The Cyprus Alternative Investment Funds (AIFs) and Undertakings for Collective Investment in Transferable Securities (UCITS).

An Alternative Investment Fund (“AIF”) is defined as 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”). 

The AIF Law allows for three types of AIFs to be established in Cyprus which are as follows: 

- Alternative Investment Funds with Limited Number of Persons (50 in total) (AIF-LNPs)

 - Alternative Investment Funds with Unlimited Number of Persons (AIFs) 

- Registered AIFs (RAIFs) 


AIFs can take the following legal forms and may be established with limited or unlimited duration:




 - Variable Capital Investment Company (“VCIC”)

 - Fixed Capital Investment Company (“FCIC”) 

 - Limited Partnership (“LP”) 



 - Variable Capital Investment Company (“VCIC”) 

 - Fixed Capital Investment Company (“FCIC”)

 - Common Fund (“CF”) UCITS:

The UCI Law defines UCITS as undertakings the sole object of which is the collective investment in transferable securities and/or other liquid financial instruments as referred to the relevant section of the UCI Law, of capital raised from the public, which operate on the principle of risk-spreading, and the units of which are, at the request of investors, redeemed or repurchased, directly or indirectly, out of these undertakings’ assets. 

UCITS can take the following legal forms: 

- Variable Capital Investment Company (“VCIC”) 

- Common Fund (“CF”)

Taxation of Funds 

Funds which are not transparent for tax purposes and which are managed and controlled in Cyprus are taxed resident in Cyprus and are subject to the general provisions of the Cyprus tax framework. In the case of funds which have compartments, each compartment is assessed separately for tax purposes subject to the provisions of the Cyprus tax legislation. 

Under circumstances and depending on the legal form of the fund, some funds may be transparent for tax purposes. 

Sale of Fund Units 

There is no capital gains tax on the gains arising from the disposal or redemption of units in funds unless the fund owns immovable property in Cyprus. However, even if it owns immovable property in Cyprus, no capital gains tax arises if the Fund is listed on a recognized stock exchange. 

Stamp Duty 

The subscription, redemption, conversion or transfer of a fund’s units are exempt from Cyprus stamp duty. 

No creation of a permanent establishment 

No Cyprus permanent establishment will be deemed to arise:

(a) investment into Cyprus tax-transparent investment funds by non-Cyprus tax resident investors, and 

(b) management from Cyprus of non-Cyprus investment funds.