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Buying Overseas. Cyprus

Immovable Property Tax

The annual immovable property tax is calculated on the market value of the property as of January 1st, 1980.

Market Value of Property (CYP) Annual Property Tax (%)
Up to 100,000 exempt
100,001 to 250,000 2.5
250,001 to 500,000 3.5
over 500,000 4.0

Capital Gains Tax

Apartment complex in the sun

On disposal of the property, CGT will be payable at the rate of 20% on the gain with the first CYP10,000 being exempt for each person. The gains are calculated on the difference between the sales proceeds and the original cost of the property. In the case of a property which was purchased prior to January 1st, 1980, the gains are the difference between the sales proceeds and the market value of the property as of January 1st, 1980.

The seller is entitled to a further allowance regarding the transfer fees paid, inflation rate per year and the cost of any additions made to the property.

Gains from the sale of a dwelling property are exempt up to CYP50,000 in total if the owner resides in the home continuously for at least 5 years prior to disposal.

Note: There is a double taxation agreement in place between Ireland and Cyprus.

Stamp Duty

The purchaser is liable for the payment of stamp duty at the rate of CYP1.50 per thousand up the value of CYP100,000 and thereafter at the rate of CYP2.00 per thousand.

This should be paid within 30 days of the signing of the contract.

To illustrate this, assume the purchase price of the property is CYP 150,000

First CYP 100,000 stamp duty is payable at 1.5% = CYP150

Remainder CYP 50,000 stamp duty is payable at 2.0% = CYP100

Total = CYP250P250

Estate Duty Tax

Estate Duty tax has been abolished from January 1st, 2000. (Statute No. 78(1)/2000).

Local Authority Taxes & Rates

A rough guide could be approximately CYP50-150 per year depending on the size of the property. This tax is for refuse collection, street lighting, sewerage, etc. The basic utilities such as electricity, water and telephone are payable individually in accordance with usage.

Residential Permits

A residential permit is easily obtained for persons residing in Cyprus who have purchased a property.

Temporary Permit

The granting of this permit requires the existence of a bank account in Cyprus and a sales agreement of the property purchased. Temporary residence status can be for a period of 1-4 years.

Permanent Permit

In addition to the above requirements, the applicant must establish evidence of a secured annual income of not less than CYP5,600 per person plus CYP2,700 for each dependant person. Owing to the entry of Cyprus to the EU it is possible that the law for Europeans in respect of permits may change.

Property Ownership

Couple enjoying their new propery in Cyprus

In comparison to many other countries, the process of purchasing property in Cyprus by foreigners is very simple. Non-Europeans are entitled to a freehold ownership of a villa, an apartment or a piece of land, with a maximum allowance of 4014sqm.

Europeans are entitled to a freehold ownership of a villa or apartment. With respect to land, there is no such restriction on the purchase.

The Title Deed

Transfer of ownership from Vendor to Purchaser is undertaken by a simple procedure through the Cyprus Land Registry office. The buyer may choose to do this personally or can appoint a power or attorney to do this on their behalf.

The title of ownership requires a permit from the Council of Ministers.

Real Estate Transfer

Real Estate Transfer Tax fees are necessary in order to transfer FREEHOLD ownership to the purchaser. The transfer fees, which are the purchaser's responsibility, will be paid when the title deed has been transferred into the purchaser's name. The rates are on a graduated scale:

Value of the Property (CYP) Transfer fee rate (%)
Up to 50,000 3.00
50,001 to 100,000 5.00
100,001 and over 8.00

If the property is owned by more than one person and is therefore in joint names, then the purchase value is divided into parts which result in reduced transfer fees. Below is an illustrated example of this:

Property purchased for CYP70,000 in one name the fees payable are CYP2,500

Up to CYP50,000 @ 3% = CYP1.500

Second CYP 35,000 @ 3% = CYP1,050 (second persons share)

Total fees payable = CYP2,100

VAT

As of 1/05/04 a statute in respect of VAT on properties was introduced at a rate of 15%.

Income Tax

The following income tax rates apply to individuals:

Chargeable Income CYP Tax Rate (%) Accumulated Tax (CYP)
0-10,000 - -
10,001-15,000 20 1,000
15,001-20,000 25 2,250
Over 20,000 30 -

Retirees

Retirees who become residents in Cyprus are taxed on their pensions from abroad at the rate of 5% per annum while an exception for the first £2,000 is granted.

Additionally, Cyprus has Double Taxation treaties with many European and other countries, safe-guarding its residents from paying tax in both countries. This gives the option to the citizens of those countries to take advantage of the very low rate in Cyprus.

Duty Free Privileges

Europeans, who become permanent residents in Cyprus and were using in their country a car for at least six months, can bring their car to Cyprus and they will not pay import tax.

Furniture can be imported free of any taxes by Europeans or Non-Europeans who become permanent residents provided that they are for personal use and are not brand new.