Immovable Property in Cyprus

By Christos Christodoulou

Posted: 14th September 2011 11:09

It is widely accepted that buying a property is the most secured investment, with a great potential of capital growth and a decent return on investment.  Cyprus is no exception.

Since 2004, Cyprus is a full member of EU and as from January 2008 Cyprus has entered the Euro Zone and as an immediate result, the island has become a respectable player in the international business and property market.

Cyprus features a stable economic environment and enjoys a quick and stable GDP which is characterized by low inflation and low unemployment rates.

The island’s geographical location in the eastern Mediterranean at the crossroads of Europe, Asia, Africa and Middle East made Cyprus an ideal business and tourist destination.

The Mediterranean lifestyle and the calm and relaxed environment blended with the warm climate, the beautiful beaches and landscape and the excellent lifestyle continue to attract not only holiday makers but property investors as well from all around the globe.

A great advantage Cyprus has to offer to the property investors is the numerous tax benefits through the favorable tax regime. Cyprus has comprehensive Double Taxation Treaties in force with over 40 countries and enjoys the lowest corporation tax rate in the EU at 10%.  As from February 1997 the acquisition of the property in Cyprus by foreigners and Cyprus companies is not subject to the foreign exchange controls.  Thus on disposal of the property the whole after tax amount can be exported. 

Cyprus has a clear strength in the area of professional business services such as legal, accounting, banking, IT, business consulting, engineering, shipping, health care, education and many more, which are ren­dered at the highest world level.  In addition, Cyprus offers high quality and cost effective consultancy services and support for business and individuals worldwide

All the above factors have led a variety of group of people such as holiday makers, business investors, and retired residents to invest in the Cyprus property market.

Acquisition of property by EU nationals

EU nationals and corporate entities have no restrictions of any nature when acquiring property in Cyprus.

Acquisition of property by Non-EU nationals

Non EU national must obtain a permit from the Cyprus Council of Ministers prior to the acquisition of any type of immovable property in the Republic. However, this is only a formality and does not constitute an obstacle to the property acquisition.

Non-EU national are entitled to purchase one of the following:

It is on the discretion of the Council of Ministers to approve the larger acquisition of a piece of property by Non-EU nationals subject to the land being used for the promotion of the tourist or industrial sector.

International Business Companies may purchase premises for business purposes and for the residence of their foreign employees provided that they have a fully fledged office in the Republic.

Charges and taxes from purchase, sale and ownership of immovable property

Stamp Duty

All contracts of sale require the payment of revenue stamp duty which is calculated on the purchase price

Stamp duty is due upon signing the Purchase Agreement, and is usually paid by the Purchaser.

Cyprus stamp duty is levied at the rate of 0.15% for a purchase price up to €170,800, and 0.2% for a purchase price above €170,800.

Transfer fees

Transfer tax is levied upon the transfer and registration of the property into the name of the purchaser. The transfer tax is calculated on the market value of the property on the day of purchase.

In the event of joint purchase, the transfer fee may be reduced since each purchaser is assumed to have equally contributed to the purchase price, hence reducing the applicable rate.

Property Value

Tax Rate

Up to €85,400

3%

From €85,401 to €170,800

5%

€170,801 and over

8%

Immovable Property Tax

Immovable property tax is based on the value of the property* as it was valued by the Land Registry Office on 1st January 1980.

The Immovable property tax is calculated according to the following rates (effective as from January 2012):

Value of property as at 01.01.1980:

Tax Rate:

up to €120.000

0%

From 120.000 to 170.000

0,4%

From 170.001 to 300.000

0,5%

From 300.001 to 500.000

0,6%

From 500.001 to 800.000

0,7%

Over 800.000

0,8%

 *subject to exceptions

Capital Gains Tax

Capital gains tax is charged at the rate of 20% on gains arising from the disposal of immovable property* in Cyprus or the disposal of shares of companies which own immovable property in Cyprus

The taxable gain is the difference between the proceeds of sale and the original cost of the property plus the cost of improvements cost, adjusted for inflation from the date of acquisition

The following allowances are available:

These deductions are granted once in the lifetime of the individual, until fully exhausted and if an individual claims a combination of them, the maximum deduction granted cannot exceed €85,430.

*subject to exceptions

 

Bybloserve Management Ltd

Bybloserve Management Ltd is specifically designed to pro­vide services which include corporate man­agement, trust, fiduciary, bookkeeping, tax advisory, corporate consultation and audit to a respect­able volume of high net worth corporations and individuals around the globe.

The Bybloserve team consists of Lawyers, Chartered Accountants, National and In­ternational Tax Experts, administrators and staff with expertise in the field of corporate management and international tax planning.

Our firm can provide advice on all matters relating to the sale or purchase of immovable property in Cyprus and also handle all administration work involved including drafting of contacts of sale, payment of emerging taxes and acquiring approval from the Council of Ministers for Non-EU nationals.

Bybloserve Management may also advise on the best available ownership structure for a potential purchaser in the light if the particularities of the transaction and tax optimization through the use of corporate structures.

Christos Christodoulou graduated from a UK university with a BA in Accounting and Finance and a Member of the Institute of Chartered Accountants of England and Wales (ICAEW) since 2007. Experienced in the field of statutory audit with international Audit firms before joining Bybloserve Management in 2009. Actively involved in International Tax planning and Business Consulting to clients around the globe. Regularly provide advisory on tax and audit issues for companies involved mainly in professional services, real estate, import – export, trading, and investment companies.

Christos can be contacted at info@bybloserve.com or on +357 24 812575.

 


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