AIF Legal Forms
An AIF can take the following legal forms and may be established with limited or unlimited duration
- Fixed Capital Company
- Variable Capital Company
- Limited Partnership
- Common Fund
Types of AIFs
1. Alternative Investment Fund with Unlimited Number of Persons
May be marketed to “retail”, or “well-informed” and/or “professional investors”
Freely transferable investor shares
Must appoint a global custodian
Can be listed on a recognised stock exchange, and AIFs marketed to retail investors can be traded
Subject to minimum capital requirements of €125,000 or €300,000 if a self-managed fund
May be subject to certain investment restrictions depending on the investor type and the overall investment policy
2. Alternative Investment Fund with Limited Number of Persons:
May be marketed only to “well-informed” and/or “professional investors”
Cannot exceed total number of 75 investors / unit holders
Freely transferable investor shares, with the condition that their transfer does not result in the AIF having more than 75 investors
In certain cases may not be required to appoint a licensed manager or a custodian
Assets under management do not exceed the AIFMD thresholds of €100 million (including leverage) or €500 million (5-year lock-up period without leverage)
Key Benefits of the Cyprus AIF
-Cost-efficient and simple to set-up, manage and operate-Modern regulatory framework fully in line with relevant EU directives and no burdensome reporting requirements
-Significant tax incentives offered by the country’s advantageous tax framework (see below)-Full transparency through annual audited and half yearly reports to CySEC and investors, which include fina
ncial statements, borrowing information, portfolio information and Net Asset Value
-Supervised by a competent and accessible regulatory authority
-Reduced reporting requirements-No restrictions imposed by the Regulator on type of investments
-May be self-managed (subject to the approval of the Regulator)
-May be set-up as umbrella funds with multiple compartments
-May be listed on Cyprus Stock Exchange and other recognised EU stock exchanges, provided number of investors is not limited
Tax Benefits:
Most income of a Cyprus tax resident Fund is tax free (e.g. most dividend income, capital gains)
Interest income is taxable, but effective tax can be significantly reduced (taking into account the NID on new equity)
Tax resident funds are eligible to all benefits under a double tax treaty or the EU Directives
Services provided by the Investment Manager of the fund are not subject to VAT
No withholding tax on any type of payments to non-residents
No subscription tax on net assets of a fund
No capital gains tax on disposal of shares/units by the holders
No tax on capital gains from the sale of immovable property located outside Cyprus
Extensive network of Double Tax Treaties in place with more than 60 countries
Registered AIF (RAIF)
Registered AIFs (RAIFs) are a new and innovative fund vehicle launched in July 2018.
They are geared to professional and well informed investors and offer a quick and cost-efficient fund launch of only one month from the date of notification.
The RAIF must appoint an AIFM which is responsible for the regulatory oversight of the fund, therefore no CySEC authorisation is required.
No licensing required
No minimum capital requirements
No investment restrictions
Multiple Compartments possible
Can be open or closed-ended
Units of RAIFs may be listed
Must appoint local Depository
Where to apply
The Cyprus Securities and Exchange Commission (CySEC) is the regulatory authority, responsible under the AIF Law for the licensing and supervision of Alternative Investment Funds. The commencement of operations of an AIF requires its prior authorisation. CySEC must review an application and communicate its decision within three months of the submission of a duly completed application.
