Taxes And Fees Relating To Property

Land Registry Fees

Land Registry fees are levied on the purchaser by the Department of Land and Surveys upon the transfer of immovable property and are as follows:

A transfer subject to VAT is exempt from the above transfer fees

A transfer not subject to VAT will be eligible for a 50% exemption from the above transfer fees.

A. VAT

In transactions involving the purchase of new property from first –time buyers the buyers have the right to apply for a reduced rate of VAT of 5% rather than 19%, which is the current VAT level in Cyprus. In order to apply for the reduced rate of 5%VAT and to qualify for reduced VAT rate the applicant must meet the following criteria:

• Applicant must be over 18 years old
• Must use the property as his main place of residence.
• The planning permit (poleodomic permit) or the building permit, where a planning permit is not required, must be submitted to the VAT department after the 01/05/2004, which means that the property is subjected to VAT.
• The total area of the property must not exceed 275 m2. It should be noted that the reduced 5% VAT applies only to the first 200m2 of the property.

B. Stamp Duty

The Stamp Duty legislation has been amended on the 17th of December 2012 by the Stamp Duty (Amending) Law of 2012, Law No. 173(I)/2012, amending the provisions of the Cyprus Stamp Duty law of 1963 to 2007.

The amended legislation in in effect since the 1st of March 2013.

Agreements specifying a fixed amount:

For all agreements and/or memorandum of agreements and/or all documents forming any agreement specifying any fixed amount, the stamp duty is calculated on the basis of the contract value stated within the document in the following manner:

• For amounts between €1 – €5.000 the stamp duty payable is €0
• For amounts between €5,001 – €170,000 the stamp duty payable is €1.50 for each amount of €1,000 or any part thereof.
• For amounts exceeding €170,000 the stamp duty payable is €2.00 for each amount of €1,000 or any part thereof, with a maximum cap of €20,000.

Agreements not specifying a fixed amount:

For agreements and/or memorandums of agreement and/or all documents forming an agreement in which no fixed amount is specified the stamp duty payable is €34.00. On contracts with value between €1.00 – €5,000 the the stamp duty is zero.

Penalties where the stamp duty is not paid within 30 days from execution in Cyprus:

• If the stamp duty is paid within six months after execution then for the unpaid stamp duty not exceeding €2.00, the unpaid amount must be paid plus €2.00;
• For the unpaid stamp duty exceeding €2.00 but being less than €35.00, the unpaid amount is payable plus a penalty of €35.00; and
• For the unpaid stamp duty exceeding €35.00, the unpaid amount is payable plus 10% on the amount of the stamp duty which exceeds €35.00.
• If the stamp duty is paid after the expiration of six months from execution, the unpaid stamp duty is payable, plus double the amounts of the penalties specified above.

C. Capital Gains Tax

Tax is imposed on any gain from the disposal of property situated in Cyprus at the rate of 20%. The first €17,086.01 (or € 85,430.07 in the case of one’s private residence) is exempt.

D. Communal Expenses

When it comes to managed properties, a service charge is applicable for the maintenance and upkeep of the common areas of the premises in good condition. The service charge is usually on a m2 basis, and can range from €50 – 150 per 2 months.

E. Inheritance Tax

There is no inheritance tax in Cyprus.

F. Other Property Taxes:

There are property taxes paid to the Municipality, dependent on the size and value of the property. This covers refuse collection, sewerage, street lighting, etc. and it varies according to the area, from €50 – €250 per annum per unit property.

G. Tax Benefits

Corporation tax in Cyprus is currently at 12.5%. There are various Tax Advantages, especially attractive to those looking to invest in Cyprus or foreign citizens retiring to Cyprus. It is always best to discuss these with your auditors and tax/legal consultants.