Taxation and Fees

Transfer fees

The transfer fees applicable for the transfer of property acquired payable by the purchaser at the date of purchase are as shown below:

Property Value

Fees

Transfer Fee

%

%

Up to 85.000

3

2.550

From €85.000 to €170.000

5

4.250

From €170.000 and over

8

 

 

The above fees are based on the property’s market value at the date of the transfer although the valuation of the Land’s Registry Office may vary from the declared value. In cases where the sales contract/agreement is deposited at the Land Registry or proof is provided for the purchase date, the adopted valuation is the date of purchase otherwise the date of the actual transfer.

In cases where the property is owned by more than one individual/entity, then the fees payable are divided in to equal shares. Example: A property owned by three individuals, sold for €210,000 the fees payable for each individual are as follow:

Sale price

€210,000

Amount payable for each buyer 

€70,000

Transfer fees payable for each buyer

€70,000 X 3% = €2,100

  

The calculation of transfer fees can be made online at the link below in the Department Of Land And Surveys website

The House of Representatives has passed a number of changes applicable to property transfer fees in relation to cases of first sale of property. These changes came into effect on December 2011 for a period of six months and has now been extended until the 31st December 2012 provided that the contract of sale is deposited at the Land Registry before the 31st of December 2012:

  1. In cases where VAT has been paid on the purchase of a house, no property transfer fees are imposed.
  2. In cases where no VAT has been paid on the purchase of a house, property transfer fees are reduced by 50%.

Immovable Property Tax

The registered owner of the property (physical/legal person) is liable to an annual immovable property tax calculated on the market value as at 1st of January 1980. It applies to the immovable property owned by the taxpayer of 1st January each year and it is payable on 30th September each year.

Property Value Rate Accumulated Tax
%
Up to 120.000 - -
120.001 - 170.000 4 200
170.001 - 300.000 5 850
300.001 - 500.000 6 2.050
500.001 - 800.000 7 4.150
800.000 < ∞ 8  

 

Capital Gains Tax

Capital gains tax is imposed at the rate of 20% on gains from the disposal of immovable property situated in Cyprus including gains from the disposal of shares in companies which own such immovable property. It is the difference between the sale proceeds and the costs of the acquisition. In cases that the immovable property is acquired prior to 01.01.1980 the property’s value adopted is that as valued on 01.01.1980. If a purchase is made after 01.01.1980 the actual cost of acquisition is adopted. The costs will include interests payments made, transfer and legal expenses, other professional fees paid, ant additional costs made to the property and the annual inflation rate published by the government.

The following disposals of immovable property are not subject to capital gains tax:

  • Transfers arising on death.
  • Gifts made from parent to child or between husband and wife or between relatives up to 3rd degree.
  • Gifts to charities and the government.
  • Transfers as a result of reorganisations.
  • Exchange or disposal of immovable property under the Agricultural Land (Consolidation) Laws.
  • Gifts to a company where the company’s shareholders are members of the donor’s family and the shareholders continue to be members of the family for five years after the day of the transfer.
  • Gifts by a family company to its shareholders, provided such property was originally acquired by the company by way of donation. The property must be kept by the donee for at least three year.
  • Expropriations.
  • Exchange of properties, provided that the whole of the gain made on the exchange has been used to acquire the other property. The gain that is not taxable is deducted from the cost of the new property.

Individuals are also entitled to deduct from the capital gain the following:

  • The first €17.086 of gains from the disposal of property.
  • The first €25.629  of gains from the disposal of agricultural land by a farmer.
  • The first €85.400 of gains from the disposal of private residence, that has been used by the owner for his own use. This is subject to certain conditions, the most important is that the residence must be the only house owned by the owner and he/she must have lived in it for the past five years.

The above exemptions are lifetime exemptions subject to an overall lifetime maximum of €85.430. 

Cyprus Stamp Duty

Cyprus stamp duty is payable on all agreements/contracts and any documents which involve any assets located in Cyprus and/or any matters or things taking place in Cyprus. Usually unless otherwise agreed, the purchaser is liable for the stamp duty of the contract/agreement.

Stamp duty is calculated on the purchase price as written in the contract of sale. Stamp duty paid up to €170.860 is 0.15% and thereafter it increases to 0.2%. The maximum amount of stamp duty payable is €17.086 per stampable agreement.

The stamp duty payment is within 30 days from the date signing the agreement/any document otherwise a penalty will be imposed for any delay. In cases where the agreement/document is not stamped it does not in any case invalidate the agreement but the agreement may not be used as evidence before any court. The purchaser is obliged in such cases to stamp the agreement and pay any penalty imposed as a result of the delay. 

Deposit of a Sales Contract/Agreement in the Land Registry

A sales contract/agreement is advisable to be deposited at the Land Registry by the purchaser within six months after the signing of the contract/agreement. This is recommended for all purchasers in order to be able to exercise their right for Specific Performance Defence. The contract/agreement in such cases must be duly stamped as mentioned above for any deposit before the Land Registry.

Value Added Tax (VAT)

The accession to the European Union in 2004 resulted in imposing a VAT on the sale of all new property at the rate of 15%. In cases where an application for a town planning permit has been submitted prior to 01.05.2004 (date of accession of Cyprus to the European Union) no VAT is payable for the acquisition. VAT does not apply to used properties or properties that VAT has been paid previously. In order to help lower income home buyers the Cyprus Government has introduced a VAT refund scheme where under certain conditions VAT is refunded to a certain extent (up to 10%), as follows:

  1. In cases where the purchase property is the main and primary place of residence of the applicant and the applicant does not own any other property in Cyprus that is used as a main residence.
  2. The applicant should be citizen of the Republic of Cyprus or of any other EU Member State, or citizen of country outside the European Union (as from 24th May 2012), who reside permanently in the Republic of Cyprus and who has reached  the age of 18 years of age at the time of the application.
  3. The property total covered area does not exceed 250 square meters, otherwise no VAT is refunded. The VAT refund is calculated on the basic area, only up to 130 square meters. This is extended for families with four or more children where there is an additional provision of 15 square meters per child.
  • The basic area of 130 square meters does not include the following but are included in the total 250 square meters
    • Up to 36m² is allowed for covered parking.
    • Up to 40m² for covered verandas.
    • Up to 5m² for a boiler room.
    • Up to 7m²for storerooms.

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 applicant must submit an application on a special form, issued by the VAT Commissioner, which will state that the house will be used as the permanent and primary 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. The documents supporting the ownership of the property must be submitted together with the application (i.e. water/electricity/telephone bills etc.) within six months from the date on which the eligible person acquires possession of the property.

It is important that the person who ceases to use the residence as his primary and permanent place of residence before the elapse of the 10 years period, must notify the AT Commissioner within 30 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. 

Other fees/taxes payable by the registered owner

A registered owner of a property is required to pay the following fees/taxes in addition to the above:

  • Local Authorities Fees: Annual fees imposed by the Local Authorities, depending on the size and value of the property and it covers refuse collection, sewerage, street lighting etc. The amount varies for each property between €50.00 to €250.00 approximately and is payable yearly to the local municipal authority.
  • Sewerage Taxes: Annual taxes calculated on the market value of the property as at 1.1.1980 payable yearly to the local sewerage authority.
  • Municipality Taxes: Annual taxes calculated on the market value of the property as at 1.1.1980 payable yearly to the local municipal authorities.

Estate duty

The estate duty has been abolished since 1 January 2000. The administrator/executor of the deceased is required by the Deceased Persons Estate Law to submit to the tax authorities, within six months from the date of death, a statement as to the assets and liabilities of the deceased.

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