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Cyprus Alternative Investment Funds (AIFs) | Private Funds

SERVICES / Cyprus Funds / Alternative Investment Fund (AIF)

Main advantages of Cyprus Funds

-  Competitive setting-up and on-going costs structures and funds in the EU
-  Favourable tax regime in the EU, especially for non-Cyprus residents
-  Combination of reasonable regulations, flexibility and tax incentives
-  EU member state compliant with EU laws
-  Developed infrastructure, highly qualified professionals and minimum formalities
-  Wide and efficient network of legal, accounting and banking services
-  Hedge fund and hedge fund managers location
-  AIFS, UCITS can be listed on CSE and other recognized EU stock exchanges
-  Re-domiciliation in and out is possible

The key new features of the Cyprus’ fund regime are:

-  the AIF Law introduces a single regulator
-  multiple investment compartments
-  provides the ability to set up a Cyprus AIF taking the contractual form of a Common Fund
-  it furthermore allows the cross investment between sub-funds
-  provides the ability to set up an AIF marketed to Professional Investors and/or Well-informed Investors
-  it allows the public offering of shares of AIFs

Types of Cyprus Alternative Investment Funds (AIFs)

  AIFS AIFs with Limited Number of Persons (AIFLNP) Registered AIFs
Authority CySEC CySEC Supervision at the level of the Manager
Available legal structures Common Fund (CF), Variable Capital Investment Company (VCIC) , Fixed Capital Investment Company (FCIC), Limited Partnership with or without legal personality (LP) Variable Capital Investment Company (VCIC), Fixed Capital Investment Company (FCIC), Limited Partnership with or without legal personality (LP) Common Fund (CF), Variable Capital Investment Company (VCIC), Fixed Capital Investment Company (FCIC), Limited Partnership with or without legal personality (LP)
Number of investors Unlimited Up to 50 (with look through provisions) Unlimited
Addressed to Retail Investors, Professional/Well-Informed Investors Only to Professional/Well-Informed Investors Only to Professional/Well-Informed Investors
Investment restrictions Apply for liquidity and risk diversification Non Applicable Non Applicable
Minimum capital requirement If self-managed: €125.000 alternatively if externally managed: N/A If self-managed: €50.000 alternatively if externally managed: N/A Not Subject to Minimum Capital Requirement
Minimum AuM (within 12 months) €500.000 €250.000 €500.000
Fund management Can be self-managed (in the case of a company or a limited partnership with separate legal personality) or Appoint a fund manager Can be self-managed (in the case of a company or a limited partnership with separate legal personality) or Appoint a fund manager Always required to appoint an external fund manager
Who can act as Manager AIFM licensed in the EU, UCIT Manager licensed in the EU, MiFID Investment Firm ,Cyprus Mini-Manager (to be enacted), EU Sub-threshold AIFM AIFM licensed in the EU, UCIT Manager licensed in the EU, MiFID Investment Firm ,Cyprus Mini-Manager (to be enacted), EU Sub-threshold AIFM Externally managed by an AIFM established in Cyprus or within another EU Member State. 

Depositary

Eligible providers include a credit institution, MiFID Investment firm or other entities subject to prudential regulation. If AIF is managed by an AIFM, custodian must be located in Cyprus or other EU member state by July 2017.
 
If AIF is managed by any other entity custodian must be located in Cyprus or any other member state or third country which Cyprus has signed a cooperation agreement.

Administrator

The administrator must be based in Cyprus. Exemption maybe obtained if both the Manager and Custodian are based in Cyprus.

Tax for Cyprus Funds 

Cyprus is increasingly becoming a favoured destination of choice in EU for Fund Managers and Management Companies seeking new locations, for the following reasons:

-  30 percent cap on personal income
-  12.5 percent cap on corporate tax, amongst the lowest in the European Union
-  corporate tax can be reduced to 0 percent as gains from trading in securities and shares are tax exempt
-  flexible regulations and light supervision
-  substantially lower operating costs than comparable EU fund centres




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