Valsen Fiduciaries Funds

Cyprus AIF (Non-UCITS) Fund

The Securities and Exchange Commission may, by means of a directive, regulate any technical matters and details relating to Alternative Investment Funds (AIF’s).

AIFs in Cyprus are governed by the Alternative Investment Funds Law 131(I)/2014 (“AIF Law”), which repealed the former legislative framework for investment funds in Cyprus, the International Collective Investment Schemes Law 47 (I)/1999.

About Cyprus AIF (Non-UCITS) Fund

The Alternative Investment Funds (AIF’s) are non-UCITS funds. By definition, An AIF is a collective investment undertaking to raise external capital from a number of investors with a view to investing it in accordance with a defined investment policy for the benefit of those investors, and that has not been authorized as a UCITS.

Cyprus AIF (Non-UCITS) Fund Legal Requirements

Requirements

Description

  1. Applicable legislation

The Alternative Investment Funds Law of 2018 L.124(I) of 2018

  1. Supervising Authority

Cyprus Securities and Exchange Commission

  1. Corporate vehicle permitted

State the legal form of the fund,

Investment Company;

Limited Partnership; or

Common fund

  1. Share capital or equivalent

  • Minimum subscription

EUR 200,000

EUR 300,000 (Self-managed)

  • Minimum investors

None

  1. Directors / Partners / Trustees

  • Minimum number

2

  • Corporate Directors / Partners / Trustees allowed

No

  • Local Directors / Partners / Trustees required

No

  1. Fund functionaries required

Local Depositary

Yes

AML Compliance Officer

Yes

  1. Custodian

  • Custodian required

Yes

  • Local custodian required

No

  • Eligible custodian

A Custodian licensed and approved locally the Commission.

A Custodian licensed and approved under the laws of a recognized country or jurisdiction.

  1. Fund manager / Investment Adviser

  • Fund manager required

Yes

  • Local fund manager required

No

  • Fund manager requires to be licensed

Yes

  • Eligible fund manager

Subject to approval by Cyprus Securities and Exchange Commission.

A Fund Manager Must be authorised for the purpose of asset management and is subject to prudential regulatory supervision. If located in third countries, there must be a cooperation agreement between CySEC and the supervisory authority of the fund manager.

  1. Fund administrator

  • Fund administrator required

Yes

  • Local fund administrator required

No

  • Eligible fund administrator

Subject to approval by Cyprus Securities and Exchange Commission.

A fund administrator may be appointed by the Management Company or UCITS itself, as the case may be, to perform the administration tasks noted under the Management functions of the UCI Law.

  1. External auditor

  • External auditor required

Yes

  • Local external auditor required

Yes

  • Eligible external auditor

An auditor acceptable to the Commission in accordance with generally accepted auditing standards;

  1. Asset Requirements

  • Restriction on type of asset class invested

None

  • Asset diversification requirements

None

  • Limitation on size of the fund or total assets under management

None

  1. Local physical office required

No

  1. Prospectus / Offering Memorandum required to be filed

Yes

  1. Eligible for listing

Yes

  1. License fees

  • License application fee

EUR 2,000

  • Annual license fee

EUR 2,000

  1. Estimated license processing duration

3 months

Ongoing Obligations

Requirements Description
Monthly obligations
Office Required
Quarterly obligations
None
Annual obligations
Maintain such accounting records and financial statements available for examination by the Registrar or any person authorized under his hand at its principal place of business or registered office in Cyprus;
Other obligations

Notify Minister within a reasonable period of any of the following changes:

Changes in any Key Functionary in the Fund.

Changes in the composition of the governing body.

When the assets of the investment company are reduced and fall below the two thirds (2/3) of the minimum assets requirement.

Change in the registered office address

Change of its agent in Cyprus

Change in name or address of-

  • each director of the fund, if the fund is a company
  • each general partner of the fund, if the fund is a limited partnership.

Appointment, resignation or removal of a Director or officer

Tax Obligations and Other Exemptions
Requirements Description
Business Tax

Non-UCITS are exempted from Business Tax on Foreign income.

Resident Non-UCITS are subjected to a Corporate income tax at the rate of 10% on taxable income credited or accrued following the deduction of allowable expenses.

Withholding Tax
No withholding tax on income repatriation by the UCITS/non-UCITS (ICIS) to the non-resident unit holder.
Value Added Tax (VAT)
VAT is not applicable to Non-UCITS in its entirety depending on the activities.
Stamp duty Act
Non-UCITS are exempt from payment of stamp duty Tax
Trades Tax Act
Non-UCITS are exempted
Immovable Property Transfer Restriction Act
Non-UCITS are exempted
Immigration Decree
Non-UCITS are exempted
Exchange Control Act
The provisions of the Exchange Control Act do not apply to Non-UCITS.
Foreign Earnings Act
The Foreign Earnings Act is not applicable to Non-UCITS in its entirety.

Benefits of a Cyprus AIF (Non-UCITS) Fund:

  • Tax exceptions on profits from disposal of shares and other financial instruments and foreign dividends
  • No withholding tax for interest and dividend payments made to non-residents and on redemption of units
  • Advantage of the double taxation treaties of Cyprus with other jurisdictions
  • Tax Residency Certificate can be obtained
  • Dividends distributed or deemed to be distributed by an AIF to Cyprus tax residents are subject to 3% Special Defense Contribution (SDC), compared to 17% that applies to dividends from normal limited liability companies to Cyprus tax residents.
  • No formal requirement to appoint local Directors.
  • Under certain conditions no requirements to appoint an external investment manager and a custodian.