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Fees and Taxes on Cyprus Property

1. Transfer fees: one-off payment.
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:

The director of the Lands Office may dispute the declared value and adopt a Market Value of the property. The adopted valuation date is the date of purchase provided the sales contract is deposited at the Lands Office. If not, the actual transfer date will be adopted as the valuation date.

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

2. 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.

3. Fees for the deposit of a sales contract in the Land registry: The deposit of the sales contract is advisable in order for the purchaser to exercise the defence of Specific performance against the developer/seller. The purchaser has the right to deposit the sales contract within 60 days after signing of the contract. However the sales contract must be deposited and stamped within 30 days after signing. After this period a penalty is imposed. The fees are 1.5‰ for values upto €170.860 and 2.0‰ for values there after.

4. 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. The cost of acquisition and sale includes interest of payments paid for the acquisition. Additions to the property etc., are also deductible from gains. On the acquisition cost, the inflation rate (as this is published by the Government) is added on. Thus the tax is charged on gains which takes into account the inflation (which for the last years is 2.5%- 3% p.a.). 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.

Read Article on Capital Gains Tax

5. Other Property Taxes: These are taxes paid to the Municipality and depend on the size and value of the property. It covers refuse collection, sewerage, street lights etc. and it varies according to the area, from C£50 - 150 annually.

6. VAT on Real Estate: For those buildings for which an application for a town planning permit was submitted prior to the 1.5.2004, no V.A.T. is charged in the event of a sale. For those after the above date, a V.A.T. of 15% is charged (no V.A.T. is charged on land/building plots for purchases prior to 1.7.2008).

In case of a house purchase which is classed as the main/permanent resident of the purchaser, and provided that it is not larger than 250m², the V.A.T. is refunded up to 10% (out of the 15%). This means that the V.A.T. must be fully paid and then the Authorities will require proof that the applicant is using the property as his main/permanent residence (with the production of water/EAC/CYTA bills, payment of taxes etc). The applicant will be required to declare that he/she has no other house as such (permanent), whereas foreign purchasers must live in the house 186 days p.a. at least. So, it is reasonable to expect a required period of say 6 months after the property is lived in, in order to expect the refund. V.A.T. is paid only once, so if you buy a property and you pay V.A.T. and then you decide to sell it, no V.A.T. is charged. In case you buy property in order to sell it and which is not used, not even by the purchaser, not let etc, no V.A.T. is paid, but if you decide to sell it, a V.A.T. must be charged by the original buyer to the new buyer (to be paid to the Authorities). If a person claims and receives a refund, he must live in the house for 10 years. If he leaves the house e.g. he decides to sell the property on the 8th year, he must refund the V.A.T. refund to the Authorities in proportion to the period outstanding out of the ten years e.g. 2/10. If he lives in the house for 10 years, he can acquire other property with the same V.A.T. rights. In this context house includes also a flat. It includes also those cases where a person erects a house. V.A.T. is charged on all buildings purchase and including V.A.T. on payments when building a house. Refund is only given to residents only (flats/ houses) and for no other.

For commercial/industrial accommodation developed for own use, no V.A.T. is charged (100% discount). Rents are not charged with V.A.T. (but licenses are).
*Note: The area is calculated on the total covered area of the property, including storerooms, covered parking, covered verandas and excluding:
● Upto   5m² – engine/boiler room
● Upto   7m² – storerooms
● Upto 36m² – covered parking
● Upto 40m² – covered verandas
V.A.T. is not charged/is refunded on buildings which are used for as business e.g. hotels, offices, shops etc.