Cyprus FDI Screening: A Practical Guide for Foreign Investors

Cyprus FDI Screening: A Practical Guide for Foreign Investors

Legally reviewed: 23 July 2026
Jurisdiction: Republic of Cyprus

Foreign investors acquiring a stake in a Cyprus business must now consider a regulatory question at the start of the transaction: does the investment require approval under Cyprus’s foreign direct investment screening regime?

The answer may affect the structure of the deal, the information that must be collected, the wording of the transaction documents and, importantly, when completion may lawfully take place. The rules are particularly relevant to investments in technology, energy, financial services, communications, healthcare, tourism, data, defence-related activities and other sensitive sectors.

Direct answer

Under the Establishment of a Framework for the Screening of Foreign Direct Investments Law of 2025, Law 194(I)/2025, a foreign investor will generally require prior approval from the Cyprus Ministry of Finance where the investment:

1. gives the investor at least 25% of the share capital or voting rights, or an equivalent ability to exercise decisive influence;
2. has a value of at least €2 million, counting certain transactions between the same parties over a 12-month period; and
3. concerns an undertaking operating in a strategic or particularly sensitive sector.

These are not the only circumstances requiring attention. An increase that crosses the 25% or 50% threshold may be notifiable regardless of its value. The Ministry also has statutory powers to examine certain investments that are outside the mandatory filing criteria where security or public-order concerns may arise. A transaction requiring approval must not be completed until written approval has been received.

Key takeaways

• Law 194(I)/2025 took effect on 2 April 2026 and the Ministry of Finance is the competent authority.
• The regime concerns investors from outside the EU, EEA and Switzerland, but may also look through an EU acquisition vehicle to its third-country ownership, ultimate beneficial owner or controller.
• Acquiring 25% is not the only relevant test. Voting arrangements, contractual rights, rights over assets and other mechanisms capable of conferring decisive influence must also be assessed.
• The €2 million threshold can be calculated cumulatively across transactions between the same parties during the relevant 12-month period.
• Further acquisitions crossing 25% or 50% may require notification regardless of value.
• Written clearance is required. Silence or expiry of the review period is not approval.
• Requests for further information suspend the statutory review periods.
• Failure to notify can lead to fines, restrictions on shareholder rights and measures to prohibit, terminate or reverse an investment.
• FDI analysis should be completed before signing where possible and must, at the latest, be reflected in the conditions to completion.

The legal framework in Cyprus

Cyprus’s national screening regime is governed by Law 194(I)/2025. It operates alongside the EU framework for cooperation between national screening authorities and the European Commission.

The current EU framework is Regulation (EU) 2019/452. A replacement measure, Regulation (EU) 2026/1386, entered into force in July 2026 and is due to apply from 17 January 2028. It will further harmonise minimum requirements across the EU. Investors involved in transactions with a longer timetable should therefore monitor both the Cyprus regime and the EU transition.

The purpose of the Cyprus review is not to assess whether an investment is commercially attractive. The Ministry considers whether the transaction may affect the security or public order of the Republic of Cyprus, another EU Member State or the EU as a whole. The European Commission may issue an opinion and other Member States may submit comments through the EU cooperation mechanism, while the final national decision remains with the Cyprus authority.

When is a Cyprus FDI notification required?

The analysis should be conducted in five stages.

1. Is the investor a “foreign investor”?

The Law treats the following as foreign investors:

• a natural person who is not a national of an EU Member State, an EEA Member State or Switzerland; or
• an undertaking from a third country, meaning a country outside the EU, EEA and Switzerland.

The place of incorporation of the immediate buyer is not necessarily decisive. A company, organisation, foundation or other legal entity may itself have to notify where a foreign investor holds at least 25% of its share capital or voting rights, is its ultimate beneficial owner, or directly or indirectly controls it.

This means that placing an Irish, Dutch, Luxembourg or other EU company between a third-country investor and the Cyprus target does not, by itself, remove the transaction from scrutiny.

2. Does the investment confer a special participation or decisive influence?

A “special participation” includes the direct or indirect acquisition, alone or together with others, of:

• at least 25% of the target’s share capital;
• at least 25% of its voting rights; or
• an equivalent ability to exercise decisive influence over its activities.

The review must go beyond the percentage printed on the share certificate. Shareholders’ agreements, veto rights, board appointment rights, reserved matters, rights of use over assets and other contractual or practical arrangements may be relevant to whether decisive influence exists.

3. Is the value at least €2 million?

For the ordinary mandatory filing test, the investment must be worth at least €2 million. The calculation is not necessarily limited to one payment or one agreement. Transactions between the same parties within the relevant 12-month period are combined.

Artificially separating a wider acquisition into smaller steps should therefore not be assumed to keep the investment outside the regime.

4. Does the target operate in a strategic or sensitive sector?

The statutory list is broad. It includes activities connected with:

• critical physical or virtual infrastructure, including energy, transport, water, health, education, tourism, communications, media, data processing or storage, aerospace, defence, electoral infrastructure and financial services, including systemic credit institutions;
• sensitive facilities and land or real estate crucial to the use of critical infrastructure;
• access to, or control over, sensitive information, including personal data;
• freedom and pluralism of the media;
• critical technologies and dual-use items, including artificial intelligence, robotics, semiconductors, cybersecurity, aerospace, defence, energy storage, quantum and nuclear technologies, nanotechnology and biotechnology; and
• critical inputs, including energy, raw materials and food security.

The fact that a business uses software, holds customer data or owns property does not automatically resolve the question. The actual products, services, infrastructure, customers, datasets and role of the target in Cyprus must be examined.

5. Does a special threshold or call-in power apply?

Two important qualifications prevent the analysis from becoming a simple three-box exercise.

First, an increase that moves a foreign investor:

• from below 25% to 25% or more; or
• from below 50% to 50% or more,

may create a notification obligation regardless of the value of that further investment.

Secondly, the Ministry may examine an investment even where it is outside the mandatory notification criteria if there are reasonable grounds to consider that it could affect security or public order. For a non-notifiable investment, this power may be used within 15 months after completion. Where a transaction was notifiable but was not notified, the call-in period is five years after completion.

Which investments are excluded?

The Law expressly excludes from mandatory notification investments concerning ships under construction or ships being bought or sold. Floating storage and regasification units are not covered by that exclusion.

This is a narrow statutory exclusion. Shipping groups should still examine acquisitions of shares in strategic undertakings, port-related infrastructure, energy assets, sensitive facilities or FSRUs on their own facts.

How the notification procedure works

Step 1: Conduct the FDI assessment early

The parties should map:

• the immediate investor and every entity in its ownership chain;
• all ultimate beneficial owners and persons exercising control;
• the proposed and existing shareholding and voting rights;
• board rights, vetoes, reserved matters and other influence mechanisms;
• the target’s activities, assets, data, licences, infrastructure and principal customers;
• the investment value and connected transactions between the same parties; and
• any relevant security, sanctions or criminal-history considerations required by the Law.

This assessment should be coordinated with corporate due diligence, merger-control analysis, sector-specific approvals and sanctions compliance. An FDI clearance does not replace any of those separate requirements.

Step 2: Build clearance into the transaction documents

Where notification is required, the acquisition agreement should deal expressly with:

• FDI approval as a condition precedent;
• restrictions on completion and transfer of control before clearance;
• each party’s obligation to provide filing information promptly;
• responsibility for responding to Ministry questions;
• the approach to possible conditions or mitigation measures;
• confidentiality and the exchange of sensitive information;
• the long-stop date and any extension mechanism; and
• termination rights if approval is refused or unacceptable conditions are imposed.

The Law treats relevant agreements and legal acts as subject to the condition precedent of regulatory approval. Express drafting is nevertheless important because it allocates risk and gives the parties a workable process while clearance is pending.

 Step 3: Prepare the prescribed filing

The Ministry has published an official FDI notification form and an application submission guide. The current official form should be used.

Section 4 of the Law requires information including:

• identification and registration details of the transaction parties, including applicable NACE classifications;
• the ownership structures of the investor and target, including the final investor, ultimate beneficial owner and capital participation;
• the approximate investment value;
• the parties’ products, services and business activities;
• their economic activities in Cyprus;
• the investment funding and its source;
• the intended completion date;
• jurisdictions of establishment and countries in which the parties conduct business;
• annual turnover and employee numbers;
• specified information concerning sanctions and restrictive measures;
• specified conviction or pending criminal-case information; and
• any further information considered necessary by the Ministry.

The filing should be internally consistent with the acquisition documents, constitutional documents, corporate registers, beneficial-ownership information, financing arrangements and ownership charts. If the application is incomplete, the review clock may not begin or may be suspended while additional information is provided.

Step 4: Submit before completion

The application must be made before the investment is completed.

The parties should verify the current submission method immediately before filing because administrative guidance and forms may change.

Step 5: Initial review

The Ministry has 20 working days from receipt of a fully completed application to decide whether the notified investment will undergo screening. The Ministry consults its Advisory Committee at this stage.

If additional documents, explanations or clarifications are requested, the 20-working-day period is suspended until the requested material is submitted. If the Ministry decides that the transaction will not undergo screening, it informs the investor within five working days of that decision.

Step 6: In-depth screening where required

If the transaction is placed under screening, the investor is informed within five working days of the relevant decision. The Ministry then has 65 working days from the decision to determine whether the investment may affect security or public order.

That period is also suspended while requested additional information or clarification remains outstanding. Investors should therefore avoid treating 85 working days as an unconditional maximum timetable.

Step 7: Await written clearance and comply with any conditions

Approval is not deemed to have been granted merely because a statutory period has passed. Completion should occur only after the investor receives written approval.

The Ministry may:

• clear the transaction;
• permit it subject to conditions;
• prohibit it; or
• where legally available, terminate or reverse it.

An investor affected by a decision under the Law may bring an administrative recourse before the Administrative Court under Article 146 of the Constitution.

Confidential information

FDI filings can contain commercially sensitive material, personal data, financing information and detailed ownership records. The Law permits an investor or another person connected with the transaction to identify documents, statements or material as confidential, explain the basis for that treatment and provide a separate non-confidential version.

Confidentiality should be addressed when the filing is assembled, rather than after information has already been submitted. The parties may also need a clean-team or controlled-disclosure arrangement between themselves where competitively sensitive information is involved.

Costs, fees and taxes

Law 194(I)/2025 does not expressly prescribe a government filing fee. The Ministry page and submission materials should be checked again before filing to confirm whether any administrative charge has subsequently been introduced.

Professional fees and disbursements will depend on the transaction, ownership structure, number of jurisdictions, volume of supporting material, translation or certification requirements and whether the Ministry requests additional information.

The FDI procedure is not a tax clearance. Tax, merger-control, corporate, sectoral-licensing, sanctions and financing consequences must be assessed separately. Investors should therefore avoid assuming that FDI approval confirms compliance with every other Cyprus or EU requirement.

Penalties and consequences of non-compliance

The consequences extend beyond a late-filing fine.

Under the Law, the Ministry may impose:

• a fine of €5,000 to €50,000 for failure to notify;
• a fine of up to €100,000 for false or misleading information;
• a fine of up to €50,000 for failure to provide required information; and
• a fine of up to €100,000 for failure to comply with an ordered measure, plus up to €8,000 for each day the breach continues.

The Ministry may also take measures to prohibit, terminate or reverse an investment. During prohibition, termination, reversal or pending compliance with conditions, the investor and persons controlled by or acting in concert with it may be prevented from exercising voting, management or control rights connected with the investment. The authority may seek prohibitory, mandatory or interim court orders.

These consequences make it unsafe to treat FDI screening as a post-completion formality.

Common mistakes in Cyprus FDI planning

Looking only at the direct purchaser

An EU-incorporated acquisition company may still be caught where a third-country investor owns at least 25%, is the ultimate beneficial owner or exercises direct or indirect control.

Assuming a minority stake cannot confer control

A stake below 25% may still require careful analysis where the associated contractual or governance rights create decisive influence. Percentage ownership and practical control are related, but they are not identical questions.

Ignoring connected acquisitions

The €2 million test can aggregate transactions between the same parties over 12 months. Staged closings, options and follow-on subscriptions should be assessed together.

Treating every property purchase as an FDI filing

The regime is not a general approval system for all foreign property buyers. However, an acquisition involving a strategic undertaking, sensitive facility, or land or real estate crucial to critical infrastructure may require FDI analysis. The legal structure and actual use of the asset matter.

Using a short, fixed closing timetable

The statutory clocks may stop when additional information is requested, and an in-depth review adds a further phase. Transaction documents need a realistic long-stop date and a mechanism for extensions.

Closing without a written decision

There is no deemed clearance. The investor must have the Ministry’s written approval before completing a notifiable transaction.

Treating FDI clearance as the only regulatory approval

A transaction may also require merger-control approval, a sector regulator’s consent, sanctions analysis or another licence. Each regime has a separate purpose and test.

Practical examples

The following scenarios are hypothetical and are intended only to illustrate the analysis.

Example 1: Israeli investment in a Cyprus AI company

An Israeli technology group proposes to acquire 30% of a Cyprus company developing artificial-intelligence tools for critical infrastructure. The consideration is €3.2 million.

The investor is from outside the EU, EEA and Switzerland; the shareholding exceeds 25%; the value exceeds €2 million; and the target’s activities fall within a listed sensitive technology area. The transaction is likely to require notification and written approval before completion.

Example 2: US parent using an EU acquisition vehicle

A US group establishes an EU subsidiary to acquire 40% of a Cyprus data-storage business for €5 million.

The EU incorporation of the immediate purchaser does not end the analysis. If the US investor is the ultimate beneficial owner, holds at least 25% of the vehicle or exercises control, the acquisition vehicle may be subject to the notification obligation.

Example 3: Follow-on investment below €2 million

A non-EU investor already owns 20% of a Cyprus cybersecurity company and subscribes for additional shares that increase its holding to 27%. The new subscription is €700,000.

The transaction crosses the 25% threshold. The Law provides that such an increase may be notifiable regardless of value, assuming the other relevant conditions are present.

Example 4: 20% stake with extensive governance rights

A third-country investor acquires 20% of a Cyprus energy-services company and receives rights to appoint half the board and veto the annual budget, business plan and senior-management appointments.

Although the percentage is below 25%, the governance package may create decisive influence. The parties should obtain Cyprus legal advice before deciding that no filing is required.

Example 5: Ordinary commercial property versus critical land

A foreign individual purchases a standard office unit as a passive property investment. In a separate transaction, a foreign-controlled company acquires land essential to the operation of energy or communications infrastructure.

The first transaction should not be assumed to fall within FDI screening merely because the buyer is foreign. The second presents a materially stronger screening issue because the statutory factors expressly refer to land and real estate crucial to critical infrastructure. Both transactions must still be analysed according to their legal structure and facts.

Pre-signing checklist for investors and sellers

Before signing or announcing a transaction, the parties should confirm:

• the nationality, place of establishment, ownership chain and control of the investor;
• all ultimate beneficial owners;
• the investor’s current and proposed share capital and voting rights;
• whether any persons are acting in concert;
• all governance, veto, board and reserved-matter rights;
• the target’s exact activities, assets, datasets, infrastructure and licences;
• whether the target serves Cyprus without being incorporated in Cyprus;
• the value of the current transaction and connected transactions during the relevant 12 months;
• whether the investment crosses the 25% or 50% threshold;
• whether other Cyprus, EU or foreign FDI filings are required;
• whether merger control or sector-specific approvals are also needed;
• which party will lead the filing and bear the associated costs;
• whether confidential and non-confidential filing versions are required; and
• whether the long-stop date allows for information requests and an in-depth review.

Frequently asked questions

1. Does Cyprus now require approval for every non-EU investment?

No. Mandatory notification ordinarily depends on the investor, participation or influence acquired, investment value and target sector. However, special threshold rules and the Ministry’s call-in power mean that apparently out-of-scope transactions may still require legal analysis.

2. Is an investor from Israel, the United Kingdom, the United States or another non-EU country a foreign investor?

Generally, yes. A natural person who is not an EU, EEA or Swiss national, and an undertaking from outside those jurisdictions, falls within the statutory foreign-investor definition. Whether the transaction is notifiable depends on the remaining conditions.

3. Can an EU holding company avoid Cyprus FDI screening?

Not necessarily. Cyprus law may look through the immediate EU entity where a foreign investor holds at least 25%, is the ultimate beneficial owner or exercises direct or indirect control.

4. Is a 24% acquisition always outside the regime?

No. A participation below 25% may still create decisive influence through contractual rights, board representation, vetoes or practical arrangements. The Ministry also retains a call-in power where security or public-order concerns exist.

5. How long does Cyprus FDI clearance take?

The initial decision period is 20 working days from a fully completed application. If the investment enters in-depth screening, a further 65-working-day period applies. Both periods may be suspended while additional information is outstanding, and written approval is required before completion.

6. Can the parties sign before obtaining approval?

The Law requires approval before the investment is completed. Relevant agreements are treated as subject to the condition precedent of approval. Parties commonly need express conditions precedent and risk-allocation clauses so that signing does not lead to premature transfer of control.

7. Are all Cyprus property acquisitions covered?

No. The regime is not a general foreign-buyer approval for every property purchase. It may nevertheless be relevant where the transaction involves a strategic undertaking, sensitive facility or land or real estate crucial to critical infrastructure.

8. What happens if the investor files incomplete information?

The Ministry may seek additional documents, explanations or clarification, and the statutory review period is suspended while the requested material is outstanding. False, misleading or omitted information can also attract administrative fines.

How Michalaki, Pitsillidou & Co LLC can assist

FDI screening should be integrated into the legal architecture of the transaction, not left until the proposed completion date. Michalaki, Pitsillidou & Co LLC can assist foreign investors, Cyprus targets, sellers and transaction advisers with:

• jurisdictional and control analysis;
• review of the investor’s ownership and beneficial-ownership chain;
• classification of the target’s activities and assets;
• preparation and review of the notification;
• transaction-document conditions, covenants and regulatory-risk provisions;
• responses to Ministry requests;
• coordination with corporate, merger-control, sanctions, property and sector-specific advice; and
• advice on conditions, prohibition decisions and available administrative remedies.

To discuss a proposed investment in Cyprus, contact Michalaki, Pitsillidou & Co LLC:

• Telephone: +357 99 345000
• Email: info@impklawyers.com
• Contact form: Contact our legal team

Legal disclaimer

This article provides general information about the law of the Republic of Cyprus as reviewed on 23 July 2026. It does not constitute legal, tax, investment or regulatory advice and should not be relied upon as a substitute for advice based on the facts, documents, ownership structure and timing of a particular transaction. Laws, regulations, administrative practice, forms and guidance may change. Professional advice should be obtained before signing, completing or restructuring an investment.