Legal Advice

Legal Advice

Property Taxes

The following cyprus property transfer fees apply on immovable property and based on the market value of the property according to the Cyprus Land Registry Office.

Until 31st December 2016, no transfer fees will be payable when the property is subject to VAT, otherwise the transfer fee will be reduced by 50%.

Transfer Tax

Immovable Property Tax

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

Stamp Duty

Cyprus stamp duty is levied on ‘documents’ (i.e. written agreements/contracts) relating to assets located in Cyprus and/or matters or things taking place in Cyprus. Stamp duty is calculated on the value of the agreement at 0.15% for amounts exceeding EUR€5.000 but do not exceed EUR€170.000 and at 0.2% thereafter with a maximum cap of €20.000 per stampable agreement. The person legally liable to pay such stamp duty (unless otherwise stated on the agreement) is the purchaser. The due date for such stamp duty payment is within 30 days from the day of the ‘signing’ of a document which is considered to be subject to stamp duty.

Cyprus VAT Payable on Property

Since Cyprus’ accession to the EU in 2004, VAT must be paid when buying a new build property.

In cases where an application for a town permit was filed before the 1st of May 2004, VAT will not be charged.

If the town planning application has been filed after the 1st of May 2004, VAT is charged on the sales price at a rate of 19%. First-time buyers can apply for VAT reimbursement in cases where they paid the full amount of VAT on single properties purchased after the 1st May 2004.

No VAT is charged on the purchase of land.

Reduced Rate of VAT to 5%
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 10 years (minimum). This is applicable only to contracts of sale which are conducted from October 1st 2011 onwards. The rate will apply for the first 200 m2 of residences of total covered area of up to 275 m2.

Capital Gains Tax

Capital gains tax is levied at a fixed rate of 20% on both individuals and companies on gains arising from the sale of immovable property situated in Cyprus.

The capital gain is calculated after deducting from the sales proceeds the original cost and any additional expenditure, adjusted for inflation, and any allowable expenses directly related to the disposal of the building such as interest on loan and advertising.

It should be noted that if the property is purchased prior to 1980, the cost used in the calculation is the market value of the asset as at 1.1.1980.

Life Time Exemptions

These exemptions apply only for individual (not for legal person) and are used for reducing / eliminating the taxable gain. The life time exemption is given once in the life time of an individual and the max amount provided, subject to conditions, is €85.430.

The life time exemptions are as follows:

•  Gains from any kind of disposal: €17.086

•  Agricultural land (if main occupation is agriculture i.e. farmer): €25.629

•  Disposal of principal private resident €85.430. To be eligible for this exemption:

1. 1. The house should be used by the owner exclusively for his own habitation for at least 5 years (10 years if second time)

2. 2. The period of use does not necessarily have to be continuous. It may be interrupted as it may happen for example during an absence overseas

3. 3. Use of the resident means use by the owner

4. 4. Situated in land not exceeding 1.500 sq.mts

5. 5. Where the residence is situated on land exceeding 1.500 sq.mts, tax is payable on the proportion of the gain accruing from the disposal of the land in excess of the 1.500 sq. mts

6. 6. No exemption is allowed where disposed in more than 1 year after it has ceased to be used by the owner

Exemptions

•  Gift between relatives up to third degree of kindred

•  Transfer by reason of death

•  Gifts made for educational or charitable purposes to a local authority or to any approved charitable institutions in the Republic

•  Gift to a company where the company’s shareholders are members of the donor’s family and the shareholders continue to be members of that family for five years after the day of the transfer.

•  Gift by a family company, where all of its shareholders are members of the same family, to its shareholders provided the property was originally acquired by way of a gift. The property must be kept by the donee for at least three years.