Before agreeing a completion date for an investment in Cyprus, establish whether the transaction requires government approval. Discovering a filing requirement after financing and commercial deadlines have been agreed can leave both buyer and seller with difficult decisions.
Since 2 April 2026, Cyprus’s Foreign Direct Investment Screening Law, Law 194(I)/2025, has required prior approval for qualifying foreign investments. The Ministry of Finance is the competent screening authority. Law 194(I)/2025, sections 2, 3 and 20
Where the rules can apply
The law adopts the definition of “foreign direct investment” in Article 2(1) of Regulation (EU) 2019/452. It means:
“an investment of any kind by a foreign investor aiming to establish or to maintain lasting and direct links between the foreign investor and the entrepreneur or undertaking to whom or which the capital is made available in order to carry on an economic activity in a Member State, including investments which enable effective participation in the management or control of a company carrying out an economic activity.”
The main Cyprus notification test applies cumulatively where:
- The investment concerns a strategic business;
- The investment is worth at least €2 million; and
- The investor acquires, directly or indirectly, alone or together with others, at least 25% of the shares or voting rights, or an equivalent ability to exercise decisive influence.
Relevant transactions between the same parties during the statutory 12-month period are aggregated.
A further notification obligation applies where an existing holding increases from below 25% to 25% or more, or from below 50% to 50% or more. These threshold-crossing increases trigger notification irrespective of investment value, but the transaction must still fall within the statutory foreign-investment and strategic-business framework. Section 3
Investments outside the mandatory notification criteria may still be reviewed where there are reasonable grounds to believe that they could affect Cyprus’s security or public order.
Investors should therefore bring the full proposal to their advisers, including existing holdings, earlier investments and rights being negotiated. A headline purchase price provides only part of the information needed. The review should also describe what the target actually does and the assets, infrastructure and information it uses.
Strategic businesses
A “strategic business” is an undertaking carrying out activities in particularly sensitive sectors identified in the Annex to the law.
These include critical physical and virtual infrastructure, energy, transport, water, healthcare, education, tourism, communications, media, data processing and storage, aerospace, defence, financial services and electoral infrastructure. The Annex also addresses:
- Sensitive information, including personal data;
- Artificial intelligence and robotics;
- Semiconductors and cybersecurity;
- Quantum and nuclear technologies;
- Nanotechnology and biotechnology;
- Dual-use items;
- Critical energy and raw-material supplies; and
- Food security.
The target’s actual activities, assets and dependencies matter. A sector label alone will not determine the outcome. Ordinary property purchases are not automatically subject to FDI approval, although land or property may be relevant where it is essential to sensitive infrastructure. Sections 2 and 3 and the Annex
The Ministry may also consider investor-related factors, including:
- Direct or indirect control by a third-country government, state body or armed forces;
- Significant government or state-linked funding;
- Previous activity affecting the security or public order of an EU Member State;
- A serious risk of illegal or criminal activity;
- Comments from other Member States or opinions of the European Commission; and
- Effects on other Member States, the EU or projects of Union interest.
Why the investment vehicle matters
Cyprus or EU incorporation does not itself exclude a vehicle with relevant foreign ownership, beneficial ownership or control.
The law may apply where:
- A foreign investor holds at least 25% of the capital or voting rights;
- The beneficial owner is a foreign investor; or
- A foreign investor controls the entity directly or indirectly.
A “foreign investor” is a non-EU, non-EEA or non-Swiss individual, or a third-country undertaking, making or proposing to make the investment. A “third country” is any country outside the EU, EEA and Switzerland.
Prepare an ownership and control chart showing the structure before and after the investment. Include the individuals or entities behind intermediate holding companies and identify the decision-making rights attached to the proposed investment.
The notification may require information about the parties, ownership chain, ultimate beneficial owner, investment value, activities, financing and source of funds, countries of operation, turnover, employees, sanctions and restrictive measures, and relevant criminal proceedings. The Ministry may request clarification or confirmation from third parties, including the target.
Build approval into the transaction timetable
Written clearance is required; elapsed time alone is not approval. The Ministry has 20 working days from receipt of a fully completed application to decide whether the investment will undergo screening. If screening is opened, a further period of up to 65 working days applies. Requests for information suspend the relevant period until the information is provided.
The Ministry communicates its decision within five working days after making it. Approval is not deemed to exist merely because a review period expires.
Failure to notify may result in an administrative fine of between €5,000 and €50,000. Other fines may apply for false or misleading information, failure to provide information or failure to comply with measures imposed by the authority. The Ministry may also prohibit, terminate or reverse the investment, and court injunctions may be available. Sections 5, 6, 7, 12 and 17
For transaction planning, clearance should be addressed alongside the funding timetable. A realistic plan should allow time to:
- Collect ownership, funding and business information;
- Prepare and submit the notification;
- Respond to questions from the Ministry;
- Complete the initial 20-working-day stage; and
- Accommodate the possible 65-working-day screening process.
The parties should identify who will coordinate the filing and how each side will provide the required information.
Make the agreement reflect the approval process
The agreement should distinguish signing from implementation and completion. Under the Cyprus law, implementation occurs when the last condition precedent relating to the parties’ investment decision has been satisfied.
Investors should discuss with their legal advisers:
- How approval will operate as a condition to completion;
- Which party will prepare the notification;
- How the other parties will provide information and assistance;
- What happens if the authority proposes conditions affecting the commercial bargain; and
- Whether the long-stop date should be extended if review remains ongoing.
These issues deserve attention during negotiations. A buyer and seller may agree on price but have different expectations about accepting approval conditions or bearing the cost of delay.
Looking ahead to 2028
Regulation (EU) 2026/1386 entered into force on 16 July 2026, with the new EU framework generally applying from 17 January 2028. Regulation (EU) 2026/1386
The future framework will expressly address indirect investments made through EU subsidiaries controlled by non-EU individuals or entities. It will establish a common minimum scope covering sensitive areas such as military and dual-use items, semiconductors, quantum technologies, certain AI technologies, strategic raw materials, designated financial infrastructure, electoral systems and critical transport, energy and digital infrastructure.
It will also introduce common procedural requirements, including an initial review period of up to 45 calendar days after a complete filing, with the possibility of an in-depth investigation.
The new framework will not eliminate Cyprus’s national rules or create a blanket exemption. Transactions extending into 2028 should therefore be assessed by reference to their implementation date, filing status and the applicable transitional provisions. The European Commission has described the revised framework as introducing mandatory screening mechanisms in all Member States while preserving the EU’s general openness to foreign investment. European Commission announcement
Discuss your proposed investment
The first conversation with your legal adviser should produce a practical route forward: an assessment of whether a filing is needed and, where it is, a plan for the application, transaction documents and completion timetable.
If you are planning an investment in Cyprus, contact our firm to discuss the proposed transaction, its ownership structure and the legal support required for the approval process.
This article provides general information only and does not constitute legal advice. The application of the Cyprus and EU foreign investment screening rules depends on the facts, structure and timing of each transaction.
