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What are the taxes when buying property in Cyprus?
Cyprus has proved to be an increasingly popular destination by foreigners for the acquisition of real estate for a plethora of reasons. Especially, the continuing demand for property by foreigners 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 and the fact that Cyprus is one of the top destinations for retirement.
The taxes levied for purchasing immovable proprety in Cyprus are very low compared to other comparable jurisdictions and are as follows:
The Purchaser is liable for the payment of Stamp Duty on the purchase price of the property at the following rates:
|VALUE OF THE PROPERTY||RATE (%)|
|More than €170.000||2|
VAT Payable on Property.
Since Cyprus’ EU accession in 2004, a standard VAT rate of 19% is required to be paid when buying a new property.
However, following a recent VAT Amendment Law, a reduced VAT rate, starting from 5%, is applicable for the acquisition of new residential properties.
For the reduced rate to be in effect, certain terms and conditions must be met:
- The property must be used as the primary and permanent residence of the applicant (for the next ten years).
- The applicant has not acquired any other residence in Cyprus with a reduced VAT rate.
- The applicant must be an individual, over 18 years old, thus legal entities are excluded.
The reduced VAT rate of 5% is applied on the first 200 square meters of the property as per the architectural plans submitted to the Authorities. On the remaining square meters, the standard rate of 19% is imposed.
Annual Property Taxes & Fees in Cyprus.
- Local Authority Fees
Depending on the size of the property, local authorities charge between €85 – €500 per annum for regular refuse collection, street lighting, sewerage and similar community services. Communal Services fees are payable to the local municipal authority, where the property is situated.
- Municipality Tax
The registered owner of the property is required to pay an annual Municipality Tax, calculated on the market value of the property as at 1st of January 2013. Rates vary from 1‰ – 2‰. Municipality tax is payable to the local municipal authority, where the property is situated.
- Sewerage Tax
The registered owner of the property is required to pay an annual Sewerage Tax, calculated on the market value of the property as at 1st of January 2013. Rates vary from 0.5‰ – 3‰. Sewerage taxes are payable annually to the local sewerage board, where the property is situated.
Transfer Fees are imposed by the Land Registry Office in order to transfer freehold ownership to the name of the Purchaser. The transfer fees are due for payment when the transfer of the Title Deed in the name of the Purchaser takes place. The Purchaser is solely responsible for the payment of the Transfer Fees. The rates are on a graduated scale.
|Value of Property (€)||Transfer Fee Rate (%)|
|up to 85,000||3|
|from 85,001 to 170,000||5|
|from 170,001 and over||8|
If the property is in joint names, then the purchase value is divided into two parts which results in reduced Transfer Fees.
So to give you an example:
If an individual or a couple buys in their joint names a house for €700,000, the taxes will be as follows:
If buying as an individual:
- Transfer taxes will be: €24,600
- Stamp Duty: €1,308
- Total : €25,908
If the couple is buying on joint names then:
- Transfer taxes will be : €21,200
- Stamp Duty: €1,308
- Total: €22,508
Capital Gains Tax.
On any financial gains from disposal/sale of Immovable Property situated in Cyprus, Capital Gains Tax will be imposed at the rate of 20% with the first €17,086 being exempt for each person.
The gain is the difference between the sales proceeds and the original cost of the property. In the case of a property which was purchased before 1st January 1980, the gains are the difference between the sales proceeds and the market value of the property as of 1st January 1980.
The Seller is entitled to a further allowance regarding the Transfer Fees paid, Inflation Rate per year and the cost of any additions made to the house.
Gains from the disposal/sale of a private residence/dwelling house are exempt up to €85,430 in total if the owner resides in it continuously for at least five years prior to disposal/sale.
For more articles on the matter see here:
For any questions feel free to contact our law firm at email@example.com
P.S. The photo on this article shows the recently acquired villa of Shakira in Peyia, Paphos.