The European Commission called Cyprus to comply with EU rules which grant to nationals from the European Union as well as from Iceland, Norway and Liechtenstein, the right to purchase property in the Republic of Cyprus. Cyprus is still maintaining its restrictive measures and as a result EU and EEA nationals cannot exercise their right.
Under the Accession Treaty of 2003, Cyprus had been allowed to maintain transitional measures imposing restrictions on the purchase of property. Nevertheless, these measures were applicable for a five year period and expired on 1 May 2009. By that date, Cyprus authorities had the obligation to repeal the transitional measures. However, the Republic of Cyprus did not conform and is now in breach of its obligation on the free movement of capital.
The free movement of capital is paramount to the single market and constitutes together with the free movement of goods, services and people, the EU’s four freedoms in the 27 Member States. Concretely, free movement of capital for EU citizens is intended to permit movement of investments such as property purchases, opening of bank accounts and buying shares in non-domestic companies between Member States. Moreover, for companies the above freedom means the ability of investment and ownership of companies in other EU countries with active participation in their governance.
Therefore, the Commission, given the fact that Cyprus has not yet repealed these restrictions, has sent a reasoned opinion, which is the second step following the EU’s infringement procedure.
If the Cyprus authorities do not conform with EU legislation and fail to take satisfactory measures in order to remedy the breach of EU law within two months, the European Commission may refer the case to the EU Court of Justice.