In 2026, the Source of Funds (SoF) procedure became a central step in purchasing property in Cyprus. Tightening European legislation (AMLR) and the implementation of new protocols by Cypriot banks require buyers to provide an impeccable financial dossier. Without documentary proof of the legality of their capital, you will be unable to transfer funds to the developer, open an account, or complete the transaction at the Land Department. This article presents a personal opinion on preparing documents for various capital accumulation scenarios.
Contents
- 1 The concepts of Source of Funds and Source of Wealth: in how difference
- 2 Classification of documents by sources of income
- 3 Confirmation of income from entrepreneurial activity
- 4 Specifics of confirming funds from the sale of assets
- 5 Using crypto assets to buy homes in 2026
- 6 Practical tips for preparing documents
- 7 The role of tax residency
- 8 FAQ: Frequently Asked Questions
The concepts of Source of Funds and Source of Wealth: in how difference
To successfully pass compliance in 2026, it is important to distinguish between two terms that are often confused by investors.
- Source of Funds (SoF): Refers to the specific funds used for the current transaction (e.g., €500,000 for the purchase of a villa in Paphos). The bank verifies the exact source of this amount.
- Source of Wealth (SoW): This is your overall wealth history. The bank needs to understand how you’ve accumulated your wealth over your lifetime. If you buy a property for €2,000,000, but your income history only shows your average salary, there will be a critical discrepancy.
In 2026, compliance departments will require proof of both indicators. Your task is to create a continuous logical chain from the moment income is generated to the moment it is accumulated in a bank account.
Classification of documents by sources of income
The list of required documents depends directly on how the funds were received. Below is a detailed guideline table, relevant for Cypriot banks and law firms in 2026.
| Source of funds | Main documents | Additional requirements |
| Wages | Employment contract, income statements for the last 12–24 months, tax returns. | Statement from the account where the salary was received. |
| Real estate sales | A certified sales contract, an extract from the property register, and confirmation of funds transfer. | Proof of the funds used to purchase this property previously. |
| Business dividends | Audited financial statements of the company, minutes of the shareholders’ meeting on payment, tax returns of the owner. | Certificate of company registration and register of directors/shareholders. |
| Sale of business/share | Share purchase agreement, transaction confirmation, company valuation report (if applicable). | Information about the business buyer (KYC of the buyer). |
| Inheritance | Certificate of inheritance, copy of will, documents of ownership of assets by the deceased. | Proof of payment of inheritance taxes (if required). |
| Donation | Gift agreement (certified), confirmation of donor’s income (SoF of the donor). | Proof of family ties. |
| Investments/Crypto | Reports from licensed brokers or crypto exchanges (CASP), transaction history for the entire period. | Full wallet audit and confirmation of withdrawal to a bank account. |
Confirmation of income from entrepreneurial activity
If you are a business owner, in 2026 the bank will require not just a certificate of dividends, but proof that the company is engaged in real economic activity (substance).
To confirm SoF, businessmen need to prepare:
- Certificates of incorporation of the company issued no earlier than 6 months ago.
- The company’s latest tax return (Corporate Tax Return).
- Corporate account statements showing operating activities.
- A description of the business model in English, confirming the legality of sales markets and counterparties.
Particular attention is being paid to the beneficiaries of structures in jurisdictions on the FATF “grey list.” In 2026, such transactions will be subject to double auditing, and the list of documents may be expanded to include an audit of the entire group of companies.
Specifics of confirming funds from the sale of assets
When using funds from the sale of previously owned property (apartments, houses, land) in your home country or abroad, the “ownership period” is critical. If you purchased a property and sold it three months later at a 100% profit, compliance officers will request proof of the source of funds for that initial purchase.
As of 2026, a bank statement showing receipt of the full amount from the buyer will be a standard requirement. Using cash for payments virtually eliminates the possibility of legally transferring these funds to Cyprus. All payments must be made by bank transfer.
Using crypto assets to buy homes in 2026
Cyprus implemented the MiCA (Markets in Crypto-Assets) regulation in 2026, making the use of cryptocurrency income more transparent, but no less complex.
To prove the origin of funds from crypto assets, you must provide:
- Fiat-to-Crypto Trail: Documents confirming which fiat money (salary, business) was used to purchase the first coins.
- Transaction History: Export the history of all transactions from an exchange or cold wallet, eliminating the use of mixers (e.g., Tornado Cash) and interactions with dubious addresses.
- Cashing Out: Documentary proof of withdrawal of funds through a licensed cryptocurrency service provider (CASP) to your personal bank account.
Practical tips for preparing documents
To avoid the approval process dragging on for months, follow these strict application guidelines for 2026:
- Translation and legalization: All documents must be translated into English or Greek by accredited translators.
- Validity period: Extracts from registers and bank statements must be “recent” – no older than 1 month at the time of submission.
- Digital footprint: Banks prefer documents with QR codes for instant verification of authenticity.
- Data Completeness: Don’t try to hide intermediate links. If money moved between three of your accounts in different countries, provide statements from all three.
The role of tax residency
Your key document in 2026 is your Tax Residency Certificate. It confirms the country in which you pay taxes on the income you use to purchase the property. If you’ve already lived in Cyprus for more than 183 days and have non-dom status, the bank will reconcile your incoming transfers with your tax returns filed with the Cyprus Tax Department.
FAQ: Frequently Asked Questions
Is it possible to confirm the availability of funds with a statement showing the presence of cash in the safe?
No, as of 2026, a “Cash Declaration” will not be accepted by Cypriot banks as sufficient proof of the Source of Funds for large real estate transactions. You must document how the cash came into your possession (for example, by withdrawing it from an account with an old statement) and why it was not held in the banking system.
Does Cyprus accept funds received as a loan from a friend or partner?
In 2026, private loan agreements were considered high-risk. To be accepted, the lender must undergo the same KYC process and prove the origin of the funds they loaned to you. Banks generally only approve loans from licensed financial institutions.
Do I need to prove the origin of my funds if I’m buying a home on an installment plan from a developer?
Yes, developers in Cyprus will be required to comply with the same AML regulations as banks in 2026. Before accepting the first payment, the developer’s legal department will request a minimum SoF from you. Furthermore, when you transfer funds from your foreign account, the correspondent bank in Cyprus will still block the transaction until full proof is provided.
What taxes do I have to pay when transferring funds to Cyprus?
The act of transferring your own funds is not taxable. However, the bank may request proof that taxes have been paid on this income in the receiving country. If you are a Cyprus tax resident and transfer dividends from abroad, having non-dom status will allow you to avoid paying the 17% Special Contribution for Defense (SDC).
What to do if some documents have been lost over the years?
In 2026, compliance officers may accept an affidavit (a sworn statement) certified in court to explain the absence of documents dating back 10-15 years. However, this only applies to small amounts of capital. The bulk of the capital must be supported by archival bank statements, copies of old contracts, or archival tax returns.
