Stamp Duty on Contracts
In the case of a sales contract, the
purchaser is liable for the payment of Stamp Duty at the rate of:
Value |
Rate |
First €5.000 |
0. |
€5.001 up to €170.000 |
0.15% |
Above €170.001 |
0.2% |
Above €8.550.000 |
Fixed at €17.000 |
TOTAL Stamp Duty |
Cumulative Total Payable |
Please do not hesitate to contact us so to further assist you and respond to any inquiry.
VAT Payable on Property
Since Cyprus accession to the EU in 2004, VAT must be paid when buying
newly build property.
In cases where an application for a town permit was filed before the 1
st of May 2004, VAT will not be charged.
If the town planning application has been filed after the 1
st 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 after the 1
st May 2004.
No VAT is applicable on the purchase of
land.
Exemption for VAT at 5%
A reduced rate of VAT at 5% is applicable for properties purchased by permanent residents of Cyprus, conditional that the property will be utilised as the main residence of the purchasers for the minimum of 10 years and provided that the contract of sale was conducted after October 1
st 2011. The rate applies for the first 200 m2 of the property of a total covered area up to the maximum of 275 m2.
Please do not hesitate to contact us so to further assist you and respond to any inquiry.
Annual Property Tax and Other Fees
Immovable Property Ownership Tax
The House of Representatives voted on July 14, 2016, to reduce Immovable Property Ownership Tax between 72.5% and 75% for 2016, and further
abolish it as from 2017 onward.
Registered property owners are liable to pay annual Immovable Property Ownership Tax based on the market value of the property as of 1
st of January 1980. Tax is due by the 30
th of September every year at the Inland Revenue Department of the Republic of Cyprus. For 2016, the scale remains as follows but discounted by the aforementioned amount depicted under the amended legislation.
Therefore, Immovable Property Tax from 2016 will be at 25% of the amount calculated within the existing provisions in place, that is to say its value on January 1st, 1980, provided that is is paid until October 31st, 2016. The new legislation provides that in case the tax is fully paid between November 1st and December 31st, 2016, it will then stand at 27.5% of the taxable amount, in addition to a further imposition of a penalty of 10% on the 27.5% if it is not settled by December 31st, 2016.
Value |
Rate |
Up to €40.000 |
0.6% |
€120.001 - €170.000 |
0.8% |
€170,001 - €300.000 |
0.9% |
€300.001 - €500.000 |
1.1% |
€500.001 - €800.000 |
1.5% |
€800.001 - €3.000.000 |
1.7% |
Over €3.000.001 |
1.9% |
Local Authority Fees
Local authorities charge a yearly duty ranging between €85 - €256, and depending on the size of your property, for
regular refuse collection, street lighting, sewerage and other community services. Communal Services fees are payable at your local municipal authority.
Sewerage Tax
Registered property owners are required to pay an annual Sewerage Tax, based on the market value of the property, as of 1
st January 1980. Rates may vary between 3% - 3.5%. Sewerage taxes are payable annually to your local sewerage board.
Basic utilities such as electricity, water and telephone charges are payable individually, in accordance with consumption, and based on a meter reading.
Municipality Tax
Registered property owners are required to pay an annual Municipality Tax, based on the
market value of the property, as of 1st January 1980. Rates may vary between 1% - 2% and the Municipality Tax is payable at your local municipal authority
Common Expenses
Common usage expenses cover the owner’s share towards the cost of cleaning and maintaining a property’s communal areas, gardens, swimming pool, management fees and repairs. Fees are payable at fixed intervals throughout the year, or included in rental fees, as they differ depending on each property and/or arrangement.
Please do not hesitate to contact us so to further assist you and respond to any inquiry.
Property Transfer Fees
The fees charged by the Department of Land and Surveys for the transfer of immovable property are payable as one-off payment as follows:
Value |
Rate |
First €85.000 |
3% |
€85.000 to €170.000 |
5% |
Over €170.000 |
8% |
A property placed in joint names, i.e. husband and wife, then the purchase value is split into two parts resulting in
reduced transfer fees.
Property transfer fees are calculated on the market value of the property at its date of purchase. However, if the Contract of Sale was not deposited at the Lands Office; transfer fees will be assessed on the value of the property on day of the transfer.
In case of the director disputing the declared value and adopting a value for the given property; the adopted valuation date is the date of purchase provided the sales contract is deposited at the Lands Office, complemented by proof of purchase. Market value may sometimes vary as to the the price paid for the property (declared sales price) where an assessment will need to be carried out in accordance to the area of location and the type of property. Once you have paid the transfer fees, you may contest the Land Registry’s decision through the Supreme Court.
Upon payment, a Title Deed for the property is issued showing that the Buyer is the property’s registered, legal owner.
Exemption on Property Transfer Fees
Properties purchased between the
2nd of December 2011 and 31st December 2016, which were subject to VAT are exempt from transfer fees whereas
properties not subject to VAT will be eligible for a
50% exemption from the above transfer fees.
In consideration of the abolition of transfer fees alongside the aforementioned new procedures; TODAY is as good as ever to invest in property in Cyprus.
You may calculate transfer fees online by visiting the Cyprus Department of Lands and Surveys –
Transfer Fees Calculator
Capital Gains Tax
Capital gains tax is payable by
both residents and non-residents at a rate of 20% on the gains made from the disposal / sale of immovable property in Cyprus in relation to the cost of acquisition, it entails taxation on the gains difference between sales proceeds minus cumulative inflation and the original cost. Note that the
first €17.086 as being exempt for each person as investment allowance.
On 9 July 2015, the House of Representatives enacted a number of significant tax laws, in order to improve Cyprus’ competitiveness and to provide additional incentives to international investors. The aim of these amendments are to simplify and harmonize the Cyprus tax system with EU guidelines, reinforce Cyprus companies in international tax structuring and make Cyprus more attractive as a prime destination for investments in Cypriot property.
This is achieved by introducing certain tax relaxations on property transactions, income from Cyprus employment and the introduction of the non-domicile status.
Exemption on Dividends, Interest and Rental Income
The non-domicile status that is being introduced for the first time will also solve many inherent issues that foreign High Net Worth Individuals have when it comes to taxing their worldwide income after becoming Cyprus tax residents. Non-doms are
exempt from defense tax contribution which is applicable on Cyprus tax residents on dividends, interest and rental income.
Prior obligations to
Special
Defense
Contribution tax (‘SDC’) for individuals who could qualify as tax resident of Cyprus (183 days’ rule) will now no longer be applicable, if it can be proved that the individual is not domiciled in Cyprus. Cypriot Tax residents who do not have domiciling in Cyprus shall no longer be subjected to 30% SDC on bank deposits in Cyprus, 3% SDC on rental income arising in Cyprus, or 17% SDC on dividends received by a Cypriot Company.
Exemption on Property
The seller is also entitled to further allowance regarding transfer fees paid, by the inflation rate per year and the cost of any additions made to the property.
Gains from the disposal of a private residence are exempt by up to €85.430 in total if the owner resides in the property for at least five years prior to disposal.
Exemption from Capital Gains Tax on Immovable Property acquired until 31st December 2016.
100% exemption from Capital Gains Tax in Cyprus, for the disposal of real estate located in Cyprus provided that the real estate has been purchased between 16/7/2015 until 31/12/2016 and it is acquired through purchase or purchase agreement and not through exchange or donation at market value from a non-relative party.