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#CyprusAdvantage



Cyprus Alternative Investment Funds - an emerging investment fund centre



The funds industry in Cyprus is expected to grow significantly in the next 5 years with Cyprus becoming a favourable location globally among international investment firms and investors.


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With an increase of almost 70% in the number of new funds registered in Cyprus from 2013 to 2018, and a 90% increase in funds under management, the fund industry in Cyprus has become one of the most dynamic. The country is now fast becoming a location of choice for many investment promoters and fund managers.



The Law on Alternative Investment Funds (AIFs) that was enacted in 2014 and which aligns Cyprus with the EU directives as well as the introduction in 2018 of the Registered Alternative Investment Fund (RAIF) which does not need to be regulated by the Cyprus Security and Exchange Commission (CySEC), have strengthen and modernized the Cyprus funds framework which can now accommodate advanced fund structures with many benefits.


The new type of RAIF fund provides an alternative route for those looking to create a cost-effective investment vehicle at a relatively short period of time. The fact that this type of fund is not regulated it does not mean though that there is no supervision at all; it is operating under the supervision of an externally appointed AIF manager.


In addition it is merit noting that Alternative Investment Funds in Cyprus that have no limitations as to the number of investors can be listed on Cyprus Stock Exchange and other recognized EU stock exchanges


Cyprus benefits from the harmonization of EU financial services regulations and serves as a convenient “bridge” offering competitive access to Europe, the Middle East and Africa. Furthermore Cyprus provides a comprehensive double tax treaty network with over 60 countries while the tax regime generally but also in particular to Alternative Investment Funds provides many benefits.



main advantages and benefits of a cyprus alternative investment fund:





  • The application is quite straightforward
  • Low setup fee and maintenance costs
  • Best practice policies for investor protection and AntiMoney Laundering
  • Depending on the type of fund the units or shares can be marketed either to professional, well-informed or retail investors in any EU Member State
  • Low corporate tax rate of 12,5% for fund management companies with possibility to be reduced up to 2,5% due to Notional Interest Deduction
  • The services provided by the Investment Manager and Fund Administrator are not subject to VAT


  • No withholding tax on dividend distributions and no taxation of capital gains
  • Tax incentives for senior officers of fund management companies relocating in Cyprus, including investment fund managers.
  • AIFs can be set-up as umbrella funds with multiple compartments, allowing the management of different asset pools with separate investment policies
  • Supervised by the Cyprus Security and Exchange Commission; a competent, accessible and business friendly Regulator
  • Subject to the approval of the Regulator, an AIF can be self-managed by its Board of Directors,


types of alternative investment funds in cyprus



AIF





LEGAL FORM

• Common fund (CF) • Variable Capital Investment Company (VCIC) • Fixed Capital Investment Company (FCIC) • Limited Partnership with or without legal personality



ELIGIBLE INVESTORS

• Professional • Well-informed investors; or • Retail investors *


NUMBER OF INVESTORS
Unlimited


MINIMUM CAPITAL REQUIREMENTS

If self-managed: • EUR 125.000; or • EUR 300.000 for self-managed AIF/AIFM If externally managed: N/A


MINIMUM ASSETS UNDER MANAGEMENT **

EUR 500.000


ASSETS UNDER MANAGEMENT

• No restrictions if AIFM is appointed • Up to EUR 100.000.000 including leverage; or • Up to EUR 500.000.000 with no use of leverage and no redemption rights for five years


FUND MANAGEMENT

• Can be self-managed; or • Appoint a fund manager


DEPOSITARY

• Mandatory Appointment of a local depositary



Alternative Investement Fund



AIFLNP





LEGAL FORM

• Variable Capital Investment Company (VCIC) • Fixed Capital Investment Company (FCIC) • Limited Partnership with or without legal personality


ELIGIBLE INVESTORS

• Professional and/or
• Well-informed investors; *


NUMBER OF INVESTORS

Up to 50


MINIMUM CAPITAL REQUIREMENTS

If self-managed: EUR 50.000; or

• If externally managed: N/A


MINIMUM ASSETS UNDER MANAGEMENT **

EUR 250.000


ASSETS UNDER MANAGEMENT

• No restrictions if AIFM is appointed • Up to EUR 100.000.000 including leverage; or • Up to EUR 500.000.000 with no use of leverage and no redemption rights for five years


FUND MANAGEMENT

• Can be self-managed; or • Appoint a fund manager


DEPOSITARY

• Mandatory Appointment of a local depositary or

• May be waived if one of the following criteria is met:


-AUM less than EUR 5.000.000;
-Up to five investors; or
-No more than 10% of total assets are subject to custody and; up to 25 investors and; minimum investment per investor is at least equal to EUR 500.000



Alternative Investment Fund with limited number of persons



RAIF





LEGAL FORM

• Common fund (CF) • Variable Capital

• Variable Capital Investment Company (VCIC) • Fixed Capital Investment Company (FCIC) • Limited Partnership with or without legal personality


ELIGIBLE INVESTORS

• Professional and/or
• Well-informed investors; *


NUMBER OF INVESTORS

Unlimited


MINIMUM CAPITAL REQUIREMENTS

Not subject to any minimum capital requirement


MINIMUM ASSETS UNDER MANAGEMENT **

EUR 500.000


ASSETS UNDER MANAGEMENT

• No restrictions if AIFM is appointed • Up to EUR 100.000.000 including leverage; or • Up to EUR 500.000.000 with no use of leverage and no redemption rights for five years


FUND MANAGEMENT

• Must appoint an authorized Alternative Investment Fund Manager


DEPOSITARY

• Mandatory Appointment of a local depositary



Registered Alternative Investment Fund



[*] Professional investors are defined in accordance to the investment services and activities and regulation of the market law of 2017 (87(I)/2017) as credit institutions, investment companies, insurance companies, collective investment vehicles, pension funds, large corporation under qualifications. Nevertheless, application a person may be qualified as a professional investor under conditions.


[**] AUM of up to EUR 100.000.000 including any assets acquired through use of leverage, or up to EUR 500.000.000 without the use of leverage, for the acquisition of any assets and where investors may not redeem their interest in the first five years after



For initial advice, complete details, the process, and how our firm can help you please contact us at info@aristidou.com





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