The location of Cyprus is in the eastern Mediterranean at the crossroads of Europe, Asia, the Middle East and Africa, its reliable and transparent legal system, combined with its membership of the EU, the relatively low cost of living, wonderful climate and friendly hospitality of its people, are just a few reasons that have made Cyprus attractive to foreign investors.
Retired residents that choose to settle permanently in Cyprus upon retirement can benefit from very low taxation of pension income received from abroad. Retirees may also enjoy, under certain circumstances, the benefits of any double taxation treaty.
Many people purchase properties as holiday homes, often with a view to permanent residence in Cyprus once they retire, or to sell at a profit at a later stage.
Non-Cypriots who own a property in Cyprus enjoy all the property rights which are available to the citizens of Cyprus and can be assured that their property is absolutely protected.
A one-off payment. The purchaser will be liable to pay the following transfer fees for the property acquired, when this is registered in his name at the Lands’ Office. The fees are charged on the property’s market value at the date of purchase:
Property Value € Fees -% Transfer fee €
Up to €85.430 3% €2.563
€85.431-€170.860 5% €4.271
€170.861 and over 8%
Immovable Property Tax
The registered owner of the property is liable to an annual immovable property tax calculated on the market value of the property as at 1st January 1980.
Assessed Values as at 1 January 1980 Tax Rate
0 – €40.000 0.6 % (minimum amount €75)
40.000 – €120.000 0.8%
€120.001 – €170.000 0.9%
€170.001 – €300.000 1.1%
€300.001 – €500.000 1.3%
€500.001 – €800.000 1.5%
€800.001 – €3.000.000 1.7%
Over €3.000.000 1.9%
The Stamp Duty
The Stamp Law defines the revenue stamps payable on contracts in accordance with the purchase price as follows:
• on the first €170,860, the revenue stamp is 1,5 per thousand or part thereof; and
• on any excess above €170,860, the revenue stamp is 2 per thousand or part thereof.
The absence of the revenue stamp does not render a contract void but an unstamped contract cannot be used in court proceedings or for the transfer of ownership of property in the Land Registry. An unstamped contract may be used in proceedings or to transfer ownership provided it is properly stamped at the time of such use, in which case a fine is also imposed according to the value and the date of execution of the relevant contract.
Capital Gains Tax
Capital Gains Tax is levied at 20% on gains arising from the disposal of property by each individual person. The gain is reduced by an indexation allowance that takes into account the inflationary increase over the years the property was owned. Non-residents are only taxed when selling property situated in Cyprus. The following allowances are available to individuals:
The first €17,086 of gains arising from the first disposal of any property in Cyprus. The first €85,430 of gains arising from the disposal of a house used by the owner for his/her own habitation. This allowance can be claimed once. An individual claiming a combination of the above allowances are only allowed a maximum allowance of €85,430.
VAT on Property:
For those buildings for which an application for a town planning permit was submitted prior to the 1.5.2004 and for transfers of plots of land, no V.A.T. is charged in the event of an acquisition. For those after the above date, V.A.T. of 19% is charged, but only once. So if you acquire a property for which V.A.T has been paid previously you will not be required to pay V.A.T. again. V.A.T is not added on the sales price for the purposes of calculating the property transfer fees.
Average Property Running Costs
Municipality Charges sewage and refuse tax is approx €140.00 per year depending on the area.
Water approx €10-30.00 per month depending on area.
Electricity approx €50.00 per month depending on size of property and individual usage.
Telephone new companies have recently entered the market and brings lower charges for telephone and internet.
Immovable property tax (IPT) approx €150-500.00 per year depending on value of property.
Communal Expenses in Complexes for maintenance of the communal areas such lifts, pools and gardens. Fees vary from €30- €100 per month.
When the title deeds are in the name and in full possession of the vendor, your lawyer can implement a straight forward transfer of Sale Contract. The Contract of Sale is stamped by the Tax Office and lodged with the Land Registry for Specific Performance purposes, (Law cap 232 as amended by the laws 50/70, 96/72 and 51(1)/95).
If the title deed has not yet been purchased by the vendors from the developer that built the property, but proves to be free of any encumbrances on the search however is still in the name of the developer, the sale will be drafted as an assignment agreement i.e. under the new law you will assume the rights of the current vendor and by law the developer will transfer the deeds in to the name of new buyer.
If the title deeds have not yet been issued and the Land registry search shows no encumbrances and the project has a completion certificate and AX number has been issued, you can purchase the property by an assignment agreement.
Being a former British Colony the legal system in Cyprus is modeled on the British system and safeguards the purchases rights in many ways. With EU membership Cyprus has harmonized its laws and regulations which also means that EU citizens can now buy more than one property in Cyprus.
The banking system in Cyprus also closely follows the British pattern. The banks, having many convenient branches are efficient, modern and well equipped with the latest technology. Non-Cypriot citizens may open both foreign and local currency accounts. Many international banks have branches in Cyprus. Major credit cards, such as Visa and Master Card are widely used.
If you have any further questions please do not hesitate to contact us at [email protected]