A quick guide for acquiring property in Cyprus

General

Cyprus is a popular place for the acquisition of immovable property by foreigners. This popularity is attributed to many factors including:

• the relatively low cost of living,
• the high quality of lifestyle,
• the favourable policy to obtain a permanent residence through the acquisition of real estate,
• an attractive tax and business regime,
• strategic location at the crossroad of three continents.

Legal framework

Immovable property transactions are regulated by a number of Cyprus Laws that generally follow respective UK laws. Foreigners who purchase property in Cyprus have the same rights as locals and can be rest assured that their property rights and ownership are secured.

Acquisition of property by EU nationals

Since Cyprus’ accession to the EU, European nationals, including companies whose shareholders are European nationals, are allowed to purchase any type of Cyprus property without any restrictions.

Acquisition of property by Non EU nationals

Non-Europeans can buy one home in Cyprus, and are entitled to hold land freehold, but there is a maximum limit on land ownership of 3 donums (4,014 sq m). A permit to register a property is needed from the government, but can easily be obtained through a lawyer. A company owned by non-Europeans may also acquire premises for their operations (with no limit on the extent) and for the residence of their foreign employees, provided they maintain a fully-fledged office and the residence to be registered on the name of the employee.

No Exchange Control regulations

On a future disposal of the property the whole amount of the sale proceeds can be exported from Cyprus (after the tax obligations have been settled) and no exchange controls will be applicable.

Taxes and Charges arising from ownership of immovable property in Cyprus

• Taxes arising on Acquisition & Disposal
• Transfer fees
• Stamp Duty
• VAT
• Capital gains Tax

• Taxes during ownership of property
• Local authority taxes
• Immovable Property tax (IPT) – abolished from 1.1.2017

• Other Taxes & charges
• No other wealth or inheritance taxes

Transfer Fees

The purchaser will be liable to pay the following transfer fees for the property acquired, when this is registered in his/her name at the Land Registry Office. The fees are charged on the property’s market value at the date of purchase.

Note : The rates above apply per person

Important Exemptions: 

1. Exemption from transfer fees if the transfer relates to a transaction that is subject to VAT. VAT is charged at the standard rate of 19% where a reduced rate of VAT (5%) has been introduced for properties purchased by permanent residents of Cyprus, provided that the property will be used as the main residence of the purchaser for a minimum of 10 years.
2. In case a transaction is not subject to VAT, the legislation provides for an exemption of 50% of the transfer fees. This applies to transactions where transfer fees apply or are due and the transfer relates to plots of land, buildings or interests in land or indivisible interests that are sold for the first time from the date of issue of the relevant building permit and the relevant contract is prepared and submitted for the first time to the local District Land Registry during the period of application of the law.

Stamp Duty

A one-off stamp duty is levied on the purchase of property in Cyprus. The rates are dependent on the contractual purchase amounts and payment is due within 30 days of signing the Sale Agreement. The amount is payable by the purchaser to the tax authorities.

Note: Maximum Duty €20,000

Value Added Tax (VAT)

Newly erected buildings (and the associated land) are subject to the standard VAT rate of 19%. The transfer of land on its own and used buildings are not subject to VAT.

Reduced VAT rate of 5%

A reduced VAT rate of 5% is applied on the purchase or construction of a house or flat to be used as a private main residence, provided the area of the property does not exceed 200 sq.m. (the reduced rate of 5% also applies on the first 200 sq.m. if the total area of the property does not exceed 275 sq.m.).

The reduced rate also applies to properties acquired by individuals who do not ordinarily reside in Cyprus, but acquire property to be used as their residence while in Cyprus.

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 inflationery 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 only be claimed once. An individual claiming a combination of the above allowances in only allowed a maximum allowance of €85,430.

Local Authority Taxes

Property taxes levied by the local authorities are payable annually and may vary, depending on the size of the property. The tax covers the cost of sewerage, garbage disposal, street lighting, etc.

How we can help you

Our team of experienced and qualified professionals can provide a wide range of services in relation to the Acquisition of Property in Cyprus and any other related  Services.

For more information on how we may be able to assist you and your business please contact us at consult@cosmoserve.com or call (00357) 22379210.

We look forward to hearing from you.

The contents of this article should be considered to be of a general nature only not referring to any particular business.  Before proceeding with any action, please request further advice relating specifically to your business.  We will be very pleased to be of assistance.