The House finance committee concluded on Monday that there is a need to clarify with the European Commission whether natural persons with dual nationality from an EU member state and a third country can apply to make investments within the European Union.

The discussion took place during the article-by-article review of the harmonising bill that establishes a national framework for screening foreign direct investments.

The bill aims to bring Cyprus in line with European practices, introducing stricter controls on investments of strategic importance while at the same time ensuring that the country remains a competitive destination for credible investment.

Particular debate centred on whether individuals holding dual nationality, that of an EU member state and a third country, should be allowed to proceed with investments in the EU.

A representative of the Cyprus Bar Association and the Cyprus International Businesses Association (CIBA) suggested that the matter should be clarified with the European Commission to avoid potential breaches of EU law, since the issue is not explicitly addressed in the European directive.

Responding to a question about whether those with both European and third-country nationality are considered foreign investors, the representative of the Finance Ministry said that in the case of a legal entity, the entity must be established in an EU member state in order to be eligible to apply for investments within the union.

Regarding natural persons with dual nationality from an EU state and a third country, the ministry’s representative added that the matter will be discussed with the European Commission to determine whether, under EU law, a third-country national with European nationality can apply to make investments.

The issue will return to the committee for continuation of the article-by-article discussion.

Speaking after the session, Dipa MP Alekos Tryfonides explained that the bill is designed to create a framework and procedure for controlling foreign direct investment in the European Union.

He added that it replaces and improves provisions of a previous bill that had already been examined, while incorporating some of the suggestions made by interested stakeholders.

Tryfonides emphasised that the bill introduces safeguards with strict criteria, allowing the state to intervene in acquisitions of large companies, organisations or financial institutions, especially systemic ones, if such transactions could threaten the security or public order of the Republic of Cyprus.

“From the article-by-article discussion, it has become clear that the new bill is indeed improved and it is a fact that the concerns expressed by many about a possible loss of foreign investments already made in Cyprus, as well as the view that the adoption of the law could make attracting new investment more difficult, have been mitigated, though we are not entirely certain,” he said.

On controversial points, Tryfonides underlined that one of them concerns the retroactive effect of the legislation, which allows the screening of foreign direct investments up to 15 months back and provides for the possibility of cancelling a transaction if irregularities are identified.

He added that there is also the possibility of further exemptions from the scope of the law, while he questioned whether the threshold of two million euros is a reasonable one.