Cyprus continues to grow as a prominent European hub for investment funds. With a regulatory framework aligned with EU norms and recent updates in 2025, the island offers modern fund structures, flexible setups, and attractive tax features for global investors and managers alike.
Fund Types in Cyprus
Cyprus offers two main fund categories under CySEC regulation:
UCITS Funds (Open-ended Undertakings for Collective Investment in Transferable Securities): These are regulated under EU Directive 2009/65/EC and are aimed at retail investors. They allow investments in securities, maintain risk-spread rules, and offer easy EU-wide passporting.
AIF with Unlimited Persons (AIF-UNP): open to professional and retail investors.
AIF with Limited Persons (AIF-LNP): capped at 50 investors—ideal for professionals.
Registered AIFs (RAIFs): quicker, lighter setups managed by licensed AIFMs.
New Rules for Fund Administrators
On 29 May 2025, Cyprus introduced the Investment Funds Administrators Law (L.101(I)/2025). This provides dedicated regulation for fund administrators – dramatically improving transparency, boosting investor trust, and setting Cyprus alongside top-tier fund hubs.
Why Choose Cyprus?
Key advantages include:
EU-aligned regulatory framework supports seamless passporting across Europe.
Fund variety: structures range from retail UCITS to boutique RAIFs and bespoke AIFs.
Cost efficiency: setup and maintenance are generally lower in Cyprus compared to other EU jurisdictions.
Tax perks: no withholding tax on dividends paid to foreign investors, favorable capital gains treatment, and access to double tax treaties.
Skilled services: local firms offer strong support in administration, legal compliance, accounting, and auditing.
Ideal Uses for Cyprus Funds
Professional & niche funds: AIF-LNPs and RAIFs suit hedge funds, private equity, real estate, and family office structures.
Retail investments: UCITS funds cater to diversified public offerings with investor protection safeguards.
International reach: the AIFMD passport facilitates cross-border fundraising and management within the EU.
Setting Up a Fund in Cyprus
To establish an AIF in Cyprus:
Select your type: AIF-UNP, AIF-LNP, or RAIF.
Choose the legal form: variable-capital or fixed-capital investment company, common fund, or limited partnership.
Appoint a licensed manager: self-managed if small-scale or appoint a regulated AIFM.
File with CySEC: for authorization or registration and fulfill compliance requirements.
Appoint roles: including depositaries, administrators, auditors, and service providers.
Benefit from regulatory updates: including new administration laws and proposed AIF-LP reforms.
Sector Growth & Outlook
Cyprus’s investment fund AUM exceeded €9.3 billion in 2024. The Cyprus Investment Funds Association (CIFA) projects further expansion in 2025 thanks to regulatory modernization, new fund structures, and international market access CIFA.
Ongoing developments- including the new administrator regulation and CySEC’s AIF-LP reforms – further boost fund competence and attractiveness .
Final Thoughts
Cyprus stands as a compelling choice for fund formation-offering EU-compliant regulation, diverse fund structures, tax benefits, and a growing asset base. As 2025 pioneering updates unfold, Cyprus firmly establishes itself as a competitive investment fund hub in Europe.
For detailed guidance on fund establishment, compliance, and market positioning in Cyprus, visit Soneverse and explore our comprehensive Business Guide Page. You’ll find practical tools, step-by-step instructions, and expert insights tailored to your investment needs.
