Since 2013, Cyprus has been excluded from the list of offshore companies, however, it remains attractive for foreign investors interested in taxation issues. In addition to investors, thanks to a favorable climate and comfortable living conditions, people from all over the world buy property in Cyprus for their own residence.
Taxes on property purchase in Cyprus
Starting January 13, 2014, the rate of VAT in Cyprus is 19%. VAT is only charged when buying a new property from the developer. Resale property is not taxed upon purchase.
If the buyer does not have other real estate on the island, and a new object for basic residence is purchased, then part of the price for the first 200 m² of housing area is subject to VAT at a reduced rate of 5% (the discount can be used once).
When buying, the buyer still has to pay the full 19% VAT on top, and only then he will be able to submit documents for part of the tax refund.
Property Transfer Tax (Transfer Fees). If the buyer pays for the purchase of VAT, then Transfer Fees is not paid. The tax is calculated on the basis of the contractual amount of the property, or the value is determined by the Cyprus Land Resources Department. The rate depending on the price of real estate varies from 3% to 8%.
With a property value of up to 85,430 euros, the transfer tax is 3%. If the cost is from 85 430 to 170 860 euros, then the tax rate is 5%. Over 170,860 euros – 8%.
For example, if the value of real estate is 145,231 euros, then for the first 85,430 euros the amount of tax will be 2,562 (3%), for the next 59,801 euros – 2,990 (5%). As a result, the tax amount will be 5,552 euros (3.82%). When registering ownership of two or more persons, the amount of this fee is reduced, since the taxable value for each owner is reduced proportionally.
Stamp duty is a state one-time tax on the purchase of real estate in Cyprus (Stamp duties), paid within a month after signing the contract of sale.
Its rate is 0.15% of the value of the property, if the amount is not more than 170,000 euros. With a property value of more than 170,000 euros, the stamp duty rate is 0.2%. The first 5,000 euros of housing costs are not subject to stamp duty.
Property Taxes in Cyprus
In early 2017, the annual real estate tax was completely abolished.
However, property owners in Cyprus still pay the annual municipal tax: from 55 to 185 euros, depending on the area of housing.
Taxes for the sale of real estate in Cyprus
Capital Gains Tax
Capital Gains Tax is accrued on the sale of real estate. The amount of tax is 20%. Capital Gains Tax is calculated based on the difference between the purchase price and the sale value. Actually, the rate is much lower, since the law provides for many benefits. No tax is charged on the first 17,086 euros of each of the owners. If the property has been operated by the seller for more than 5 years and the sale of real estate in Cyprus takes place for the first time, then the first 85 430 euros of housing value are not taxed. You can exclude from the tax base, the confirmed costs of operating the facility.