Tax Procedure

 

Legal System in Cyprus

The legal system in Cyprus is modeled on the British system.

The Land Registry system is based on the British equivalent and is very reliable.  In Cyprus purchasers of property  will be secure due the land registry system here is more advanced than in other Mediterranean countries,  in matters such as title deeds.

Ownership a property in Cyprus

The procedures of buying a property in Cyprus are very flexible and the process of purchasing a property by foreigners is very simple,  in comparison with other countries.

Paying for property

It is a requirement to pay for your property in Euro. Personal cheques, bank drafts and telex transfers are acceptable.

D.G Acme Developers can deal with all your money transfers ensuring that the necessary certificates relating to the property purchase are obtained from the Central Bank of Cyprus approval of the council of ministers.

Having signed a contract of sale for your property, it will be necessary to make an application to the Council of Ministers to grant its approval for a non-Cypriot to acquire immovable property.

D.G Acme Developers will assist in the processing and monitoring of your application.

Title Deed

The procedure for the title deed is simple and is undertaken through the Cyprus Land Registry Office, the transfer of ownership from Vendor to Purchaser is done either by the buyer in person or by appointing a third party with a Power of Attorney and requires a permit from the Council of Ministers.

 

Transfer title fees

The transfer fees are due for payment when the transfer of the title deed in the name of the purchaser takes place. The purchaser is solely responsible for the payment of the transfer fees. The rates are on a graduated scale.

Property value(€)

Transfer fee rate (%)

up to 85,430.07

3

from 85,430.08 to 170,860.14

5

from 170,860.15 and over

8

If the property is in joint names e.g. of a couple (husband and wife) or two individuals, then the purchase value is divided into two parts which results in reduced transfer fees.

Example follows to clarify this:

For property purchased for € 300,000 in one name, the fees payable are € 17,164.69.

For Property in one name

Up to € 85,430.07

@ 3%

= € 2,562.90

from € 85,430.08 to € 170,860.14

@ 5%

= € 4,271.50

The remaining € 129,139.86

@ 8%

= € 10,331.19

Total fees payable

= € 17,164.69

 

For property purchased for € 300,000 in the names of two persons, the fees payable are € 11,582.80.

For property in the names of two persons

First € 85,430.07

@ 3%

= € 2,562.90 (Share of husband)

Second € 85,430.07

@ 3%

= € 2,562.90 (share of wife)

The remaining of First,

€ 64,569

@ 5%

= € 3,228.50 (Share of husband)

The remaining of Second,

€ 64,569

@ 5%

= € 3,228.50 (Share of husband)

Total fees payable

= € 11.582,80

 

Stamp Duty

Once the contract is signed the purchaser is responsible for the payment of stamp duty at the rate of €1.50 per thousand towards the purchase price up to the value of €170,860.14 thereafter the rate is €2.00 per thousand. The contract must be stamped within 30 days after its signing in order to avoid the payment of a fine.

Value added tax (VAT)

The VAT charge is 18% and since 08/06/2012 any person that is buying his/her first permanent residence in Cyprus can apply for a reduced VAT rate (defined at 5%).

The purchaser must complete a form at the VAT Authorities (like all Cypriot nationals) declaring his/her intention and commitment to use the house that he/she is purchasing, as the permanent residence for himself and /or his family in Cyprus. This process is the same procedure followed by all Cypriot nationals, the same procedure and set of documents, as before, need to be provided in order to secure the certificate from VAT. 

Important parameters:

- The house must be used only for personal and /or family living of the purchaser.

- It is not permitted to generate any income such as rental, or to utilize the property as an investment or any other type of business.

- The VAT Authorities maintain the right, and most probably at a later stage after possession (6-12 months), to investigate each case to ensure that the purchaser has honoured the above requirements.

- In the event that the purchaser has ceased to use the property as his permanent residence in Cyprus, including resale of the property, within a period less than 10 years from possession, then the purchaser must pay to the VAT Authorities the remaining VAT of 13% (18% less 5%) on the purchase price.

Double Taxation Agreements

Cyprus has double-taxation agreements with Austria, Bulgaria, Canada the People's Republic of China, the Czech Republic, Denmark, Egypt, France, Germany, Greece, Hungary, India, Ireland, Italy, Kuwait, Malta, Norway, Poland, Romania, Russia, (Armenia, Belarus, Kurdistan, Moldova, Tajikistan, Turkmenistan and Ukraine) Slovakia, South Africa, Sweden, Syria, the United Kingdom, the United States, Yugoslavia (Serbia and Montenegro) and other countries.

The main purpose of these treaties is the avoidance of double taxation of income earned in any of the above countries. A credit is usually allowed against the tax levied by the country of the tax payer's residence for taxes levied in the other country.

Duty Free Privileges

Europeans who become permanent residents in Cyprus and were using in their country a car for at least six months, can bring their car to Cyprus and they will not pay import tax.

 

Furniture can be imported free of any taxes by Europeans or Non-Europeans who become permanent residents provided that they are for personal use and are not brand new.

*The above transfer fees are the regular transfer fees. According to government announcement transfer fees will be half until 31/12/2016.

Proposed Investment A

Proposed Investment B

Proposed Investment C

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