The debate over Malta’s citizenship-by-investment programme may have subsided in recent months, but on another small Mediterranean island, the same scheme is facing similar criticism – and a similar defence by the authorities, reports Times of Malta.
The programme introduced by the government of Cyprus in 2013, originally as a temporary measure in the face of economic crisis, offers citizenship to foreigners who invest at least €2 million in the property market or Cyprus-based companies, including a residence worth at least €500,000.
The Cyprus Mail last month reported local experts’ concerns that the scheme would ultimately lead to stricter EU oversight for citizenship requirements, while negatively impact property prices due to the possibility of investors reselling their residences after three years.
But speaking to the Times of Malta, director general of the Cyprus Investment Promotion Agency (CIPA) Natasa Pilides insisted the arguments against the programme were unfounded.
“The numbers coming in are very small, and the authorities follow very strict rules: just two people have moved to another EU country after acquiring citizenship through the scheme,” Ms Pilides said during an interivew at the CIPA office in central Nicosia.
“The people we are attracting are not the sort who would abuse the system. We are proud of the people we let in and want them to enjoy the same benefits in Cyprus that we do.”
The Cypriot government says the investment programme had brought in close to €3.5 billion in foreign investment by the end of 2016, although a spokesman told this newspaper that while a “very good base”, the scheme could still not be seen as a long-term solution in itself.
Ms Pilides attributed the success of the programme to “competitive advantages” offered by Cyprus as a destination, including safety, high-quality schooling and quality of life, and a favourable business environment.
Malta’s Individual Investor Programme boasts of a lower threshold for investors, requiring a €650,000 contribution, a €150,000 investment in government bonds, and a €350,000 residence held for at least a year.
Cypriot authorities recognise that the two programmes – along with Austria, the only ones which can offer an EU passport – are in competition to some degree, but also that interested countries have a joint interest in fighting their case in the face of increasing EU pressure.
“There’s no reason why these schemes should attract such negative press,” Ms Pilides said. “They’ve been going on for a long time before either Malta or Cyprus.”
With an economy geared heavily towards services and a corporate tax regime facilitating foreign investment, Cyprus has similarly found itself on the same side as Malta in opposing EU efforts towards corporate tax harmonisation across the single market.
“We have taken a clear position that taxation should be a national competence,” Cypriot Finance Minister Charis Georgiades said. “Tax cooperation is positive, but EU-wide cooperation must never interfere with the sovereignty of individual member states.”
The Commission proposals aim to ensure that companies are taxed in the country where revenues are actually generated, rather than their tax base. But Mr Georgiades insisted the Cypriot government had always courted investors with a view to real economic activity in the country.
“We are not interested in large volumes of investments without substance,” he said. “This is where we are focusing attention with our policies, and we have seen qualitative improvements in our services sector as a result.”
Brexit: “We must work more closely together”
After Britain’s departure from the EU, expected to take place in 2019, Malta and Cyprus will be the last remaining Member States to also be part of the Commonwealth.
As former British colonies, both islands also have deep enduring links with the UK: some 300,000 Cypriots currently live in the UK, compared to a home-based population of 800,000, according to a government spokesman.
The UK is also one of the largest incoming tourism markets for both countries, and both have to some degree pitched themselves as potential alternatives for London-based businesses after Brexit.
Cypriot Foreign Minister Ioannis Kasoulidis said the two countries were currently “comparing notes” over Brexit, adding that he had written to his Maltese counterpart George Vella to discuss enhancing Commonwealth-EU relations in the years ahead.
With Malta holding the EU presidency and the Commonwealth chair-in-office, Mr Kasoulidis added that the two countries had a unique opportunity to push to institutionalise contacts with the Commonwealth, highlighting development as a key area for potential cooperation.