The term foreign direct investment means the participation of more than 10% in the share capital of an enterprise resident in one country, by an investor resident in another country (direct investor) and implies the existence of a long-term interest on the part of the foreign investor. The relationship which is based on this criterion can exist directly between two entities, or indirectly through a third party which has a direct investment relationship with the other two. Consequently, it might be possible for a number of enterprises to be in a direct investment relationship regardless of whether the relationships involve one or more chains. This relationship can, therefore, extend to indirect relationships, such as subsidiaries of direct investment enterprises, subsidiaries of subsidiaries, associates and sister companies.
The foreign direct investment data for Cyprus include both the initial and subsequent equity transactions between residents and non-resident direct investors and direct investment enterprises. In addition to the above, data also include all other capital or intercompany debt transactions between resident and non-resident related entities.
The recording of foreign direct investment data is based on the investment’s “direction“ criterion. According to this criterion, all financial transactions between a resident direct investor and a non-resident direct investment enterprise, are recorded under “direct investment abroad”, while all financial transactions between a non-resident direct investor and a resident direct investment enterprise are recorded under “direct investment in Cyprus”.
The data and information required for the compilation of foreign direct investment are collected through the specialised Foreign Direct Investment Survey conducted on a quarterly basis by the Central Bank of Cyprus.