Business news from Ukraine

Cypriot banks and financial institutions have begun conducting enhanced due diligence on clients who have obtained citizenship or a residence permit through investment programs, including the former Cypriot “golden passport” program and current investment-based residency schemes.
On June 5, the Tax Department of the Republic of Cyprus published a notice regarding the strengthening of due diligence procedures under DAC2/CRS standards. The measures are aimed at determining clients’ actual tax residency and preventing the use of investment passports and residence permits to conceal assets or evade tax reporting.
The new requirements primarily apply to clients who indicate tax residency in countries with high-risk investment programs. Banks must more carefully verify whether the declared jurisdiction actually corresponds to the client’s real “center of vital and economic interests.”
As part of the verification process, financial institutions may request additional information from clients: whether citizenship or a residence permit was obtained through an investment program, whether the client has the right of residence in other countries, whether they have stayed in other jurisdictions for more than 90 days in the past year, and where they actually filed tax returns.
For new clients, the enhanced procedures apply from the date of publication of the notice—June 5, 2026. For existing clients, financial institutions have up to six months to conduct the additional verification.
If a bank determines that a client’s actual situation does not match their declared tax residency, information about their accounts may be shared with the tax authorities of the relevant country through the CRS automatic exchange system.
The OECD has previously noted that citizenship and residency-by-investment programs can be used to circumvent tax transparency rules if a client obtains formal status in one country but actually lives and conducts economic activities in another.
The list of jurisdictions whose programs the OECD considers potentially risky for the CRS includes, in particular, Cyprus, the UAE, Bahrain, Antigua and Barbuda, Dominica, Grenada, St. Kitts and Nevis, St. Lucia, the Bahamas, Barbados, the Seychelles, Vanuatu, and the Turks and Caicos Islands.
This is an important signal for the Cyprus real estate market, as investment residency remains one of the factors driving demand for housing from foreign buyers. The current permanent residency-by-investment program requires an investment of at least €300,000, particularly in real estate; however, investors must now be prepared for a more thorough review of their sources of funds, tax history, and actual place of residence.
Cyprus’s citizenship-by-investment program, known as the “golden passport” program, was shut down in 2020 following a corruption scandal and pressure from the EU. However, some investors who obtained citizenship earlier still hold Cypriot documents and bank accounts, making them a group of heightened interest for tax and financial authorities.
Tighter controls may complicate account management for some foreign investors, especially those who hold multiple residencies, do not maintain transparent tax records, or cannot verify the source of their funds. That said, for real estate buyers with documented income and a clear tax history, the new rules do not mean automatic denial of service, but they do raise compliance requirements.
Cyprus remains one of the prominent real estate and tax planning markets in the Eastern Mediterranean. The country is an EU member, has a developed banking sector, a low corporate tax rate, and continues to attract interest from foreign homebuyers, primarily in Limassol, Paphos, Larnaca, and Nicosia. However, following the closure of the “golden passport” program and the strengthening of international tax information exchange, the market is gradually shifting from a model of quick investment statuses to stricter compliance and transparency regarding the origin of capital.