Cyprus and the EU

Cyprus is a member of the European Union (EU) since 1 May 2004. It is also part of the eurozone and has adopted the euro as its national currency.

A Timeline for Cyprus in the EU

1972 Association agreement with the EEC (as the EU then was) on 19 December. The agreement entered into force on 1 June 1973.

1990 On 4 July, Cyprus applies for membership to the EEC.

A pre-accession strategy is formulated between 1995 and 1996.

1998 The EU lists Cyprus as a potential member. Accession negotiations begin.

2002 Accession negotiations are completed. In the December EU summit, Copenhagen invited Cyprus to join in 2004.

2003 On 16 April, President Tassos Papadopoulos signed the Treaty of Accession to the EU.

2004 On 1 May, Cyprus becomes one of 10 new states to join the EU.

2008 On 1 January, Cyprus joins the eurozone and adopts the euro as its national currency.

What does membership in the EU mean?

The EU is based on four freedoms: goods, persons, services and capital. They are the cornerstones of the Single Market and the single currency. According to the Jacques Delors Institut, together with peace, the four freedoms are the great achievement of the European Unification Project.

As the EU website explains, the whole of Cyprus is EU territory. However, because of the Turkish occupation, a Turkish-Cypriot needs EU documentation to be considered an EU citizen:

“Despite joining the EU as a de facto divided island, the whole of Cyprus is EU territory. Turkish Cypriots who have, or are eligible for, EU travel documents are EU citizens. EU law is suspended in areas where the Cypriot government (Government of the Republic) does not exercise effective control”. Source: https://european-union.europa.eu/

But what does it all mean for someone living in Cyprus?

Here are the basics:

• EU law is the superior law in the country. It is even superior to the Cyprus Constitution.
• EU Regulations apply directly. On the other hand, EU Directives need to be adopted by the Cyprus Parliament as legislation.
• EU citizens can move, work, buy goods and services, invest and live in Cyprus without restrictions. However, they must apply to and register with the Civil Registry and Migration Department within four months of entry into Cyprus.
• Third-country nationals will need to apply for a residence permit according to the laws of the Cyprus Republic. Importantly, during their stay in the Republic, they can enjoy the respect for freedom, civil liberties and human rights which characterise the EU.

How membership in the EU has affected specific areas

Banking

Because Cyprus is in the eurozone, its banks are supervised by the European Central Bank (ECB). There are 29 authorised credit institutions on the island under the authority of the Central Bank of Cyprus. They all have the SEPA direct debits scheme, administered by the JCC Payment Systems.

The Central Bank of Cyprus has implemented the capital requirement and other Directives of the ECB. It cooperates with the authorities of other member states and other countries to exchange information.

Additionally, the banking system is fully harmonised with EU legislation. Directives on consumer protection in relation to banks have all been adopted into Cyprus law. Mortgages, unfair commercial practices, and borrowing on credit cards are all under the regulation of the EU, guaranteeing that the rights of consumers are protected. Read more about opening a bank account in Cyprus.

Anti-money laundering (AML)

On November 30, 2001, Cyprus ratified the International Convention for the Suppression of the Financing of Terrorism.

The five EU Directives and other regulatory instruments on anti-money laundering apply in Cyprus.

In accordance with EU obligations, Cyprus has established the Unit for Combating Money Laundering (MOKAS) and amended the Prevention and Suppression of Money Laundering Law of 2007 to include the latest EU updates.

The Cyprus AML rules provide that professionals coming across suspicious financial transactions must report them to MOKAS.

Client due diligence, meanwhile, applies to, among others, accountants, banks, lawyers, and real estate agents dealing with transactions over EUR 10,000.

Their professional bodies (such as the Cyprus Bank Association, the Real Estate Agents Registry Council, and CySEC) review these professionals to determine whether they honour their AML duties. If they do not, they may lose their license or face other penalties and charges.

Concerning trusts and beneficial owners in companies, the true beneficial owners of trusts must be disclosed to the lawyer or other professionals. Companies or other entities must keep a record of their true owners. The Republic’s relevant authorities, such as MOKAS and the police, can access those records.

Other areas

Cyprus adopts EU policies on important matters like:

• Human rights, equality, fair trial, and the rule of law
• Competition
• Environment
• Sustainability
• ESG (environment, social and governance)

Cyprus and the EU – the rights of third-country nationals

A third-country national living in Cyprus should expect to be treated according to the rule of law and human rights standards. Their freedoms will be recognised, respected, and treated everywhere without prejudice, bias, or discrimination.

As a consumer, a third-country national will have his rights protected and guaranteed.

Their business will be carried out in an orderly and regulated manner, subject to the AML legislation explained above.

Cyprus's tax system operates favourably, with various tax exemptions, such as interest and dividends.

The EU recognises the residence permits offered by the Republic. A third-country national may obtain such a permit as an employer, employee, investor, retiree, digital nomad or innovative business owner (startup visa). These permits often carry provisions for spouses and children. Some of the permits may be permanent.

However, a Cyprus permanent residence permit does not allow a third-country national to travel across the EU without further documentation.

The Takeaway

Cyprus has been part of the EU since 2004. EU citizens and third-country nationals with a residence permit are treated with equality and respect and (with certain restrictions for third-country nationals) can carry out business in a safe and well-regulated environment. Anti-money laundering, banking, and consumer protection apply.

Frequently asked questions