Taxes in Cyprus

Republic of Cyprus has a more favourable tax regime than other European countries. For example, there is no inheritance tax in Cyprus.

Transaction and registration taxes

Title deed transfer tax is paid to the land register after all fees for the real estate sale are settled and the state has issued a permit to transfer the deed to the buyer. Rates vary from 3% to 8% depending on the value of property.

For instance, on a property purchase of €145,231, the first €85,430 of the payment would be taxed €2,562 (3.00%) and €2,990 (5.00%) on the remaining €59,801. In total, the buyer would pay taxes in the amount of €5,552 (3.82%). If the property is registered to two or more persons, they pay less as the taxable amount is shared between them, allowing them to benefit from a lower tax band.

Real estate transfers made between 2 December 2011 and 31 December 2016 are exempt from VAT. In addition to that, there is 50% tax break on transfers of these properties.

Stamp duty of 1.5–2.0% is payable on all property purchases and is due within one month of the signing date. Stamp duty for properties under €171,000 is 1.5% and 2.0% on all purchases exceeding this amount. To illustrate, stamp duty on real estate worth €256,290 is €426 (€170,860 x 1.5% + 85,430 x 2.0%).

As of 13 January 2014, VAT in Cyprus is 19%. There is a beneficial rate of 5% VAT for buyers who do not own any property in Cyprus and are purchasing their primary residence (not exceeding 200 sq m).

Ownership and capital gains taxes

Real estate tax is calculated on the estimated value as of 1 January 1980. It ranges from 0.6% to 1.9% depending on the property’s value and is payable before 30 September each year.

Public buildings and agricultural land in use are exempt from real estate tax.

Owners also pay annual municipal tax from €55 to €195, depending on the surface area of property.

Capital gains tax on the sale of property is 20%. There is no inheritance or gift tax on property transfers.

Income, pension and corporate taxes

Income tax is paid by all tax residents on revenue earned in Cyprus and abroad. Non-residents pay income tax on certain types of income received in Cyprus. Income tax ranges from 0% to 35% and also applies to property rental income. A tax resident is any individual spending more than 183 days per year in the country (from 1^st January 2018 the “183 day rule” will be replaced by the “60 day rule”). Taxes paid abroad are deductible if there is a double taxation agreement between Cyprus and the home country. There are income tax deductions and allowances available.

Tax on pension income from abroad is 5% (fixed rate) with the first €3,420 exempt from tax.

Corporate tax is 12.5% for all tax resident companies of Cyprus (managed and controlled from there) on profits received in and outside Cyprus.

Non-resident companies pay business tax on their activity in Cyprus. Taxes paid abroad may be subtracted from corporate or business tax.

Disclaimer: the information in the above article is for reference and may be subject to change over time. Persons interested in exact calculations should contact a certified tax specialist in this country before purchasing property.