Cyprus has taken a key step toward regulating cross-border deals with the formal submission of the foreign investment screening law to Parliament, aiming for discussion in September and a final vote in the first weeks of the new legislative session.
The draft bill is part of Cyprus’s compliance with EU Regulation 2019/452, which requires member states to establish clear frameworks for the screening of foreign direct investments (FDI). Until now, Cyprus has remained one of the few EU countries without such legislation, raising concerns about transparency and institutional credibility.
The new foreign investment screening law will create a national mechanism for vetting proposed deals that may pose risks to public order or national security. According to Finance Ministry Director General Andreas Zachariadis, the move is not designed to block investment, but rather to build trust and ensure economic security.
“We aim to have a fully functional national screening mechanism by the time Cyprus assumes the Presidency of the EU Council in the first half of 2026,” he told Economy Today.
Zachariadis stressed the importance of aligning with international developments, given the growing role of foreign capital in strategic sectors and the new threats that come with it.
“This is not a restriction on free capital movement. It’s a tool for safeguarding the public interest.”
Finance Committee Chair Christiana Erotokritou echoed these concerns, warning that Cyprus risks damaging its credibility by lagging behind the rest of Europe.
“We cannot be the only EU member state without national legislation to implement the regulation,” she said. “Delays raise valid concerns.”
The draft legislation outlines when foreign investments must be reported, how approvals are granted, the types of information required, and the criteria for assessment. It is accompanied by an explanatory report from the Legal Service, which highlights the operational scope and enforcement powers of the designated authority.
While attracting international capital remains a strategic priority for Cyprus, officials insist that sustainable growth must be balanced with proper oversight.
“Proactively protecting strategic sectors is not a barrier to growth,” said Erotokritou. “It’s a tool for stable, long-term development rooted in the public interest.”
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