Cyprus is one step closer to setting up its FDI mechanism: What Foreign Investors need to know

Cyprus has officially moved forward with its first national screening framework on foreign direct investments (FDI), aligned with EU Regulation 2019/452. A bill which was approved by the Council of Ministers on 2 July 2025, was submitted to Parliament on 10 July 2025 for discussion and voting.

This is a pivotal development for Cyprus’s investment landscape, and it’s crucial that foreign investors understand how it may impact their strategies going forward.

Key Takeaways from the New FDI Framework

Under the proposed law, Foreign Investors (i.e. natural or legal persons, from outside the EU/EEA/Switzerland) will face mandatory filing requirements before investing in strategically important enterprises carrying out activities falling within particularly sensitive sectors.

Key sectors likely to be affected:

The sectors currently caught by the bill include:

• Energy & water supply
• Transport & communications
• Media
• Financial services
• Healthcare
• Digital infrastructure and dual use technology
• Education
• Tourism
• Defence
• Land and real estate of critical importance

To ensure that nothing falls through the cracks, the bill provides that even where the FDI is made through an EU based entity, the obligation to notify will still arise if the EU based entity is 25% or more owned or controlled by third country investors.

When is an FDI filing required?

The obligation to notify FDI transactions arises where the following apply:

• The acquisition concerns 25% or more of the voting rights or share capital in (or a corresponding ability to exercise decisive influence over the activities of) Cypriot entities active in the sensitive sectors (e.g., energy, transport, media, health, defence); and
• The value of the FDI is equal to or exceeds €2 million—whether through a standalone or cumulative transactions between the same parties, within a period of 12 months.

A notification is also triggered in cases where there is a subsequent increase in the participation percentage in entities from less than 25% to 25% or more and from less than 50% to 50% or more, regardless of the value of the FDI.

Exception

The draft Bill provides for certain exceptions from mandatory notification. Notably, it excludes FDI involving ships under construction or subject to sale or purchase, except for floating storage and regasification units (FSRUs) of natural gas, which remains subject to review.

Who Will Review the Investment?

The Ministry of Finance has been designated as the competent Authority to evaluate all notifications. The bill sets out the timeline of the assessment and the evaluation criteria. The competent Authority will be supported by an Advisory Committee which will consist of 7 members appointed by the competent Authority. The competent Authority may exercise any of the following powers in carrying out its duties:

• Approve the transaction
• Impose conditions
• Prohibit or reverse investments that may affect national security or public order.

What This Will Mean for Investors

While Cyprus remains committed to attracting high-quality foreign investment, this new framework adds a critical compliance step for transactions in key sectors. Once the screening mechanism is put in place, Investors will need to act early to determine if their planned investment triggers notification and if so, they will need to notify the Ministry of Finance, in writing, of their intention, at least 10 days before the investment is made.

This legal update is provided for information purposes only and is not intended to constitute legal advice. Our team stands ready to provide any further information or advice required.