UGLOBAL . COM 75
Buyers of residential properties in Cyprus pay taxes , irrespective of whether they are Cypriot citizens , citizens of another European Union ( EU ) member country , or a non- EU nation . Moreover , the taxes are payable regardless of whether the buyer is a resident of Cyprus or not , or if it is a physical person or a legal entity .
TAXATION FOR PERSONS OWNING RESIDENTIAL PROPERTY IN CYPRUS
Buyers of residential real estate can benefit from several tax advantages . To begin with , unlike other jurisdictions , Cyprus does not charge a wealth tax , gift tax , inheritance , or estate tax .
Municipality fees
At the same time , since the abolition of the Immovable Property ( IMP ) Tax on Jan . 1 , 2017 , owners of properties are not subject to immovable property tax but to local fees annually , which are paid to the municipality of the property ’ s location for community services ( such as refuse collection , sewerage , and cemetery fees ).
Stamp duties
These are paid to the Tax department within a 30-day deadline from when the sale contract or the assignment agreement is signed . The stamp duty varies based on the property purchase price using the following formula :
The lodging fees of the assignment agreement are calculated as 0.5 % of the sale price as determined in the sale contract or on the amount that is determined in the assignment agreement , whichever is the higher of the two amounts , with a minimum fee of € 50 and a maximum fee of € 3,000 .
If the assignment is executed between relatives up to the third degree of kindred or between husband and wife , € 20 are paid as a lodging fee . Unlike stamp duties , which are imposed irrespective of whether the property is new or resale , certain taxes are imposed only on new residential properties . VAT would be applicable in such cases , whereas transfer fees would be charged for the resale of residential properties .
TAXES PAID IN CASE OF NEW RESIDENTIAL PROPERTIES
New properties sold for the first time are subject to Value Added Tax ( VAT ), at the standard VAT rate of 19 %, added to the purchase price .
Under certain conditions , a reduced VAT rate of 5 % is applied to the purchase or construction of a property after submitting a relevant application . The application can be submitted for a property , which will be used as the applicant ’ s primary and permanent residence in Cyprus . The application should be submitted at any stage during the construction of the residence and before the property ’ s possession is delivered to the applicant .
Amount Rate of stamp duty
€ 0 to € 5,000 |
0 % |
€ 5,001 to € 170,000 |
0,15 % |
Over € 170,001 |
0,2 % |
Source : The Stamp Duties Law 19 / 1963 ( First Annex ) |
“ The reduced VAT rate is granted provided the applicant will use the residential property as their primary residence for at least ten years .
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Lodging fees
Lodging duties are paid at the Land Registry Office when lodging a document .
For lodging a sales contract , € 50 is paid at the Land Registry Office . In cases where a separate title deed has not been issued yet for the property , an assignment agreement is executed between the seller and the buyer , whereby the seller , as the current registered owner of the property , assigns all their rights deriving from the first contract of sale to the new buyer .
The reduced VAT rate application can be submitted by an adult physical person . The application includes a declaration confirming that the applicant has not acquired another residence in Cyprus as their primary and permanent residence with the reduced VAT rate .
The VAT law was amended earlier this year , in June 2023 . As per the amending 42 ( Ι )/ 2023 law the reduced VAT rate of 5 % shall be applicable on the first 130 square meters of a property ( taking into consideration the architectural plans -building coefficient ). In addition to this , the reduced VAT rate of 5 % shall be applicable up to a total cost of € 350.000 , provided that the property does not exceed 190 square