Property Legal Information

Acquisition of immovable property by foreigners in Cyprus (Ownership)

Non-Cypriots are allowed to buy in Cyprus for their personal use either:

  • Apartment or a house or
  • Villa on a site or
  • Piece of land.

The maximum allowed area is 4,013m².

Moreover, offshore entities may also entitle to acquire a property in Cyprus for their business purposes and/or for their foreign employees’ residential needs. In certain circumstances a non-Cypriot may be given permission to own a property that exceeds these dimensions.

Permission to transfer the property for sale in Cyprus to the non-Cypriot’s name must be sought from the Cyprus Council of Ministers. However this is granted more or less as a matter of course to all bona fide purchasers.

In the meantime, purchasers may take possession of the property without restriction. The application to the Council of Ministers to acquire immovable property in Cyprus can be made within a reasonable time after signing the contract of sale.

Note: European Union Citizens do not need permission from the Council of Ministers to purchase one or more properties in Cyprus.

Exclusion: If they are not permanent residents they need permission to buy a secondary residence in Cyprus.

Application Procedure for the issue of permit
The Ministry, under the Immovable Property Acquisition (Aliens) Law Cap. 109. Require for the application the following:

  1. Survey plan
  2. Copy of the title of ownership
  3. Copy of the building permit for the erection of the house/block of flats or for the residential development of estates. If separate titles of ownership have been issued for the flats of the block or if the house is mentioned on the title of ownership, applicants need not submit a copy of the building permit. For plots under division, applicants must submit a copy of the division permit.
  4. Copy of the deed of sale.
  5. Sectional view of the building or the flat. Very old houses mentioned on the title of ownership are exempted. A division plan must be submitted in the case of division of plots. In areas of residential development, the plan must be submitted showing the position of the house on the entire holding.
  6. Area in square metres of the plot, which is to be acquired.
  7. Documents proving the financial situation of the applicants.
  8. Copies of the pages of the applicants’ passports and those of their spouses (the pages containing the data and the photo of the holders and stamps of arrival to and departure from Cyprus).
  9. Certificate of marriage of the applicants or relevant attestation of their Embassy and in cases where the spouses do not have the same surname and when the name of the husband is not written on the wife’s passport.
  10. Copy of residence permit and work permit of the applicants in Cyprus.
  11. Application COMM 145, completed clearly and in full.
  12. If the applicant is a company or a shareholder in an offshore company, it is necessary to submit the certificates of registration, of shareholders and of the registered offices of the Company.
  13. If the applicant is a Company, a copy of the company’s Articles of Association must be submitted and written information must be furnished on the company’s activities in Cyprus and the staff it employs, both Cypriots and foreigners with the social insurance numbers.

Transfer of the property
Transfer of the property bought may be effected only through a formal declaration of sale in a District Land Office, in the presence of both parties. A lawful agent through a written power of attorney may represent any party.

Transfer Fees
All taxes and duties regarding the property bought, due at the date of the transfer, are payable by the owner (Vendor). The only taxes payable by the purchaser simultaneously with the transfer of the property in his name are the transfer fees which are payable on the market value of the property at the date of the contract, as valued by the District Land Officer, and not on the purchase price if it is lower. The rates on the market value are:

Value of Property Transfer Fee Rate
Up to €85,440 3%
From €85,440 to €170,881 5%
For every € exceeding €170,881 8%

If for example, the purchase of a property made in joint names (i.e. husband and wife, and provided that the total purchase price is more than Euro €85,440) the calculation for the total transfer fees are as follows (with market value is € 153,800):

Value Transfer Fee Rate Transfer Fee
The First €76,900 3% €2,307
The Next €76,900 3% €2,307
Total €4,614

In an effort to revive the real estate market for the period commencing 2 December 2011 to 31 December 2014 a transfer subject to VAT will be exempt from the above transfer fees and a transfer not subject to VAT will be eligible for a 50% exemption from the above transfer fees. In the case of property transferred to a family company, transfer fees are refundable after five years if the property remains with the company and the shareholders remain the same. In the case of property transferred from a company whose shareholders are spouses and/or their children, to one of the two spouses, or their children or to a relative up to third degree of relation the transfer fees are calculated on the value of the property as follows:

  • If the transfer is to a spouse – 8%
  • If the transfer is to a child – 4%
  • If the transfer is to a relative – 8%

Also the following rates are applicable in the case of free transfers:

  • From parents to children – 4%
  • Between spouses – 8%
  • Between third degree relatives – 8%
  • To trustees €8,54

Value in these cases is the one written on the title deed which refers to values of the year 1980. Mortgage registration fees are 1% of the current market value. In the case of companies’ reorganizations, transfers of immovable property are not subject to transfer fees or mortgage registration fees.

Immovable Property Tax

On 26 September 2013, the House of Representatives voted for an amendment to the Immovable Property Tax Law. According to the amendment:
The provision relating to the payment of a minimum amount of tax of €75, voted in April is withdrawn (please refer to a previous Tax Alert issued by Deloitte dated 2 July 2013). Immovable property owners, with total immovable property value not exceeding €12.500 (1/1/1980 prices), are exempt from immovable property tax.
The new bands and tax rates that were voted in April and are still applicable are as follows:

Immovable Property value based on 1/1/1980 prices Tax Rate Tax Cumulative Tax
€1 €40,000 0.6% €240 €240
€40,001 €120,000 0.8% €640 €880
€120,001 €170,000 0.9% €450 €1,330
€170,001 €300,000 1.1% €1,430 €2,760
€300,001 €500,000 1.3% €2,600 €5,360
€500,001 €800,000 1.5% €4,500 €9,860
€800,001 €3,000,000 1.7% €37,400 €47,260
€3,000,001 1.9%

Note: Immovable property owners, with total immovable property value not exceeding €12.500 (1/1/1980 prices), are exempt from immovable property tax. Immovable property owners with total immovable property value of €12.501 and over are subject to immovable property tax on the total value of their property, according to the above table.
The above law amendment has effect from 1 January 2013.

Stamp duty
Due at the time of signing the contract, stamp duty is levied at the rate of €1.5 per €1,708 up to the value of € 170,881 and above that, the rate is €2 per €1,708.
For Example, if the value (or purchase price) is €255,000:

Value Stamp Duty (% per €) Stamp Duty Cost
The First €170,881 1.5% €255
The Next €84,119 2.0% €170
Total €425

Local Authority Taxes and Rates
As a rule, not more than €341 yearly. These taxes and rates include street lighting, sewerage, garbage collection, etc…

The Title Deed
Transfer of the property bought may be effected only through a formal declaration of sale in a District Land Office, in the presence of both parties. A lawful agent through a written power of attorney may represent any party.

Transferring the ownership requires two permits:

  1. From the Council of Ministers and,
  2. From the Central Bank of Cyprus

In the case of the non-Cypriot, a prerequisite of registration is evidence that the property has been paid for with foreign exchange. When one purchases a house or a piece of land, the owner (vendor) as a rule must have a title deed in his own name, which can be transferred to the purchaser. These are some important issues, which the purchaser’s solicitor must take into consideration and embody in the contract.

Taxation
Cyprus is unique when it comes to the taxation aspects of living on the island. Retirees who become residents in Cyprus are taxed on their pensions from abroad at the rate of 5% for amount: exceeding €3,417 annually. Of course as for all Cypriot tax residents their total annual income up to €17,088 (as from 2004) is tax exempt. Additionally, Cyprus has Double Taxation treaties with many European and other countries, safe-guarding its residents from paying tax in both countries. This gives the option to the citizens of those countries to take advantage of the very low rate in Cyprus.

Double Taxation Agreements
Cyprus has double-taxation agreements with Austria, Bulgaria, Canada the People’s Republic of China, the Czech Republic, Denmark, Egypt, France, Germany, Greece, Hungary, India, Ireland, Italy, Kuwait, Malta, Norway, Poland, Romania, Belarus, Russia, (Armenia, Kyrgyzstan Moldova, Uzbekistan, Tajikistan and Ukraine) Slovakia, South Africa, Sweden, Syria, the United Kingdom, the United States, Yugoslavia Belgium, Denmark, Lebanon, Mauritius, Singapore, Thailand.

The main purpose of these treaties is the avoidance of double taxation of income earned in any of the above countries. A credit is usually allowed against the tax levied by the country of the tax payer’s residence for taxes levied in the other country.

Income Tax
The tax rates for individuals are as follows:

Taxable Income Tax Rate Tax Cumulative Tax
%
0 – 17.088 0 0 0
17.089 – 25.632 20 1.708 1.708
25.633 – 34.176 25 2.136 3.845
34.177 and over 30

Capital Gains Tax
Capital gains tax is imposed only on immovable property situated in Cyprus or share of capital which own immovable property situated in Cyprus.
On disposal of the property, capital gains tax will be payable at the rate of 20% on the gain with the first €17,088 being exempt for each person. There is also an indexation allowance.
On top of this allowance, 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 of a dwelling house are exempt up to €85,440 in total if the owner resides in it continuously for at least five years prior to disposal.
All exemptions are lifetime.

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. The prior applicable regime imposed a 20% capital gains tax on the seller.

Corporation Tax
The Cyprus tax legislation complies with the EU regulations and the OECD requirements against harmful tax practices. Cyprus’s accession to the EU combined with an attractive tax system make Cyprus an ideal jurisdiction through which to conduct international business.
All companies are subject to corporate tax at a rate of 12,5%. This is the lowest corporate tax rate in Europe.

Value Added Tax
Cyprus had adopted all the provisions of 6th EU Directive regarding VAT as from 1 May 2004.
Value Added Tax is imposed on the provision of goods and services in Cyprus as well as on the importation of goods into Cyprus up to 30 April 2004. Since 1 May 2004 VAT is imposed on importation of goods from Non-EU member states only.

VAT rates
The legislation provides for the following four tax rates:

  • Zero rate (0%)
  • Reduced rate of five per cent (5%)
  • Reduced rate of eight per cent (8% up to 12 January 2014 and 9% as from 13 January 2014)
  • Standard rate of fifteen per cent (15% up to 29 February 2012, 17% from 1 March 2012 up to 13 January 2013, 18% from 14 January 2013 to 12 January 2014 and 19% as from 13 January 2014)

Zero Rate: Zero rated supplies include the provisions of food supplies, medicines, export to third countries etc.
Reduced Rate: The reduced rate applies to hotel services, to provision of food in the course of catering, fertilisers, animal food and pesticides.
Standard Rate: The standard rate applies to any provision of goods and services in Cyprus not subject to the zero rate, the reduced rate or is exempt.
Imposition of the reduced rate of 5% on the acquisition and /or construction of residences for use as the primary and permanent place of residence.
The reduced rate of 5% applies to contracts that have been concluded from 1 October 2011 onwards provided they relate to the acquisition and/or construction of residences to be used as the primary and permanent place of residence for the next 10 years. For contracts concluded up to 30 September 2011 for the acquisition and/or construction of residences for use as the primary and permanent place of residence, the eligible person must apply for a grant.
The reduced rate of 5% applies for the first 200 square meters of residences of total covered area of up to 275 square meters. In the case of families with more than 3 children the allowable total covered area increases by 15 square meters per additional child beyond the three children.
The reduced rate is imposed only after obtaining a certified confirmation from the VAT Commissioner. The eligible person must submit an application on a special form, issued by the VAT Commissioner, which will state that the house will be used as the primary and permanent place of residence. The applicant must attach a number of documents supporting the ownership rights on the property and evidencing the fact that the property will be used as the primary and permanent place of residence.
As from 8 June 2012 eligible persons include residents of non EU Member States, provided that the residence will be used as their primary and permanent place of residence in the Republic.
The documents supporting the ownership of the property must be submitted together with the application. The documents supporting the fact that the residence will be used as the primary and permanent place of residence (copy of telephone, water supply or electricity bill or of municipal taxes) must be submitted within six months from the date on which the eligible person acquires possession of the residence.
A person who ceases to use the residence as his primary and permanent place of residence before the lapse of the 10 year period must notify the VAT Commissioner, within thirty days of ceasing to use the residence, and pay the difference resulting from the application of the reduced and the standard rate of VAT attributable to the remaining period of 10 years for which the property will not be used as the main and primary place of residence. Persons who make a false statement to benefit from the reduced rate are required by law to pay the difference of the additional VAT due. Furthermore, the legislation provides that such persons are guilty of a criminal offence and, upon conviction, are liable to a fine, not exceeding twice the amount of the VAT due, or imprisonment up to 3 years or may be subject to both sentences.
As from 1 May 2004, VAT was imposed on the sale of new buildings at a rate of 18%. Exemption to the above is the sale of residential building which will be used as the first residence which will be taxed at 5% under certain conditions which are expected to be issued by the Ministry of Finance.

Exemptions
Certain goods or services are exempt from VAT. They include:

  • The letting of immovable property (the letting of immovable property with the right of purchase is not exempt);
  • Most banking and financial services and insurance services;
  • Most hospital, medical and dental care services;
  • Certain cultural educational and sports activities;
  • Supplies of real estate (except supply of new buildings before their first use) including supplies of land and of second-hand buildings;
  • Postal services provided by the national postal authority;
  • Lottery tickets and betting coupons for football and horse racing;
  • Management services provided to mutual funds

Grant for acquisition of first residence
The grant is given to eligible persons for the construction, or purchase or transfer of a new residence which is used as the main and primary place of residence. The grant applies for contracts concluded up to 30 September 2011.
The application for the grant is submitted to the Ministry of Finance, in relation to residences for which an application has been submitted for the issue of a planning permission after the 1 May 2004. Persons entitled to this grant are individuals who are citizens of the Republic of Cyprus or of any other EU Member State, who reside permanently in the Republic of Cyprus and who have reached the age of 18 at the time of application. The grant is given for residences whose total covered area does not exceed 250 m² .
The level of the grant is limited to 130 m² (extended for families with four and more children) and depends on the type of the property and on whether the house was constructed or purchased. The relevant legislation provides that the level of the grant will be adjusted annually for the increase in the Retail Price Index.

Selling your property

  1. You can sell the property at any time and with no restrictions. However there are two different cases:
  2. If the property is sold to a non-Cypriot who is paying from external funds, then the whole amount can be repatriated without any requirements.
  3. If the property is sold to a Cypriot, who is paying in Cyprus pounds then the seller is entitled to repatriate an amount equal to:
    1. what he paid to buy the property,
    2. plus any other (proved) costs involved with additions or extensions of the property,
    3. plus the transfer fees,
    4. plus the inflation,
    5. plus €85,000 (Eighty five thousand Euros) per person per year.

Residential Permit (Property)
Fast-track kprocedure for granting permanent residence permit. Regulation 6(2) of the Aliens and Immigration regulations.

Requirements

  1. Must be purchased in Cyprus
  2. Purchasers could be just an applicant or just his spouse or the applicant and his spouse or a Cyprus Company as below described
  3. Vendor must just the Developer, who built this property
  4. Must be new (not resale)
  5. The Purchase Price must be at least 300,000 Euro (not including VAT)
  6. At least 200,000 Euro (not including VAT) should be paid to the Vendor
  7. Proofs of transfer of 200,000 Euro (not including VAT) from abroad must be provided
  8. Contract of Sale must be deposited at the Land Registry

It is possible to buy two properties:

  • House (or apartment) + house (or apartment)
  • House (or apartment) + shop up to 100 m²
  • House (or apartment) + office up to 250 m²

Conditions:

  • Total purchase price is more than 300,000 euro (without VAT)
  • Both of properties must be new, resale is not accepted
  • If two properties are separate they must be purchased from the same developer. It is not required when the properties possible to unite in one because they are connected to each other vertically or horizontally

Note: All conditions are valid for the couple. It will not be accepted purchase of more than two properties by the couple (including purchase by the Company). When the purchaser is a company the property could be purchased in the name of the Company.

Conditions:

  1. Company must be registered in Cyprus
  2. Applicant or his spouse (or both) must be shareholders and his/their name/ names should appear in the certificate of the shareholders of the Company. Trust deed will not be accepted.
  3. They must be only shareholders of this Company

Note: If the shareholder of this Company is another Company, it should be proved that only shareholder of that Company is the applicant (his spouse or both)

Residential Permit (Bank Deposit)
It must be created a bank deposit of 30,000 Euro in a Cypriot Bank, blocked at least for 3 years. It must be proven that 30,000 Euro was transferred to Cyprus from abroad.

Residential Permit (Income of Applicant and Spouce)
Income must be created abroad, not in Cyprus

  1. The applicant should prove at least 30,000 Euro of income for himself and plus 5,000 Euro for each dependent on him family member
  2. It should derive from legal sources as salary, rent, pension, interests, dividends, etc.

Residential Permit (Obligations)
The holders of the Permanent residence permit must not work in Cyprus. Therefore, they should make Affidavits that they are not going to engage in any professional activity in Cyprus. Income from dividends in a Cyprus Company of the applicants shall not be considered as a violation of the requirement of not engaging in any professional activity in Cyprus.
The applicant, his spouse and children from 16 years old should have and provide clean criminal record from the country of their origin. The period of validity of this document is three months.

Residential Permit (Legalization)
All documents must be translated into English or Greek language by certified translator.
All official documents must be duly legalized by apostil. If the Country, which issued the official document is not a party on the Hague Convention of 5 October 1961, abolishing the requirement of legalisation for foreign public documents, then the document must be legalized by the Ministry of Foreigner Affairs and the in the Cyprus Embassy of that Country.
Please note, that for Russian citizens apostile is not required.

Other notes:
Period of examination of the application
It should be approved within 2 months and PR should be granted provided that:

  1. All requirements are satisfied
  2. There are no reasons of rejection due to their criminal records (after the research of the Ministry of Interior) or public order

Adult children age 18-25:
Application fast track procedure (regulation 6) may be submitted by the adult child. He will get his permit till 25 years of age. After 25 he will have to make his own application for PR as independent person.

Conditions:

  1. Age 18-25
  2. To be dependent on the parents
  3. To provide proof of their studies
  4. Parents must prove additional 5,000 euro of income for each dependent adult child
  5. Adult child provides all documents required in his case

Independent Adult Children:

  1. Age 18 and more
  2. To be independent on their parents
  3. Total purchase price of the property of their parents must be 300,000 Euro (without VAT) for each independent adult child
  4. It must be proved payment of 66% of the total purchase price of the property of their parents
  5. All other requirements (bank deposit, etc) must be completed

Note: Those applicants, who do not comply with strict requirement of Regulation 6(2) may apply for PR Permit under Category F. For instance, if a family owns a property in Cyprus, the value of which is 100,000 Euro we would suggest applying for permanent residence permit under Category F.