Buying property in Cyprus and other useful legal information

Residential Permit

Residential Permit is easily obtained for persons living in Cyprus, who have purchased property.

Temporary Permit

The granting of this permit requires the existence of a bank account in Cyprus  and a sales agreement of the property purchased.  Temporary residence status can be from one to four years.

Permanent Residential Permit

In addition to the above requirements, the applicant must establish evidence of a secured annual income of not less than €9,570 per person plus €4,615 for each dependant person. (Because of the entry of Cyprus to the EU, it is possible that for Europeans the law in respect of permits will change).  For more information please contact the Ministry of Interior, Nicosia.

Work Permits

As  Cyprus is now in the EU, work permits are not required for any EU citizens who wish to take up employment or start up their own business.  Bear in mind though that certain formalities must be observed. Non EU citizens intending to work in Cyprus require a work permit as well as a visa.  In order that a permit may be issued, the Ministry of Labour must be satisfied that a Cypriot or an EU citizen is not available for the job.  When granted, a permit usually lasts for three months or a year.

Property Ownership

The process  in buying property in Cyprus by foreigners is very simple.

Europeans resident in Cyprus is allowed to buy as much property in Cyprus without restrictions. Does not need to obtain approval from any authority. To prove residency in Cyprus an EU apply to the District Administration for certification of this residency by presenting personally Administration his passport and pink slip (residency), which has already been obtained Department.

Europeans  who are not resident in Cyprus are permitted to buy as much land as they wish but are restricted to purchase one house or one apartment for which approval from the Council of Ministers is required.

No Europeans are entitled to a freehold ownership of villa, an apartment or a piece of land, with maximum allowed extend of 4014 sq. metres  (3 donums).

Foreign companies can acquire premises for their business or for holiday home for their director.

Important New Legislation

Aliens  coming from  Countries not member of the E.E.C when they buy a property in Cyprus costing over  300,000 Euros automatically they are authorised to obtain Immigration permit to Cyprus which is accepted at the same time as permanent residence in Cyprus on the assumption that they can provide guarantee documents that they have enough income coming from abroad to support their living in Cyprus

Stamp duty

The Contract of sale must be duly stamped and the stamp duty is  1,5 per thousand for the first €170,860.14 of the purchase price and 2.0 per thousand for the balance of the purchase price.  The  stamp duty should be paid  within 30 days of signing of the Contract of Sale.

Transfer fees

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

Property value in Euros (€)         Transfer Fee (% on property value)

Up to 85,430.07                                       3

From 85,430.08 to170.860,13                     5

From 170.860,15 and over                          8

If the property is in joint names e.g. of a couple (husband and wife) or two individuals, then the purchase value is divided into two parts which results in reduced transfer fees.

The following example clearly illustrates this:

For property purchased for €205.000 in one name, the fees payable are €9,565,58

For Property in one name

On the first  €85,430.07                      @3%  = € 2.562.90

From €85,430.08 to €170.860,14          @ 5%=  € 4.271,50

The remaining €34,139.86                   @ 8% = €2.731,50

Total fees payable                                       = €9.565,58

For property  purchased for €205,000in the names of two persons, the fees payable are €6.832,78=

On the first €85,430.07                        @3%  = €2.562,90  (share of husband)

Second €85,430.07                              @3%  = €2.562,90 (share of wife)

The remaining, of first, €17069.93         @5% =  €    853,49 (share of husband)

The remaining, of second,€17,069.93     @5%  = €    853,49 (share of wife)

Total  fees payable                                          €6.832,78=

Property Taxes, Fees, Rates

Immovable Property tax

The registered owner is liable for this annual tax which is based on the value of his/her property as of 1st January 1980.  Property with a value of up to €170.860,15 is exempt from property tax.  For property values exceeding this amount the rates are:

Value of property      Annual PropertyTax (% on Taxable Value)

Up to €170.860,14                      Nill

€170.860,15-€427.150,36           2.5%

€427.150,36-€854.300,72           3.5%

Over 854,300,73                        4.0%

Gapital Gains Tax

On gains from disposal of immovable property situated in Cyprus, capital gains tax will be imposed at the rate of 20% with the first €17.086,14 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 1/1/1980, the gains are the difference between the sales proceeds and the market value of the property as of 1/1/1980.

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 of  a private residence are exempt up to €85.430,07 in total if the owner resides in it continuously for at lest five years prior to disposal.

Estate Duty

Estate duty tax has been abolished as from the first of January 2000 (Statute No.78(1)/2000)

VAT

Since 1/5/04 a stature in respect of VAT on properties was introduced.  In addition to other amendments, this stature introduced VAT on the rate of 15%.  For buildings for which a Planning Permit was submitted prior to the 1st May 2004 no VAT is charged in the event of sale.  For application after the aforementioned date  15% is applicable.  For land/building plots purchased prior to 1st January 2008 there is no VAT.

Claiming Back VAT

It is possible to claim back some of the VAT you have paid on a property, if the application for the building permission was submitted after 1 May 2004.  You need to be over 18 and a Cypriot citizen, or a citizen of a member state of the European Union who is permanently residing in the Republic of Cyprus and has no other property in Cyprus that is used as a permanent residence.  The building must be new and used for the first time, with total area, not exceeding 250 sq. m. with some allowances.  The amount of the grand depends on the type and size of the residence.

Provided that the application is completed the whole process takes up to three months and, upon receipt of the grand the beneficiary is obliged to use the property  as his/her main and permanent residence for a ten-year period.  In case the beneficiary decides to buy or build a new residence before the expiry of the ten year period he/she may apply again for the special grant.

An application forms must be submitted, accompanied by the relevant documentation to:

Permanent secretary, Ministry of Finance, Grants and Benefits Service, 1489 Nicosia.

TAX ADVANTAGES

Cyprus is unique when it comes to the taxation aspects of living on the island.

The following income tax rates apply to individuals:

Chargeable income                  Tax rate                      Accumulated Tax

      Euros €                            %                                  Euros €

0-19.500                                 -                                       -

19.501-28.000                         20                                1.700

28.001-36.300                         25                                3.775over 36.301                                   30

Retirees who become residents in Cyprus are taxed on their pensions from abroad at the rate of 5% per annum while an exception for the  first €3.417,20 is granted.

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.

Duty Free Privileges

Europeans who become permanent residents in Cyprus and were using in their country a car for at least six months, can bring their car to Cyprus and they will not pay import tax.

Local Authority Taxes & Rates

Property taxes levied by the local authorities are in the range of €70- €250  per annum depending on the size of the property.  The tax covers the cost of garbage disposal, street lighting e.t.c.

The above information is subject to conditions, limitations, exclusions, modifications, and/or discontinuation without notice.

The basic utilities, electricity, water and telephone are payable individually in accordance with the consumption and based on a meter reading.

Mortgage Finance

THEOMARIA   can offer assistance to all property buyers seeking a mortgage from a  Cyprus-based bank.

We can make  the introduction to bankers we know and trust, who will offer high quality, fast and reliable service to our clients.

Currently, non – Cypriot are allowed to borrow 70% of the property purchase price from a local bank with repayment terms up to 15years.  To apply for a loan you will need:

Customer’s profile(Personal details, occupation-duration of your employment if any with your current employers)

Passport copies (the page with the photograph & personal information).

Statement of existing debt (if any).

Bank reference letter from the Bank you maintain an a/c with.

Completion of the Declaration of Personal Income form.

Evidence of  income statements  either pay slips or confirmation from your employer, or P60 or business accounts.

Copy of contract of sale and building permit

Copies of bank statements for the last three months.

Copies of payment already made by the applicant for the property.

To open and activate an account with the bank.

Bank Charges

1% On the loan amount

Government  Charges

Mortgage fees 1% of mortgage amount.

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