File - A picture taken on May 17, 2013 shows tourists enjoying their vacation in the southern Cypriot city of Limassol. With Cyprus in the height of its crisis. (AFP PHOTO/YIANNIS KOURTOUGLOU)
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This Moscow-on-the-Mediterranean has blossomed as Russians and their money flock to the tiny European Union outpost to become, in a sense, not Russian.Now foreigners can become citizens in less than six months in exchange for investing at least 2 million euros ($2.2 million) in Cyprus property or 2.5 million euros in government bonds or companies.Russians and others who obtain Cyprus passports but don't actually live there are unfairly buying EU access, he said.In the case of Cyprus, there are signs he was right.The Russian who got his passport after buying two villas is now transferring his Dutch company to Cyprus to take advantage of a deal that came with his new citizenship: tax-exempt investment income for 17 years.Did that mean this rich Russian had actually moved to Cyprus? While tax residency requires spending 183 days a year in Cyprus, it's hard to enforce that requirement.The economy expanded 1.7 percent in 2015 and 2.8 percent last year, making it among the fastest-growing in the euro area.Russian investments in Cyprus in the first nine months of last year were up more than 50 percent from all of 2015, according to Russia's central bank.Things could have turned out worse for Cyprus and for rich Russians forced to contribute to the bailout of the island's banks.
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