In July 2014 the House of Representatives passed the statute of the Alternative Investment Funds Law of 2014 (the “AIF Law”). The AIF Law follows the Cypriot Investment Funds legal framework with the new developments in the EU, especially with the EU Alternative Investment Fund Managers Directive (the “AIFM Directive”), in association with the Alternative Investment Fund Managers Law of 2013 (the “AIFM Law”).

Overview:

Following the statute of the Open-Ended Undertakings for Collective Investment (UCI) and the Alternative Investment Funds (AIF) Laws, as changed, Cyprus became one of the most cost-effective and favorable jurisdictions for the establishment of property funds, offering exceptional possibilities for fund managers to structure and grow their enterprise in Europe and beyond.

The Key advantages of a Cyprus UCITS fund are:

  • Can be sold to any type of investor, including retail investors.
  • Full EU Passporting benefits, letting UCITS to be marketed and sold in other EU constituent states.
  • Cost-effective to set-up and run.
  • Low financing risk.
  • Possibility to set up an umbrella fund.
Notable features

General information

Company structure

  • Must continually select a depositary/manager or any other business subject to prudential guidance are exemptions depending on the fund
  • Cyprus Securities and Exchange Commission (CySec) needs a minimum of two managing Directors

Taxation

Cyprus tax authorities are created to encourage the expansion of the country as an international financial and trading center, to encourage international investment and to promote the development of financial services

  • 30% personal income tax
  • 0% corporate tax as profits from trading in securities are tax-exempt
  • exemption from tax on profit income subjected to special conditions
  • no withholding taxes on repatriation of profits, interest, and royalties to non-residents

Registered office – Needed

Secretary – Needed

Accounting and Audit requirements

  • Development of Annual Financial Statements, and establishment of an annual tax return
  • Un-audited record every six months and audited yearly report
  • Monthly or Quarterly Analytical recording to the Central Bank of Cyprus
  • Yearly Information Reporting to CySec
  • Yearly paper presented to CySec regarding prevention of money laundering and terrorist financing, as prepared by the duly appointed Money Laundering Officer

Company name:

  • Language: Any
  • Letters: From the Roman alphabet
  • Names that are misleading or tricky are banned
  • The company name is restricted to be alike or similar that of an existing company
  • Offensive names are prohibited
Procedure

In order to get a license, the following actions will be carried out:

  • Gathering reports in an agreed form
  • Drafting of the fund’s offering record
  • Development of application forms
  • Introduction of the license obtaining process
  • Following up and observing your submission until Regulator permission
Document Required

In order to receive a license, Startup Formations will fill all important paper forms and also obtain following corporate documents.

  • Details of all intended Directors, with all giving the following:
  • Copy of passport and recent utility bill evidencing domestic address
  • CV with details covering a minimum term of 10 years
  • At least two recommendation letters
  • Non-bankruptcy record
  • Criminal record certificate
  • Duly finished CySec application form
  • Other documents requested by the Authority
  • It should be remarked that all Directors must have sufficient economic and fund management expertise and academic credentials

Details of the following key service providers:

  • Auditor
  • Custodian
  •  Administrator