How to Register an Investment Fund in Cyprus?

Cyprus, as one of the world business centers of the European Union, attracts the attention of entrepreneurs from all over the world, thanks to its loyal taxation, a carefully designed legislative system and a simplified mechanism for repatriating funds. IQ Decision UK experts advise paying attention to the variety of forms of capital investment, among which it is worth highlighting private and collective investments. This article will be useful for those who are interested in how to register an investment fund in Cyprus.

A Cyprus Private Investment Fund

This is a legal entity that can be owned by both an individual and a legal entity. It is created for the purpose of managing assets for solving specific tasks in the interests of an individual or a group of individuals. Such a fund is a closed structure, i.e. there is no open subscription.

The offer to subscribe to the fund units is made on a private basis and usually at the discretion of the directors. The bulk of investors enter at its launch. The rest of the investors are attracted occasionally and to a limited extent. Such funds are organized to achieve certain goals, for example, to generate income from asset management in the interests of one family. Registration of a private fund in Cyprus does not need to be approved by government agencies. Information about the creation of a private foundation may not be publicly available.

A common example of a private equity fund is a hedge fund. If a foundation is organized and funded by an individual or a group of individuals, then in practice it is called an independent foundation. If the fund is funded by a company, then it is called an associated fund.

Key features of a private investment fund:

• Asset control.
• Anonymity.
• Flexible asset allocation.
• Continuity of the fund.
• Optimal inheritance scheme.

The establishment of a private investment fund in Cyprus is possible under the guidance of competent professionals:

• Investment manager.
• Depositary.
• Administrator.
• Auditor.
• Legal advisors.

Collective investment in Cyprus implies registration of one of the three organizational and legal forms presented below.

Investment fund with variable capital, SICAV

An enterprise with equal shareholder income and assets. After the performance of duties by the company, assets and capital are allowed to change.

The starting salary of the authorized capital is paid 3 months prior to obtaining a license and amounts to 1.7 million euros.

Undertakings for Collective Investment in Transferable Securities, UCITS

The IF task is collective investment for converting joint income into various documents, banking operations, money market mechanisms, etc.

The limitation is the inability to invest in:

• shares;
• assets, securities, instruments issued by IF, etc.

There are no taxes on dividends or income increases.

Alternative Investment Fund, AIF

A collective foreign organization, which is formed by investments of investors in order to generate income and with plans for further activities (but the AIF acts differently from the IF).

Cyprus laws define two types of AIF:

Registration of an investment fund in Cyprus with an unlimited number of investors who may not be professionals. Assets are provided in various EU financial markets, and restrictions are set depending on the type of investor and investment policy.

Registration of an investment fund in Cyprus with a limited number of investors who are professionals with relevant qualifications and experience. Assets are not provided officially, and the restrictions are set up to half a million euros.

Benefits of registering an investment fund in Cyprus:

• the creation of an “umbrella” structure through which groups of shared assets can be disposed of;
• the ability to avoid double taxation;
• no difficulties in maintaining and submitting reports to government agencies;
• no taxes on dividends and on capital gains.