Commentary: Does Cyprus’ Golden Visa Scheme Still Promote Tax Haven Traits?

The proposal was approved by an overwhelming majority of Members of the European Parliament last month, including the largest group in the European Parliament, the European People’s Party whose membership also includes ruling DISY (the Greek Democratic Rally).

The MEPs called for the phasing out of citizenship-by-investment schemes and a sense of teamwork between MEPs in order to combat tax evasion in Europe.

Czech MEP Luděk Niedermaya is the EP’s Committee Coordinator, a known visa-scheme skeptic, commented: “Cyprus’ golden visa and special tax schemes attract foreign investment, posing a security threat to the EU; whilst bringing only marginal or zero economic profits and essentially devaluing European citizenship”.

Russia’s Role in Cyprus’ Golden Visa Criticism

An overview of events with the Russian influence over the last decade in Cyprus.

In the present time, Polish MEP Mr Dariusz Kajetan Rosati also highlighted Russia’s part in several scandals investigated by the special committee in recent years.

Cyprus’ infamous golden visa programmes very often benefit Russian and CIS oligarchs. The committees work has proven that Russians and CIS country residents often play a disreputable role in tax avoidance, tax evasion and money laundering not only in Cyprus but within Europe.

The EPP criticised EU member states inability to come to a unanimous agreement on fundamental measures to tackle the problem of legal tax avoidance.

The recommendations offered by the Special Committee on Financial Crimes, Tax Evasion and Tax Avoidance involve overhauling the system for dealing with financial crimes, tax evasion and tax avoidance by methodically improving teamwork in all areas between the plethora of authorities involved at EU level, in order to start introducing new legislative bodies at EU and international levels.

Additionally included among the committee’s findings are the following important key decisions and recommendations for all member states offering citizenship-by-investment:

  1. Cyprus along with 6 other EU members: Belgium, Malta, the Netherlands, Hungary, Ireland and Luxembourg all display traits of a typical tax haven and facilitate destructive tax planning practices.
  2. Golden visa and passport schemes are challenging EU ideals and should start being phased out of European legislation.
  3. The CumEx-Files Fraud demonstrates the complexity of tax systems can result in legal loopholes and that multilateral tax treaties are the way forward (rather than merely bilateral treaties).
  4. The proposal for the creation of a European financial police force and a Europe-wide anti-money laundering ombudsman.
  5. Growing concern about member states’ general lack of political will to tackle tax avoidance and laundering of other financial crimes.
  6. Cyprus specifically has been criticised by the EU for its lack of transparency of its citizenship-by-investment programme and insufficient background checks regarding the sources of applicant’s funds.

Read more about how Cyprus is amending its legislation to avoid cherry-picking between different programmes in Europe.


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