Cyprus has taken a significant step toward tightening its oversight of foreign direct investments (FDI) with the approval of a new law designed to safeguard national security and align the country with European Union regulations.
Last Thursday, Parliament passed the legislation establishing a national screening mechanism for foreign investments in “sensitive strategic sectors.” With this move, Cyprus is now fully compliant with the EU’s FDI Screening Regulation, which came into effect in October 2020. The regulation provides a framework for cooperation among EU member states and the European Commission to assess investments that may impact public order or national security.
Under the new Cypriot law, foreign investments exceeding €2 million will be subject to review by the national authority. The legislation also extends to land and property acquisitions—but only when such transactions involve critical infrastructure. The government will soon identify and map these strategic zones across the island, while interim guidance will be issued by the Ministry of Finance to assist investors.
Importantly, individuals with dual nationality will not be classified as foreign investors under the law. Those designated as foreign investors must notify the national FDI monitoring authority before proceeding with their investment. The authority will have the power to impose conditions or fines in cases of non-compliance.
Although opposition party AKEL proposed several amendments during the parliamentary session, these were ultimately rejected.
Developers Welcome the New Investment Framework
The Cyprus Land and Property Developers Association has welcomed the introduction of the new framework, calling it a milestone for enhancing transparency, investor confidence, and Cyprus’s international reputation.
According to the Association, the law represents a balanced approach that strengthens the island’s credibility as a modern and secure investment destination while maintaining its openness to international capital. Clear, transparent procedures are expected to foster long-term trust and stability within the property and investment sectors.
By aligning with the EU’s joint investment screening system, Cyprus reaffirms its commitment to responsible economic growth and strategic resilience.
The Association reiterated its readiness to collaborate with public authorities and engage in constructive dialogue to ensure that the new system remains balanced, sustainable, and beneficial for both the Cypriot economy and society as a whole.