Alternative Investment Fund

The Cypriot Alternative Investment Fund (“AIF”) regime 

With the enactment of the Alternative Investment Funds Law 124(I)/2018 (the “AIF Law”) the Republic of Cyprus has modernised and significantly enhanced the regime governing Alternative Investment Funds (“AIF”) which can be registered and domiciled in Cyprus.  

AIF is

An AIF is a collective investment undertaking raising 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 an Undertaking for Collective Investments in Transferable Securities (“UCITS”).

Types of alternative investment funds

In Cyprus, the types of alternative investment funds are as follows:

  • AIFs with limited Number of Persons (“AIFLNP”)
  • AIFs with Unlimited Number of Persons (“AIFUNP”)
  • Registered AIFs (“RAIF”).

The operation and establishment of alternative investment funds

The operation and establishment of alternative investment funds with a limited number of persons (AIFLNPs) and unlimited number of persons (AIFLUNPs) are subject to authorisation by the Cyprus Securities and Exchange Commission (CySEC). Registered AIFs (RAIFs) do not require authorisation, however, their external manager should provide CySEC with notification so that the RAIF may be included on the register of RAIFs maintained by CySEC.

Legal forms

An AIF may be established taking one of the following legal forms:

  • Fixed Capital Investment Company (“FCIC”).
  • Variable Capital Investment Company (“VCIC”).
  • Limited Partnership, with or without a separate legal personality (“LP”).
  • Common Fund (not available for “AIFLNP” or “RAIF”).


Some of the key taxation benefits which an AIF and its stakeholders can enjoy are the following:

  • Exemption from tax on profits from the sale of securities.
  • Exemption from tax on dividend income (subject to certain conditions).
  • No withholding taxes on repatriation of dividends, interest and royalties to non-residents.
  • 12.5% corporate tax rate.
  • Available of the use of Notional Interest Deduction (being an annual tax expense calculated as a percentage of equity).
  • No stamp duty on the issue of units in AIFs.
  • Investors in AIFs which are tax transparent are not deemed to have a permanent establishment in Cyprus.

*for more information on the types and features of AIFs please see table below.

Professional Investor

Professional Investor – means an investor who is considered to be a professional client or may, on request, be treated as a professional client within the meaning of the Second Appendix of the Investment Services and Activities and Regulated Markets Law.

Well-informed investor

Well-informed investor – mean every investor who is not a professional investor and (i) must confirm in writing that he/she is a qualified investor aware of the risks involved with an investment in the relevant AIF and (ii) makes an investment of a minimum €125,000 or has been evaluated by a licensed bank/credit institution, an authorised investment firm or an authorised Management Company that he/she has the expertise, experience and knowledge in evaluating the suitability of an investment opportunity.

Retail Investor

Retail Investor – An investor who does not meet the criteria above.


AIFMD – The Alternative Investment Fund Managers Directive.


AIFM – The Alternative Investment Fund Manager


AIFMD LIMIT- Refers to a total asset under management up to EUR 100m (including assets acquired via use of leverage) or EUR 500m without leverage and no redemption rights for 5 years.

UCITS Management Company

UCITS Management Company-A UCITS Management Company is a company authorized under the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011, (“the Regulations”) to engage in the management of UCITS and other collective investment schemes in the form of either unit trusts, common contractual funds or investment companies or any combination thereof.


Information contained in this publication does not constitute any kind of advice on any particular matters and should not be considered as such. ATCA accepts no responsibility for clients’ decision.

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