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As with the purchase of a home in any part of the world, there are Legal & Taxation costs associated with buying your home in Cyprus, these are normally handled by your solicitor where tax is associated with the purchase or sale of a home, or in the case of local taxes, these are payable direct by yourself to the Municipality (council). You will incur solicitors costs for the purchase, conveyance and all completion and mortgage formalities, these depend upon the property you are buying, but typically for a 2 bedroomed apartment are in the region it is CYP£ 600-900. Value Added Tax (VAT) This is included in the price of New Homes only and is borne by the vendors, unless the license to build was granted before 30/4/2004 and the property is not yet completed, in which case the property is VAT exempt. VAT will be added to the cost of land purchased from 01/07/2008 at a rate yet to be confirmed.
Example in 3rd table on left side should be for a property 95,000.
Inheritance Tax This is not an issue in Cyprus.
Council/Municipality Taxes Similar to the current Council Tax system in the UK . The registered owner of immovable property is liable to minor Municipal or Village tax regulations which vary from area to area, the size covered and services provided. This tax provides for local issues such as sewerage, refuse collection and street lighting. Currently these range from CYP£ 50 to CYP£120 per annum (less than ONE MONTHS council tax in UK ).
| Property Stamp Duty (PSD) This is paid to the Land Registry after the sale agreement is signed, this is paid via your solicitor.
Currently the rate is CYP£1.50 per thousand up to a value of CYP£100,000 and thereafter it is CYP£2.00 per thousand. Example for a purchase of house price CYP£120,000
| | Rate % | CYP £ | First CYP£
100,000 | 1.50 | 150.00 | Next CYP£
20,000 | 2.00 | 40.00 | | Total | | 190.00 | | Immovable Property Tax (IPT) This is the annual ownership tax based upon the value of the property thus:
Value of property CYP£ Annual Tax % | Up to | 100,000 | Exempt | | 100,001 | 250,000 | 0.25 | | 250,001 | 500,000 | 0.35 | | 500,001 | over | 0.40 | The IPT is based on the assumed valuation of the property in 1980 which is clearly much lower than today’s market value. So the vast majority of properties there is no IPT |
Property Transfer Tax (PTT) This is paid to the Land Registrar in order to transfer the Freehold ownership into your name in the Land Registry. This normally takes place after about 3 years from the purchase, or when a property is 3 years old. The rate is in bands as follows: | Value of property | | Transfer rate % | | from | to | | | 0 | 50,000 | 3 | | 50,001 | 100,000 | 5 | | 100,001 | over | 8 |
So a purchase at CYP£95,00 | First 50,000 | 3% | 1,500 | | Next 45,000 | 5% | 2,250 | | | Total | 3,750 |
However if a purchase is joint then the Value is halved: | First 47,500 | 3% | 1,425 | | Next 47,500 | 3% | 1,425 | | | Total | 2,850 | |
Cyprus has Taxation treaties with 34 countries for the avoidance of double taxation of Earned Income. This means that those who are resident in Cyprus can choose to be taxed in Cyprus and not in the country of origin, where rates may be higher.
To be classed as a resident, a person must be physically present in Cyprus for a period of six months (183 days) of the year. The permit is easily obtained for persons living in Cyprus who have purchased a property and/or is EU Nationals. Residence permits can be granted to an applicant who satisfies the authorities that they have a secured income (e.g. Pension, investment, earned income) of sufficient amount to be self supporting and presently this happens after a continuity stay of 6 months.
Pensioners that receive pensions in Cyprus are liable to pay tax only if it exceeds CYP£2,000 per annum and the amount over this is taxed at a flat rate of 5%. | Resident individuals are liable to tax on their worldwide income (earned within and outside Cyprus ) and non resident are liable to tax only on income earned within Cyprus . As from 2005 the income tax rates are:
| From CYP£ | to CYP£ | Rate % | | Zero | 10,000 | Zero | | 10,001 | 15,000 | 20% | | 15,001 | 20,000 | 25% | | 20,001 | over | 30% | Business Investors. Foreign individuals and companies that acquire property in Cyprus take advantage of the taxation benefits (corporation tax of 10%) and other commercial privileges that are on offer. |
