What one should know before purchasing a property in Cyprus
The Cyprus Investment Programme requires a €2 million investment in residential real estate in Cyprus or a €2.5 million investment in a combination of real estate and/or investments. Both must be accompanied by the acquisition of a private property worth at least €500,000. Various taxes will be required by the buyer when purchasing property; nevertheless, certain programmes have been created to entice international investors to Cyprus.
VAT on Cyprus Real property (value added tax)
In Cyprus, the purchase of any construction or residential property is subject to a normal VAT rate of 19%. However, a reduced rate of 5% has been implemented for recipients who satisfy the following criteria:
- Use (or intends to use) the residential property as his/her primary and permanent abode.
- Make a declaration to the Cyprus VAT Authorities.
- Be a physical person of 18 years of age or older, a citizen of Cyprus or another Member State, and a permanent resident of Cyprus.
In 2012, the reduced rate was extended to those that provide or develop residential properties for nationals of foreign nations, if such property is utilised as a permanent place of living. The lower rate cannot be applied if the property is used for investment, leasing, or any other type of commercial activity. In all circumstances, the 5% rate will only apply to the first 200m2 of the property; the remainder will be charged at the normal 19% rate. For a period of ten years, the property must be the buyer’s primary residence. If this requirement is not met, the buyer must pay compensation for the difference in VAT rates.
CYPRUS DEVELOPERS – QUALITYHOMECO.COM
Quality Home Developers Cyprus is among the most rapidly grown property development companies in Cyprus, founded in 2002. Offering a full scale of property services, we are highly motivated by our passion to deliver top quality architectural design and building construction projects, matching your needs with your dreams Qualityhomeco.com.
Other Property Taxes in Cyprus
Certain one-time taxes must be paid upon fulfilment of the contract for the transfer of property ownership. Once the Deed of Purchase is completed, the purchaser is responsible for paying Transfer Fees, which are calculated depending on the market value of the property at the time of purchase:
- A 3% fee will be applied to amounts up to €85,430.
- A 5% fee will be applied to amounts ranging from €85,431 to €170,860.
- Over €170,861 in value, an 8% surcharge will be applied.
If the property acquisition has previously been subject to VAT, the transfer charge will not apply.
Stamp duty is also payable on any documents issued in connection with the purchase of the property in question. The following are the rates:
0% for quantities up to €5,000; 0.15 percent for amounts between €5,000 and €170,000; and 0.2 percent for amounts more than €170,000.
Stamp duty may not exceed €20,000 per agreement; however, penalties may apply if the amount owed is not paid within 30 days of acquisition.
Every property owner is required to pay Property Taxes on a yearly basis, which include Local Authority taxes and Sewerage Tax. Regular waste collection, street lighting, sewerage, and other community services taxes will be allocated.
Our Cyprus Real property & Tax Services
Chetcuti Cauchi’s Property and Development team has years of expertise giving assistance throughout the whole process of purchasing, selling, renting, or developing property in Cyprus. Understanding the market and the procedure under Cypriot legislation, our specialised attorneys will advise clients on the acquisition of residential, commercial, mixed-use, and industrial property. They will also collaborate closely with banks, architects, and other parties to write, evaluate, and negotiate the parameters outlined in the Preliminary agreement. Our Tax experts will also be able to assist our customers in establishing the most appropriate programme for them to profit from.
Our Immigration attorneys, being a multidisciplinary company, will also assist you throughout the application procedure for the Cyprus Investment Programme. With a high success record, the team will guarantee that all investment and residential properties bought through the programme are of excellent quality.