set up a fund in Cyprus?

Cypriot funds are able to combine transparency along with tax benefits for investors. The fund industry has experienced a significant growth during the past few years in Cyprus, establishing the island as one of the major fund jurisdictions in the EU. Cypriot professionals have developed their skills over the fund sector and are able to provide first class services to those interested in entering the fund industry. Along with the above factors, Cyprus can provide a number of significant benefits to the investors, making the country an attractive business destination.

 

Benefits offered form the establishment of a Cyprus Investment Fund:

 

Lower set up and operational costs compared to the largest EU fund hubs, Luxenberg and Ireland.

 

Harmonization with modern fund legislation:

  • Cyprus was one of the first EU member states to transpose the AIFM Directive into national legislation.
  • As a result Cyprus funds can provide an EU passport offering fund managers cross-border fund distribution since fund managers are fully compliant with the EU legislation.

 

Modern and transparent legal and regulatory framework.

  • Redomiciliation laws are in place
  • Rigorous anti‐money laundering laws and regulations which gives Cyprus the status of a compliant jurisdiction.

 

Offering of transparency and Protection to investors, through obligatory reports to Investors and the Cyprus Security and Exchange Commission (Cysec).

 

Provision of quality services and support:

  • Country’s population is one of the most highly educated within the EU 
  • has a strong network of financial and professional service providers who have skilled, educated and multilingual teams specialized in servicing the fund industry, lawyers, accountants and auditors.

 

Flexibility offered by various fund structures:

  • Any kind of asset can be included in the investment strategy of the AIF
  • Umbrella structures are available
  • Various types of funds are available (e.g. AIF, AIFLNP, RAIF), with different characteristics to better fit to the needs and wants of any investor.

 

Taxation benefit for the fund itself:

  • Tax exemptions from:

        1. Capital Gains tax from the sale of corporate titles and other financial instruments

        2. Capital Gains tax from the sale of immovable property situated outside Cyprus

  • Dividends received
  • Low corporate tax of 12.5%
  • Double Tax Treaties with 60 countries
  • Interest received is taxed under corporation 12.5% and not under Special Defence Contribution at 30%
  • Notional Interest Deduction on new equity

 

Taxation benefit for the Foreign Investors:

  • No withholding tax on dividends received from fund
  • No tax on redemption of unit by the unitholders
  • No capital gains tax on disposal of units by the unitholders, provided that no Cyprus real estate exist.

 

Taxation benefit for the Fund Manager:

  • Attractive incentives for fund managers to relocate their fund management operations to Cyprus – with a potential flat rate 8% tax on carried interest for a 10-year period
  • Exemptions for up to 50% of taxable income derived from emoluments exceeding €100,000 for up to 10 years will apply to previously non-tax resident individuals that take on Cyprus-based employment
  • Exemptions for up to 20% or €8,550 (higher of) of taxable income derived from emoluments not exceeding €100,000 for up to 5 years will apply to previously non-tax resident individuals that take on Cyprus-based employment
  • Fund management services provided to alternative funds are not subject to VAT
AIF
Alternative Investment Fund
RAIF
Registered Alternative Investment Funds
AIFLNP
Alternative Investment Fund for Limited Number of Persons
Regulated – Authorised by CySEC Regulated through external manager who falls under AIFMD Lightly regulated - Authorised by CySEC
No. of investors: Unlimited No. of investors: Unlimited No. of investors: Up to 50
Type of Investors: Retail, Well informed, Professional Type of Investors: Well informed, Professional Type of Investors: Well informed, Professional
Legal Forms:
• Common fund
• Investment company
• Limited Partnership
Legal Forms:
• Common fund
• Investment company
• Limited Partnership
Legal Forms:
• Investment company
• Limited Partnership
Initial Capital:
• €125,000 for internally managed AIFs
• €300,000 for internally managed AIFMs
• No requirement for externally managed AIFs
Initial Capital: No requirement Initial Capital:
• €50,000 for internally managed
• No requirement for externally managed AIFLNPs
Maximum AUM:
• Up to €100M incl. leverage
• Up to €500M without leverage & no redemption for 5 yrs (if not under AIFMD)
• No restriction if under AIFMD
Maximum AUM:
• Up to €100M incl. leverage
• Up to €500M without leverage & no redemption for 5 yrs (if not under AIFMD)
• No restriction if managed by AIFM
Maximum AUM:
• Up to €100M incl. leverage
• Up to €500M without leverage & no redemption for 5 yrs
Minimum AUM:
€500,000 per compartment within 12 months (or 24 months with CySEC approval).
Initial capital cannot be counted.
Minimum AUM:
€500,000 per compartment within 12 months (or 24 months with CySEC approval).
Minimum AUM:
€250,000 per compartment within 12 months (or 24 months with CySEC approval).
Initial capital cannot be counted.
Depositary: Mandatory if under AIFMD Depositary: Mandatory local depositary Depositary: Mandatory if under AIFMD
Time Required: 1 month prep + 6 months CySEC authorisation Time Required: 1 month prep + 1 month CySEC registration Time Required: 1 month prep + 6 months CySEC authorisation
Units can be listed Units can be listed Units can be listed
Management:
• Internal management allowed
• External by:
- AIFM
- UCITS Manager
- Mini Manager
- Investment Firm
Management:
• Only external by:
- AIFM
- UCITS Manager
- Mini Manager
- Investment Firm (if LP & ≥70% illiquid assets & closed-ended)
Management:
• Internal management allowed
• External by:
- Investment Firm
- UCITS Manager
- Mini Manager
- Third-country provider or sole purpose company
Investment Restrictions:
Based on investor type & AIF’s policy
Investment Restrictions:
Based on investor type & AIF’s policy
Investment Restrictions:
No restrictions

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Globalserve Consultants Ltd can assist you in the funds set up in Cyprus and maintenance.

You can contact us on marketing@globlaserve.com.cy

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