Cyprus Property Taxes
Tax of ownership registration (one off payment)
The ownership registration fee is to be paid to the state of the Republic and in particular to the Land Department once the title deeds are transferred on to the buyer’s name. The transfer takes place once the local municipality has issued approval for transferring the title deeds for all properties and when all settlements have been made between the seller and buyer.
If two or more people are the owners of a property, the amount of the tax is reduced because the taxable value per each owner is proportionally less, and as a result the tax becomes lower.
Furthermore, the Cyprus government has introduced an incentive for property buyers according to which all new (sold for the first time) properties qualify for the full exemption or 50% reduction of the transfer fee. The incentive scheme is as follows:
– New properties, which are subject to VAT – no transfer fee
– New properties, which are not subject to VAT – 50% reduction of the transfer fee
Stamp duty (one-off payment)
A Stamp duty has to be paid when buying property in Cyprus. If the value of the property is less than € 171,000, the fee is 0.15% and if the value of the property exceeds € 171,000, the fee is 0.2%. An important detail is the fact that, the Stamp duty must be paid within one month from the date the contract of sale was signed on.
Annual property tax
Once the title deeds of a property have been settled, the buyer becomes the legal owner of the property and is obliged to pay annual property tax to the local government. The taxed amount is determined by the value of the property.
The calculation of the property tax:
Personal effects, household goods and furniture can be free of import duty, if they are for personal use. There is also an allowance for a duty free car, and retired couples enjoy the additional concession of two duty free cars.
Pensioners, who become residents in Cyprus, are taxed on their pension from abroad at the rate of 5% for amount exceeding € 3,417 annually. As long as they become tax residents in Cyprus, they will be taxed on future income (dividends and interest). Of course they will not be taxed on capital brought into Cyprus, which was created from past income.
Their total annual income up to € 19,500 is tax exempt, as for all Cypriots.
In addition, Cyprus has double taxation treaties with many European Union and other countries. The main purpose of the treaties is the avoidance of double taxation of income earned in any of the following countries: Austria, Belgium, Bulgaria, Canada, China, Czech Republic, Denmark, Egypt, Finland, France, Germany, Greece, Hungary, India, Ireland, Italy, Kuwait, Malta, Norway, Poland, Romania, Russia, Sweden, UK, USA and Yugoslavia.
Value added tax (VAT)
The standard VAT rate is 19%.
- the buyer has no other property in Cyprus or has never enjoyed the VAT refund in the past
- and the property that he/she is buying is new
- and it will be used as the primary residence in Cyprus
then, the first 200m2 of the property is subject to the reduced VAT rate of 5%. The VAT reduction is only applicable to properties smaller than 275m2.
Local council tax
This tax encompasses local municipality services such as garbage collection, street lights and other. The local council tax is paid annually and the amount due is also determined by the property size. The standard taxation is about €200.