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Cyprus has fast become a popular choice for the British looking to buy property abroad.
If you are looking for a family home, investment and rental opportunity, or a residential or retirement property, Cyprus should be top of the list of locations.
According to the Cyprus land registry, 12,000 British people, constituting 1.5% of the population, already own homes on the island.
Cyprus is very similar to the UK in many ways. Both the justice and postal systems are based on the British model, the health facilities are excellent and you will also feel comfortable driving on the left hand side of the road, getting British newspapers the same day, and keeping up with your favourite TV programmes with satellite television. Most Cypriots speak good English.
Cyprus is within easy reach of all UK airports with regular flights taking about 4,5 hours, which makes Cyprus a reasonable choice for a long weekend.
The following information is intended as a brief guide only and is not a replacement for professional legal advice.
- Legal System in Cyprus
- The Banking System in Cyprus
- Cyprus currency
- Cyprus Residential Permit
- Employment/ Working in Cyprus
- Cyprus Tax Benefits
- Property Ownership in Cyprus
- Title Deeds in Cyprus
- Mortgages in Cyprus
- Cyprus PropertyTaxes and Purchasing Costs
- Stamp Duty Local Authority
- Taxes & Rates in Cyprus
- Annual Immovable property tax
- Capital Gain Tax in Cyprus
- VAT
The legal system in Cyprus is based on the British legal system. The Land Registry in Cyprus is one of the most advanced and reliable systems in the world and also based on the British system.
Purchasing a property in Cyprus is very secure.
The Banking System in Cyprus is an efficient, modern and well equipped system with the latest technology. Foreigners can open foreign currency and local deposit accounts. Credit cards are widely used in Cyprus . There are many local and international banks with branches in Cyprus .
Cyprus uses the Cypriot Pound, often depicted by CYP.
1 Cyprus pound = 100 cents.
Bank notes are: CYP1, CYP5, CYP10, CYP20.
European Union Law of 2003 (The Free Movement and Residence of Nationals of the Member States of the European Union and their Families) applies to all EU nationals wanting to live and work in the Republic of Cyprus . Member state and Swiss nationals may enter Cyprus by showing a valid EU passport or photo ID Card.
People who have purchased property and who are living in Cyprus can easily obtain a residence permit. Residence Permits are issued to the following providing that certain criteria are met. A person must show that he/she and their family is self supporting by having an income of
CYP 5,000 per person. The banking documents must accompany the application for permanent residence submitted to the local immigration office in the area of residence.
If you are buying property in Cyprus and planning to live in Cyprus and do not have an EU passport, you will need a residence permit. A Residence Permit is given more easily to persons who have purchased property and are retiring in Cyprus . The granting of this permit is based upon the level of foreign income available to support oneself and this includes pensions and income from investments.
Temporary Permit requires:
- Bank account in Cyprus
- Sales agreement of a purchased property in Cyprus
Permanent Permit Requires:
- The temporary requirements, and A proved and secured annual income of not less than CYP10,000 per couple
- Your lawyer will apply on your behalf.
- People of Cypriot origin or the foreign wives ofCypriot citizens are not regarded as foreigners.
An application for a Cypriot Citizenship is not easily approved. However the following may submit a written application to the Migration office.
a) Foreigners married to persons of Cypriot origin for over five years.
b) A foreigner who has lived in Cyprus for at least ten years within a thirteen year period.
EU Citizens do not require a permit.
The official text reads: "Nationals of any Member State who move to Cyprus in order to pursue activity as employed persons are granted a residence permit. The residence permit is valid for not less than five (5) years from the date of issue and it is effective throughout the territory of the Republic. It is automatically renewable upon the request of the person concerned."
Non European Union citizens must have a work permit in order to work in Cyprus .
The prospective local employer of a foreigner must submit an application for these permits, on the foreigner's behalf to the Immigration office together with a curriculum vita, contract of employment, copies of qualification certificates and details of work experience in the relative field. The Ministry of Labour and Social Insurance acts as an adviser to the Immigration Officer as regards the situation in the labour market and the compliance by the above-mentioned employer with the criteria governing the employment of aliens. As soon as the permits have been issued the foreigner may enter Cyprus to take up his employment.
Skill workers include those with technical and language skills. English as a first language is also very much in demand.
Cyprus has double taxation treaties with many European countries and more under negotiation, safe-guiding its residents from paying tax in both countries. Due to double taxation treaties, income generated in Cyprus will only be taxed in the country that the individual is declared as a resident. Tax will be levied at the applicable rate in that country.
Foreigners moving to Cyprus can start a business with a very low 10% Corporation Tax, a great incentive.
Pension received from UK funds can be paid to Cyprus tax residents without deduction of UK, tax and is then taxed in Cyprus .
0% 5% If you decide to work you can earn up to CYP10,000 tax free. This is the normal tax allowance for people working.
Cancel Tax does not exists here. All spending is from Income Tax. The only local tax is to pay for rubbish collection approximately CYP50 per year.
Compared to many countries the process of buying property in Cyprus by foreigners is very simple. Foreign buyers are entitled to freehold ownership of a villa, an apartment, or a piece of land. Foreigners and EU citizens who are not permanent residents of Cyprus, wishing to purchase immovable property in Cyprus are obliged to adhere to special formalities and are restricted by certain regulations.
A restriction as to the type and size of the property is applied and the foreigners are given permission to buy only one apartment or one house or a building plot or land, which in the case of EU citizens can be unlimited and in the case of all other foreigners up to 4,014 sq m.
A permit to buy a second house may be granted in the case of persons who are living or working in Cyprus for a long period of time.
The restrictions applied to EU citizens not residing in Cyprus will cease after May, 2009, and all citizens of the EU will be treated equally with Cypriot citizens regardless of their residential status.
According to Cyprus Law, foreigners must obtain the ermission of the Council of Ministers/Pertinent Authority prior to the acquisition of real estate property.
Application to the Council of Minister is to be submitted through the relevant District Officer and the Minister of the Interior with details of:
- The applicant and his financial standing
- The property
- The Owner, the sales contract and the terms of payment
- The type of the purchase
Acquisition of real estate property includes:
- Transfer of Title Deed.
- Long lease for periods of more than 33 years.
- The acquisition of shares in a company that owns immovable property, if such an acquisition results in the company becoming controlled by foreigners.
- The establishment of a trust or any type of set-up, which is connected with the ownership of real estate, for the benefit of a foreigner, including tax benefits.
The procedures for obtaining of the appropriate permission may take a considerable amount of time.
Purchasers are entitled to occupy their properties until then. Any contract for the purchase or lease of property is valid even if the Pertinent Authority rejects the foreigner's request for a permit.
Permission is granted to the applicants provided they have:
- No criminal record in their country or in Cyprus
- The financial means to support themselves in Cyprus . (An income of CYP12,000 per annum between the couple is satisfactory).
For citizens of the EU not residing in Cyprus , there is a transitional period until May, 2009, after which they will be treated equally with Cypriot citizens regardless of their residential status. Citizens of the EU residing in Cyprus or Cyprus based companies, controlled by citizens of a Member State are not considered to be foreigners as of 1 st May 2004 .
Application to the Central Bank for confirmation of importation of foreign exchange for the purchase is to be submitted with details of:
- Confirmation from the Commercial Bank that the foreign exchange for the purchase was imported.
- Contract of sale.
- Copy of the Council of ministers' approval.
- Title Deed of the property.
Specific performance
According to the provisions of Specific Performance Law, the purchaser of immovable property may secure the transfer of the acquired property on to his/her name by depositing a duly signed and stamped copy of the contract at the Land Registry within two (2) months of the signing of the contract. Note that no burdens, charges or encumbrances can affect the right of specific performance after the contract has been deposited with the Land Registry.
Depositing a copy of the contract with the Land Registry gives the purchaser the right to seek “specific performance” of the terms and conditions of the contract and thus to register the property on to his/her name, even though the owner may not be willing to accommodate such procedures.
Application to transfer registration of ownership should be personally submitted to the Land Registry together with the following documents:
- The Purchaser's identity card or passport number.
- The Title Deed recorded in the Government archive.
- Copy of Council of Ministers' approval.
- Confirmation from the Central Bank of importation of foreign exchange.
- Proof of payment of all property and other sundry town taxes to date.
The transfer of property ownership is usually done in person or by someone with Power of Attorney (the solicitor). The purchaser may sell or dispose of the property at any time as long as a valid contract exists.
Since joining the EU the financial institutions of Cyprus have undergone (and are still undergoing) a number of changes. This is making mortgage finance easier for foreigners to get and with more attractive terms.
Banks offer all the usual facilities to assist in the purchase of Cypriot property. The typical loan amount is between 60-80% of the property value. Repayment periods are usually between 10-20 years.
There are guaranteed rental schemes available on new property in Cyprus .
Cyprus Property Taxes & Purchasing Costs
The relative fees and charges for the acquisition of immovable Property in Cyprus are usually paid by the purchaser.
A transfer tax is charged when a property is registered in a person's name and is charged at the following rates:
Market Value Tax rate If the purchase is over CYP50,000 and made in joint names the value for tax purposes is halved:
For example, if the purchase price is CYP80,000
Joint owner 1 Joint owner 2 Total Price CYP40,000 CYP40,000 CYP80,000 Tax 3% CYP1,200 CYP1,200 CYP2,400 Stamp duty is paid by the purchaser at the time of signing the contract as follows:
Up to CYP100,000 = CYP1.50 per CYP1,000
And thereafter = CYP2 per CYP1,000The contract should be stamped within a period of thirty (30) days from the signing. Although the absence of the revenue stamp on a contract does not render it void, the stamp must be paid before depositing the contract to the Land registry for Specific Performance purposes. The Stamp duty plus a fine will be payable when the contract is produced to the Land Registry for the transfer of ownership or to any Government department and the court.
Local Authority Taxes & Rates in Cyprus
As a general guide taxes and rates will be approximately CYP60-180 per year depending on the size of the property. This tax is for refuge collection, street lighting, sewerage, etc.
Immovable property ownership tax is calculated on the market value of the property as at 1 st January 1980 .
It is calculated as follows:
Up to CYP 100,000 exempt Capital gain tax is levied at the rate of 20% on gains realised from the disposal of immovable property or the disposal of shares of companies the assets of which consist mainly on immovable property unless the owner resides it continuously for at least 5 years prior to its disposal.
The gain is calculated as the difference between the sales proceeds and the original cost of the property. Interest on payments paid for the acquisition, the cost of additions to the property and inflation rate, as published yearly by the Government, are deducted from gains.
Individuals are entitled to the following lifetime allowances on Capital Gains Tax:
- The first CYP10,000 of gains arising from the disposal of any property are exempted.
- The first CYP15,000 of gains arising from the disposal of agricultural land by farmers are exempted (subject to conditions).
- The first CYP50,000 of gains arising from the disposal of a house used by the owner as his / her own residence are exempted (subject to conditions).
- The following allowances are not available separately and every individual is only allowed a maximum lifetime allowance of CYP50,000.
Non residents are only charged when selling property in Cyprus , but they can be totally exempt from Capital Gains Tax if they can prove that the purchase consideration was paid with foreign funds imported between August 1st, 1980, and July 13 th, 1990.
The following categories of immovable property disposals are exempted from the Capital Gains Tax:
- Transfers by reason of death.
- Gifts between relatives up to third degree of kindred.
- Gifts to limited liability companies when, at the time of transfer and for a period of five years following the transfer, all the shareholders of the company are members of the family of the donor.
- Gifts by family companies to their members, but only in cases where the property transferred was obtained by the company as a gift.
- Exchanges of immovable properties.
- Compulsory acquisitions.
- Gifts to charitable institutions of the Republic of Cyprus.
As of May 1st, 2004, the supply of immovable property is subject to VAT (Value Added Tax), which is calculated at a rate of 15% of the value of the property.
VAT is only levied on property before its first use, as well as on the land on which such property is build.
Transitional provisions provide the exemption of buildings for which a valid application for planning permission was submitted before May 1 st, 2004 .
For more information visit the official website of the Ministry of Finance of Cyprus at: http://www.mof.gov.cy