Whether the purchase is connected to receiving the Cypriot nationality, a Cypriot residence permit or any other reason, we are here to guide you in choosing the correct property for you. Our firm offers support not only in the draft of a sales agreement which will secure rights, we also conduct proper due diligence for both new and used properties depending on your needs.
As such, when acquiring property in Cyprus you will need to be aware of the following tax and VAT implications.
- VAT in relation to immovable property: The percentage of VAT applicable on the purchase of immovable property in Cyprus may vary from 0% (no VAT), 5% or 19%. Land, if purchased from a physical person or entity selling immovable property as a part of a business activity, is subject to 19% VAT. Re-sale properties are not subject to VAT. First sale properties are usually subject to 19% VAT. If the building permit of said property was acquired before 1st of May 2004, the property is VAT exempt.
- Stamp duty in relation to immovable property: Stamp duty is duty paid on an agreement for, amongst other, the purchase of property situated in Cyprus, irrespective of where this agreement is drafted or executed. The amount of the stamp duty is calculated on a sliding scale and such is capped at EUR 20,000.
- Assignment fees in relation to immovable property: When property has been assigned in Cyprus assignment fees are payable by the assignee directly to the District Land Office (DLO) upon filing such assignment agreement with the DLO. The fees are calculated on the contract of sale or the assignment agreement, whichever of the two agreements indicates a higher amount. The assignment fees will be 0,5‰ of said higher amount with a minimum fee of EUR 50 and a maximum fee of EUR 3,000.
- Transfer fees in relation to immovable property: When property has been purchased in Cyprus without the payment of VAT and the title deed is ready to be transferred into the purchaser’s name, transfer fees become due (these are calculated on a sliding scale). These fees are payable by the purchaser directly to the DLO. The fees are calculated on the market value of the property as indicated by the DLO. Bear in mind that the purchase price of the property and the market value as indicated by the DLO may differ: the market value according to the DLO being higher than the purchase price.
Bear in mind that currently a 50% discount is provided on the transfer fees and therefore in our example of above the payable transfer fee will be EUR 4,600. When VAT has been paid on the purchase of the property, transfer fees will not be payable.
- Local Authorities Fees/Municipality Tax/Sewerage Tax: As an owner of immovable property in the Cyprus certain small taxes are payable.
Additionally, please be aware of
- Local Authority Fee: this fee is charged per annum for regular refuse, street lighting, sewerage, etc.;
- Municipality Tax: This tax is calculated on the value of the property as at 1 January 2013 with a rate between 0.1‰-0.2‰;
- Sewerage Tax: This tax is also calculated on the value of the property as at 1 January 2013 with a rate between 0.3‰-0.35‰;
Both the Local Authority Fee and the Sewerage Tax could be transferred to the tenant if the property is rented.
- Special Defence Contribution (this tax is exempted for “Non-Doms”);
- Income tax on rental income (a statutory reduction of 20% is applied);
- Capital Gains Tax;
- VAT on the rent to be paid by the tenant in case of a business activity