Cypriot RAIFs, Now Available Under the New Alternative Investment Funds Legislation

Updated on Tuesday 09th October 2018

Cyprus has become one of the most attractive jurisdictions for setting up an investment fund, as the country’s legislation is modified on a constant basis to accommodate the needs of the investment environment
One of the latest changes brought to the country’s national legislation was approved on 10th of July 2018, concerning the New Alternative Investment Funds Law and which now allows the registration of the Registered Alternative Investment Funds (RAIFs)

The main regulations concerning the registration of Cypriot RAIFs 

Foreign businessmen who are interested in how to start a fund in Cyprus registered as a RAIF should know that the new investment vehicle is characterized by the following, as prescribed by the new law
the fund will not be regulated by the Cyprus Securities and Exchange Commission (CySEC);
the supervision of the fund will be established at the level of the fund manager, who has to be registered with the official institutions;
there are no minimum capital requirements available for this structure;
the fund can be set up as closed-ended, but also as open-ended;
the investors will be allowed to register a RAIF as an umbrella-fund;
the investment vehicle can be set up by professional or well-informed investors;
the fund can be set up under several legal entities, such as the common fund, the investment company and the limited partnership;
although it will not be regulated by the CySEC, it is necessary to register the fund with this institution. 

New tax regulations under the approved investment law in Cyprus 

All Cypriot funds, regardless if they are registered as a hedge fund startup or as any other investment structure, are liable for taxation in Cyprus. The new investment legislation prescribes new provisions regarding the taxation of the investment vehicles
In the case of investment fund management companies, a new regulation will be imposed regarding the taxation of the employees and executives of such entities, in the sense that the income of such persons will be taxed at a tax rate of 8%. A new tax threshold is imposed in this case, of EUR 10,000, applicable in specific situations. 
Businessmen are invited to contact our team of affiliates in Cyprus for more details concerning the new legislation on alternative investment funds, approved by the local institutions.