Since the introduction of the Alternative Investment Funds Law 124(I)/2018, Cyprus has rapidly developed into a key hub for alternative investment funds (AIFs). This legislation not only updated the regulatory landscape but also introduced innovative fund structures such as Registered AIFs, enhancing the island's attractiveness as a fund domicile. Leading this sector, C.Savva & Associates Ltd, a premier financial services provider in Cyprus, offers specialized services in the establishment, licensing, and management of AIFs, underpinned by deep expertise in financial services and local regulatory knowledge, making them a top choice for fund managers and promoters worldwide.
Cyprus AIFs are distinguished by a comprehensive regulatory framework that emphasizes operational transparency and investor protection. The AIF Law of 2018 allows for a variety of fund structures, including both open-ended and closed-ended funds, facilitating a wide range of investment strategies. This flexibility, combined with a favorable tax environment and strict adherence to EU regulations, renders Cyprus AIFs highly appealing to international investors looking for reliable and efficient fund solutions within the European Union.
Cyprus provides a stringent regulatory environment for AIFs, governed by the Cyprus Securities and Exchange Commission (CySEC). This framework is in full compliance with the European Union's Alternative Investment Fund Managers Directive (AIFMD), which ensures that funds operate under high standards of investor protection, transparency, and governance. Compliance with such rigorous standards reassures investors and fund managers of the integrity and safety of investing in Cyprus AIFs. Regular audits and reporting requirements are part of this comprehensive regulatory oversight, further reinforcing the robustness of the financial practices in Cyprus.
In Cyprus, investors and fund managers can choose from several types of AIFs suited for various investment needs and strategies. These include AIFs with Unlimited Number of Persons (AIFUNP), which allow an unlimited number of investors and are typically listed on a stock exchange; AIFs with Limited Number of Persons (AIFLNP), which are restricted to a maximum of 50 investors and often appeal to private investor groups; and Registered AIFs (RAIFs), which benefit from a faster and more streamlined regulatory process as they do not require direct CySEC approval provided they are managed by a licensed AIF manager. Each type offers different advantages depending on the investment goals and the scale of operations envisioned by the fund promoters.
Setting up an AIF in Cyprus is a structured and strategic process, involving several critical steps. Initially, fund promoters must decide on the appropriate fund structure and investment strategy, followed by the drafting of a detailed fund prospectus and obtaining approval from CySEC. Legal and fiscal considerations are crucial at this stage to ensure that the fund complies with both local and EU regulatory standards. C.Savva & Associates Ltd supports clients throughout this process, offering expert legal advice, tax planning, and administrative support to streamline the establishment and operational launch of the fund.
One of the most attractive aspects of Cyprus AIFs is their favorable taxation framework. AIFs in Cyprus benefit from numerous tax incentives such as exemptions from income tax on investment income, no withholding taxes on dividend and interest distributions to non-resident investors, and no subscription taxes on the net assets of the fund. These provisions greatly improve the tax efficiency of investing through Cyprus AIFs, making them an excellent vehicle for international tax planning and investment.