The Rise of Cyprus’ Investment Funds industry

Mercury Global Reports interviews Andreas Yiasemides President of Cyprus Investment Funds Association (CIFA)

Even though 2020 was a challenging year due to the COVID-19 pandemic, the Cyprus fund industry has proven its resilience and continued attracting both promoters and fund managers. To this end, at the end of the second quarter of 2020, Total Assets Under Management increased to almost €8 billion. This equals a quarterly increase of 5.3% despite the difficulties and uncertainty the COVID-19 pandemic has created. At the same time, a significant number of licensing applications are pending regulator’s approval.  Even though an emerging fund jurisdiction, Cyprus is quickly gaining ground among fund managers because of its modern, pragmatic legal and regulatory environment, the abundant supply of highly professional, educated and multi-lingual human capital and the low setup and operation costs. The country is attracting investment fund managers from the UK (due to Brexit), the Middle East, Europe, etc. 

Cyprus, an EU Member State can act as Israel’s gateway to Europe and EU investors

Cyprus benefits, as a headquartering jurisdiction for Funds and Fund and Asset Management companies

  • Effective supervision of the industry by CySEC
  • Fully harmonized and modern fund legislation
  • A multilingual, well-educated and highly skilled workforce
  • Membership in the EU and the eurozone.  
  • Friendly business environment
  • Significantly lower costs of doing business for high-quality professional services compared to other EU jurisdictions
  • Cyprus funds can be listed on the Thomson Reuters funds platform, Clearstream and Bloomberg
  • A business-friendly European destination that applies common-law rules     
  • More than 60 Double Taxation Avoidance Agreements 
  • Harmonized regulatory regime for investment services with the rules established under the UCITS, AIFM, and MiFID Directives. The country also implemented the US Foreign Account Tax Compliance Act (FATCA) and was an early adopter of the Common Reporting Standard (CRS)

The message for our Israeli friends is to explore the Cypriot funds’ ecosystem. To contact local professionals and authorities, to get to know first-hand how Cyprus can be the ultimate jurisdiction to set up their fund and fund management structures

Andreas Yiasemides – president of CIFA

Cyprus as a base for Israeli companies

Cyprus and Israel have an extensive collaboration on economic, cultural and political matters. The geographical proximity between the two countries and the ease of doing business amongst Cyprus and Israeli entities compared to other jurisdictions are the necessary ingredients for the two countries to work together and come closer. Moreover, Cyprus, being an EU Member State can act as Israel’s gateway to Europe and EU investors. Funds established in Cyprus can benefit from the EU passport, offering fund managers cross-border fund distribution. 

The message for our Israeli friends is to explore the Cypriot funds’ ecosystem. To contact local professionals and authorities, to get to know first-hand how Cyprus can be the ultimate jurisdiction to set up their fund and fund management structures.

The Cyprus Headquartering and Funds Summit in Tel Aviv, 2019 (source: philenews.com)

2021 Outlook for the Fund Industry

The outlook is positive despite the challenges posed by the pandemic and CIFA’s strategy is to continuously promote the Cyprus fund industry abroad. Investment Funds are becoming a systemic factor for the global economy, and we expect new investments in Cyprus as well that will help overcome the crisis. We are optimistic that the industry will soon reach the €20 billion threshold in Assets Under Management, but we are determined that this growth will be done the right way.