The Framework for the Screening of Foreign Direct Investments Law of 2025 introduces a comprehensive national regime for the screening and prior approval of certain foreign direct investments (“FDIs”) in Cyprus, implemented in accordance with EU Regulation (EU) 2019/452. The Law aims to safeguard public security and public order, while maintaining Cyprus’s openness to legitimate foreign investment.

Scope and Key Sectors Affected

The notification and approval requirement applies where the beneficial owner of the investment is a person or entity from outside the EU, EEA or Switzerland and the investment entails the acquisition of a qualifying participation (generally 25% or more, or control) in a Cypriot enterprise of strategic importance, with an investment value of €2 million or more, irrespective of the immediate or intermediary investment vehicle used.

Enterprises of strategic importance include those operating in particularly sensitive sectors, such as:

(a) Critical infrastructure, including energy, transport, water, health, education, tourism, communications, data processing and storage;

(b) Financial services, including systemic credit institutions and key market infrastructure;

(c) Defence, aerospace and security-related activities;

(d) Advanced and critical technologies, including artificial intelligence, robotics, semiconductors, cybersecurity, quantum, nuclear, nanotechnology and biotechnology;

(e) Media and information, where freedom and plurality of the media may be affected;

(f) Access to sensitive data, including personal data and commercially or strategically sensitive information;

(g) Land and real estate that is critical for the operation of strategic infrastructure.

The screening mechanism also applies to subsequent increases in shareholdings that cross key thresholds (25% or 50%), even where the initial investment was previously approved.

Role of the Ministry of Finance

The Ministry of Finance is designated as the competent authority responsible for the implementation and enforcement of the Law. Its powers include:

(a) Receiving and assessing mandatory notifications of qualifying foreign direct investments;

(b) Conducting a substantive security and public order assessment, based on statutory risk criteria;

(c) Requesting additional information and clarifications from investors and target entities;

(d) Consulting an inter-ministerial Advisory Committee comprising senior representatives from key government ministries;

(e) Issuing binding decisions to approve, approve subject to conditions, prohibit, or unwind an investment.

The Ministry also acts as Cyprus’s national contact point under the EU FDI cooperation mechanism, enabling coordination with the European Commission and other EU Member States.

Enforcement and Legal Consequences

Failure to notify a notifiable investment may result in administrative fines, suspension of shareholder rights, or reversal of the transaction. Transactions requiring approval are deemed to be subject to a condition precedent until written clearance is granted.Decisions of the Ministry constitute administrative acts and are subject to judicial review before the Administrative Court.

The Law enters into force on 2 April 2026 and has material implications for cross-border M&A, private equity, joint ventures and strategic investments involving Cypriot targets.

Our firm remains available to advise clients on the implications of the new FDI screening regime and to assist with compliance and notifications.

January 2026, Antis Triantafyllides & Sons LLC, Nicosia, Cyprus