Why Start an Investment Fund in Cyprus?

Updated on Monday 23rd October 2017

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Although Cyprus is a small country, the jurisdiction offers a very reliable legal framework applicable to investment funds. An advantage of the invesment legislation available in this country is that the businessmen (both local and foreigners) may set up numerous types of investment funds, available for a wide category of investors. 

Businessmen interested in how to start a fund in Cyprus will need to follow the regulations prescribed by the Cyprus Securities and Exchange Commission (CySEC), the main institution which supervises the activity of investment structures available in this country. Cyprus allows the incorporation of both investment funds and investment companies and businessmen have several options on the legal entities available in this case. 

Cyprus, member of the European Union  

As a part of the European Union (EU), Cyprus offers a legal framework following the provisions established by the Community and thus, investors can obtain various benefits that are associated with the investment market available at the level of EU

In this sense, foreign businessmen may benefit from the recent regulation on the Alternative Investment Fund Managers Directive (AIDMF), which prescribes that EU funds managed by European fund managers can be marketed in all European jurisdictions (members of the EU) without further incorporation on the local market in which the investors will set their operations. 

Increase of the investment market in Cyprus  

Another reason why foreign businessmen can start an investment fund in Cyprus is related to the stability of the investment market, which increased at a rapid pace following the end of the economic crisis. 

The number of the private investment funds increased by 300% after the economic crisis, as they are preferred by investors due to the fact that there are no limitations on the types of investments performed here. At the same time, the investors are not required to provide a specific minimum share capital. The private investment funds are regulated under the International Collective Investment Schemes Law and such funds have one of the lowest running costs available at a European level. More importantly, they can benefit from the stipulations of the double taxation treaties signed by the Cypriot representatives

Our team of partners may provide further information on tax base applicable to investment funds in Cyprus and they can offer advice on the types of investors that can set up a hedge fund startup, another vehicle that is available for registration in this country. Please contact our team of affiliates in Cyprus fur further consultancy services.