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The government does not directly receive any cash from the citizenship-through-investment scheme, the finance minister said on Monday.

“The state does not collect a single euro. The benefit is an indirect one, and has to do with invigorating the economy through a series of investments in various sectors,” Harris Georgiades told MPs.

The passport scheme is a “useful tool” and the government intends to keep it in place, the minister said, amid reports that the European Commission was none too happy with Cyprus ‘giving away’ passports.

Georgiades said reports that 1100 passports had been issued via the programme since it was introduced four years ago were misleading.

Whereas the scheme does inject much-needed cash into the economy, he added, one should not overestimate its impact.

The citizenship programme brought in €3.3 billion in foreign investment by the end of 2016.

A parallel scheme providing a permanent residence permit to those buying homes worth €300,000 yielded an additional €700 million over the same period, bringing the overall total to €4 billion.

But Georgiades noted it was important to make the distinction that this cash does not end up in state coffers.

The only benefit to the state comes indirectly, from property transfer fees and VAT.

Asked whether the government is considering revising the scheme – following pressure from the EU and IMF – Georgiades said they saw no need for tightening up the eligibility criteria.

Any changes would probably involve tweaks to how the programme is promoted and advertised, he said.

It’s understood, for example, that certain Cypriot agents advertise the scheme abroad in countries which do not even allow dual citizenship. This has created bad optics for the government.

The issue regained traction after the Guardian ran a story in September criticising Cyprus for granting citizenship to billionaire Russian oligarchs and members of the Ukrainian elite.

Trailing the Guardian report, a European Commission spokesman said that conditions for obtaining citizenship are set by national law but ‘are subject to due respect of EU law’.

Cypriot officials argue that the investment-for-passport scheme here is in fact stricter than elsewhere.

The investment needed for citizenship in Cyprus is for €2 million if the investment is made solely in residential real estate, at least a quarter of which must be spent on a residence for life. If not, the threshold is €2.5 million, at least €500,000 of which must be spent on a permanent residence.

In both cases, the requirement of a permanent residence ensures the investor remains closely engaged with Cyprus even if not actually obliged to live on the island.

The initial requirement for a €2 million overall investment in real estate applies for three years, after which the naturalised person may divest of the investment. However, they must keep their residence in Cyprus for life.

By comparison, under Malta’s scheme, €350,000 must be spent on a residence, and it need only be held for five years.

Source: CyprusMail