Cyprus Alternative Investment Funds – Speed and Low Taxes
What is an Alternative Investment Fund in Cyprus?
The idea of the A.I.F. is a pool of investors drawing funds either from the members of the fund or from external sources with a target of investing it in an assortment of assets from real estate to stocks, government bonds, gold, oil, gas etc. for the benefit of the investors. An agreed and well-defined investment policy is defined in the terms of the A.I.F. This type of fund is not authorized as an U.C.I.T.S.
The Cyprus Alternative Investment Fund was created in July 2018 by Law 124(1)/2018 which modernized the Fund laws in Cyprus. A.I.F. Law allows the creations of simple A.I.F. with no more than 50 persons or an A.I.F. with unlimited number of persons A.I.F.-U.N.P!
An AIF can take the form of a company which has fixed or variable capital, or a partnership with or without a separate legal personality.
Benefits of a Cyprus Alternative Investment Fund-L.N.P.
- No need to get a license from the CySEC, (R.A.I.F.) making it possible for fast set up.
- It can include up to fifty investors.
- Can take the form of a limited liability company with a fixed or variable capital.
- It can be managed by its own board of directors. There is no need to appoint an external investment manager.
- An A.I.F.-L.N.P. is not required to appoint a Depositary/Custodian if:
- It capital is less than 5 000 000 euro
- It limits its investors to 5
- If its assets subject to custody do not exceed 10% of its assets it limits its investors to 25 and each one of them invests no less than 500 000 euro.
- There are no minimum initial capital rules
- There are no investment type restrictions.
- No rules as to diversification of its investments
- It units/shares can be listed on any stock exchange in any other country.
- It can be an umbrella A.I.F.-L.N.P. i.e. it can have many other compartments (companies), with different investing policies. However, the total investors must not exceed 50. If an investor is a legal entity a look behind the veil will be applied.
- An A.I.F.-L.N.P. has up to a year to collect capital of at least 250 000 euro. This period can be extended to another 12 months!
- Investor Units can be transferred freely without any limitations.
- Registered A.I.F.s do not have to be licensed by the CySEC! Therefore, they can be set up in a few days!
Tax Benefits for an A.I.F. in Cyprus
- Only 12.5% tax on profits, one of the lowest tax rates in the EU.
- Cyprus does not withhold any tax on the repatriation of dividends, interests or royalties to non-residents.
- Zero tax on the profits from the sale of securities such as shares.
- There is zero tax too on dividends coming or going out.
- Notional Interest Deduction, available.
- The A.I.F. does not pay stamp duty on the issuance of units.
- Investors in a Cyprus A.I.F. are not considered to have a permanent establishment in Cyprus.
- Cyprus has an extensive network of Double Taxation Avoidance Treaties.
Types of Cyprus A.I.F.s
It is possible to set up a variety of Alternative Investment Funds in Cyprus. The most important are the following:
- The A.I.F.-L.N.P. This the Alternative Investment Fund with a limited number of partners/investors. Some of it main characteristics are the following:
- The number of investors/partners is limited to 50!
- It cannot accept retail investors.
- Investors must be professional and well informed.
- A Cyprus Alternative Investment Fund can be either a limited liability company with a fixed or a variable capital (F.C.I.C. or V.C.I.C.). It can also be a Limited Partnership with a separate legal personality. For extensive information on how to register your Cyprus Company follow the link: Cyprus Company Registration
- It has no investment and diversification limitations
- The asset size of an A.I.F.-L.N.P. cannot exceed the A.I.F.M.D
- It can be self-managed
- Its minimum capital if self-managed is 50 000 euro and no limit if externally managed
- An A.I.F.-L.N.P. must raise at least 250 000 euro in the first 12 months.
B. The A.I.F.-U.N.P. This type of fund allows an unlimited number of investors/partners. Some of its main characteristics are the following:
- It can accept retail investors! So it can draw funds directly from the public.
- A Cyprus AIF-UNP can be a limited liability company with a fixed or variable capital.
- It can also be a Limited Partnership with or without a separate legal personality.
- It can be a Mutual Fund too.
- the unlimited persons fund may have restriction on the type of investments if it takes
- It has no Asset limits unless it goes A.I.F.M.D!
- It can be self-managed
- Its capital must be at least 125 000 euro if self-managed. If self-managed and over
A.I.F.M.D, it must be at least 300 000 euro and no limit if externally
9.It must raise 500 000 euro in the first 12 months.
E R Team Expertise and Know-How
Our Firm with its Associates has a huge expertise in Funds of over 40 years. We are offering that expertise and know-how to you. If you need any information or advice, please contact our Team here for a free consultation: CONTACT.
Our Team can assist you with the following services:
- To set up your A.I.F, fast, no fuss with no hidden costs.
- To advise you on which type of Cyprus Alternative Investment Fund is the most sui
Table for your project.
- To give you professional and expert tax advice and consultation to make your A.I.F.
as effective as possible.
- To assist you to prepare all the necessary documents and applications to submit to the Regulatory Authorities.
- All the follow up you will need until your application is examined and approved by the CySEC.
- Incorporation of your company to be used as the vehicle for your A.I.F.
- Assistance in finding professional directors and managers acceptable by the CySEC!