Cyprus Set to be Europe’s Newest Investment Funds Hub

The European Union as a whole has been affected by Brexit and as the deadline approaches a notable shift in UK firms looking elsewhere can be seen. As investment and fund managers are looking for stability outside the UK Cyprus has seized the opportunity to provide attractive legislation, thus setting the country on the road to becoming Europe’s newest Investment Funds Hub.

Toll of Brexit

In the course of the past 3 years, Brexit has caused an ongoing uncertainty in the world of finances that have rippled across the whole of Europe. Due to the slow nature of Brexit UK firms are turning elsewhere for business as the toll of Brexit continues to erode long-established businesses.

This can be clearly seen in figures as the New Financial Reported that 269 UK-based financial firms have responded to Brexit by transferring business, relocating employees or rebasing assets elsewhere in the EU. The report also mentions that 65 billion pounds of portfolio funds have been transferred out of the UK so far, this figure is based only on publicly available records.

It is clear to see that Brexit is resulting in the movement of funds and investments outside of the UK and into other EU Countries.

Cyprus a Strong Contender for Investment Funds

As businesses in the UK shift many EU cities are keen to seize this unique opportunity, however, Cyprus continues to stand out among the rest due to ongoing efforts. New legislations put in place in 2018 has aided the progression of AIFs (Alternative Investment Funds) with Cyprus attracting several funds and managers designed to benefit those who set up businesses on the island.

Cyprus continues to work on the progression of jurisdiction so as to remain competitive with other EU countries. One example is KPMG Cyprus who is leading the efforts “At KPMG Cyprus we stand at the forefront of the funds’ development”, states Christos Vasiliou, Managing Director and Head of Advisory Services. “We have been involved in the drafting of the new AIF legislation as far as the framework is concerned, as well as the tax incentives that have been given to funds and fund managers.”

“The fund’s sector was always considered by us to be one of the biggest growth areas that we could develop going forward. What we did in the past three years was manage to upgrade all the legislation, bring everything up to speed, modernise everything and make our funds service offering extremely competitive. Legal framework-wise we are not running behind any of the other EU jurisdictions when it comes to funds.”

“I consider Cyprus to be a hub for British businessmen and financial institutions through which they can access the European market. I’m hopeful that it may have a positive effect on Cyprus rather than a negative effect, but it remains to be seen. We should be taking this opportunity further with British businessmen, and British fund managers especially, to promote Cyprus.”

Seizing the Opportunity

The efforts of those creating attractive jurisdiction are now paying off, according to the Cyprus Securities and Exchange Commission the number of collective investment management companies and collective investment organisations under supervision increased to 187 in the first quarter of 2019. In fact, total assets under management totaled [1] 6.7 billion euros, representing a 7 percent increase, when compared to the last quarter of 2018.

Due to these high figures, enthusiasm has spread in the sector with industry experts predicting that total funds could reach 10 billion euros or higher by 2020. The high figure is also driven by Cyprus unique selling point of the country’s location. “I must stress that Cyprus funds can be used as a passport for non-EU fund managers to direct investments through Cyprus to other countries”, explains Vasiliou, adding that fund managers who leverage the country’s vast double taxation treaty network – encompassing 50 countries – will find that Cyprus is “an ideal distribution network with opportunities for fund managers to direct their investments [internationally] through the island”.

The Overall Benefits for Cyprus

The increase in international business in Cyprus has led to an overall benefit for the economy. As new offices are needed to hold new businesses property developers in Cyprus accommodate rising demands. Alongside international workers who require housing, use travel, and services alongside general spending in Cyprus the economy is thriving.

Here at SkyPrime Group, it is our mission to ensure that our clients benefit fully from these opportunities in Cyprus. This is achieved by SkyPrimes continual growth and commitment of offering higher quality with more options when it comes to investment and property in Cyprus.

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Date published: August 23, 2019