Fees, Taxes & Duties

Transfer Fees

The purchaser will be liable to pay the following transfer fees for the property acquired, when this is registered in his name at the Lands’ Office. The fees are charged on the property’s market value at the date of purchase.
 

If the property is placed in joint names, e.g. the name of a couple (husband and wife) or two individuals, then the purchase value is split into two parts which results in reduced transfer fees.  For example if £100,000 property is bought:

Immovable Property Tax

The registered owner of the property is liable to an annual immovable property tax calculated on, the market value of the property as at 1st January 1980.
 

Stamp Duty and Mortgage Fees

Unless otherwise stipulated in the contract, the purchaser is liable for the payment of stamp duty at the rate of 1.5% per thousand of the value up to CY£100,000. 

Thereafter the rate becomes 2% per thousand. Although the non-affixing of stamps does not invalidate the contract, the stamp duty plus a fine will be payable when the document is produced to the court or any Government department. In order to avoid the payment of a fine, which could be substantial, the documents should be stamped within 30 days of their signing.

In case of mortgage, the registration fee is 1% of the amount secured, plus the relevant stamps. 


Income Tax and Capital Gains Tax

Dealers in land are treated under the income tax laws whereas non dealers under the Capital Gains Tax ones. Capital Gains Tax is levied at the rate of 20% on gains arising from the disposal of immovable property or the disposal of shares of companies the assets of which consist mainly of immovable property. Note that no Capital Gains Tax is paid when selling shares of companies which are listed on the Cyprus Stock Exchange (this applies until 31/12/2001).

As a general rule, the gain is the difference between the sales proceeds and the original cost of the property. In case of property acquired before 1/1/1980, the gain is the difference between the sales proceeds and the market value of the property as at 1/1/1980. The assessed value on this date is fixed by the Inland Revenue and it is known prior to acquisition. However, the Director of the Inland Revenue may, in certain extreme cases, make his own assessment as to the market value of the property on the date of its disposal. The cost of acquisition and sale includes interest payments

paid for the acquisition. Additions to the property etc are also deductible from the gain. On the acquisition cost, the inflation rate (as this is so published by the Government) is added on. Thus the tax is charged on a gain which takes into account the inflation (which for the last years is 2.5% -3.0% per annum). The Gains Tax as a whole, has minimal effects since the appreciation of value coupled with the following allowances and inflation leaves little for taxation. In the case of companies these allowances are not applicable.

Allowances: The following lifetime allowances are available to individuals:

• The first CY£ 10,000 of gains arising from the disposal of any property.
• The first CY£ 15,000 of gains arising from the disposal of agricultural land by a farmer (subject to certain conditions).
• The first CY£ 50,000 of gains arising from the disposal of a house used by the owner for his own habitation (subject to certain conditions).

The above allowances are not available separately. An individual claiming a combination of the above allowances is only allowed a maximum of allowance of CY£ 50,000. Cyprus residents and companies registered in Cyprus are subject to Capital Gains Tax when disposing property, wherever it is, whether in Cyprus or abroad.
These rates have remained unchanged after accession to EU on 1st May 2004.

Non residents are only taxed when selling property situated in Cyprus. They can be totally exempt from this tax if they prove that they acquired the particular property by importing foreign currency between 1/8/1980 and 13/7/1990.

Losses are calculated in the same way as gains and can be set off against capital gains of the same and future years.


Estate Duty

Estate duty was abolished as from 1/1/ 2000.


Value Added Tax - VAT

Since 1st January 2003 a revised flat rate of 15% was introduced on most goods and services. Exceptions to the 15% VAT are foodstuffs and pharmaceuticals where Cyprus has already secured a derogation of zero percent VAT until December 2007.

Since May 1st 2004 VAT is added on the price of new properties as follows:

First Time Buyers have to pay 5% VAT

All Other Buyers have to pay 15% VAT

However, all properties for which a valid application for Planning Permit was submitted at the Town Planning Department before 1st May 2004 are fully exempted from VAT.  This has resulted in increased interest in resale properties and existing new projects.


General Tax Information

From 1st January 2003 there is one important change to Cyprus Tax System for non-domiciled persons. You will be regarded as a “Tax Resident” if you spend more than 182 days in a calendar year in Cyprus. Parts of days count as whole days. Spending less than 183 days in Cyprus means you will not be regarded as a resident for tax purposes. To take advantage of the Double Taxation Treaty Cyprus has with the UK you have to be in Cyprus for more than 182 days. The tax year in Cyprus is the calendar year, and husband and wife are taxed individually.