Andreas NicolaouWhen selling or buying a Property in Cyprus, several taxes and fees are applicable based on the transaction's price and the property's status.
These are paid between the seller and the buyer as follows:
| Seller | Tax % |
|---|---|
| Capital Gains Tax | 20% |
| Property Disposal Levy | 0.4% |
| Buyer | Tax % |
|---|---|
| VAT (only If its a newly built property) | 19% |
| Transfer Fees (only if its a resale) | 3% - 8% |
| Stamp Duty | 0.15% - 0.2% |
You can read more on Capital Gains Tax here, and more on VAT here. This article will cover the remaining property related taxes and fees.
When transferring a property in Cyprus, the Land Registry imposes a transfer fee which is paid by the person receiving the transfer.
The transfer fee rates are progressive which means that different portions of the value of the property will be taxed at different rates.
Therefore, the higher the value of the property, the higher the transfer fee. The value of the property is estimated by the Land Registry.
| From | To | Fee Rate |
|---|---|---|
| €0 | €85,000 | 3% |
| €85,001 | €170,000 | 5% |
| €170,000 + | 8% |
In cases where the property transaction in question is not subject to VAT, the law provides for a 50% reduction of the transfer fee.
For example:
Say you purchased a house for €300,000. The house was a resale so no VAT was applicable.
The Land Registry will calculate the transfer fee as follows:
First €85,000:
- Rate: 3%
- Fee: €85,000 x 0.03 = €2,550
Next €85,000 (€85,001 to €170,000):
- Rate: 5%
- Fee: €85,000 x 0.05 = €4,250
Remaining €130,000 (€170,001 to €300,000):
-
Rate: 8%
-
Fee: €130,000 x 0.08 = €10,400
Cumulative Fee:
- €2,550+€4,250+€10,400=€17,200
Total Fee:
- Total Fee after 50% Reduction: €17,200 x 0.5 = €8,600
Different rates are applicable in cases where the transfer occurs between family members. Particularly:
| Transfers Between Family | Tax % |
|---|---|
| From parents to children | 0% |
| Between spouses | 0.1% |
| Between third-degree relatives | 0.1% |
There are also a number of situations where the transaction is exempt from transfer fees.
| Exemptions | Description |
|---|---|
| VAT-Imposed Transaction | Property transfers that are subject to VAT are generally exempt from transfer fees. However, if the Land Registry thinks that the price you declared is not the true market value of the property they might charge a transfer fee based on the market value, minus the fee that would have been charged on your declared price. |
| Bankruptcy & Company Liquidation | Property transfers in the context of bankruptcy proceedings or company liquidations provided that the sale price does not exceed €350,000. |
| Restructuring | Property transfers as part of a company's or individual's financial restructuring (such as debt restructuring). |
| Property Exchanges | Provided that the properties exchanged are of equal value. If they are not, the person acquiring the higher-valued property pays transfer fees based on the difference in value. |
In 2021, the Government introduced a 0,4% levy on the proceeds arising from all immovable property disposals.
The aim of this levy is to fund compensation efforts for individuals affected by the Turkish invasion and occupation with the aim of restoring their pre-war financial condition.
Particularly, the levy is applied as follows:
-
In the case of transferring real estate through a sale, where the property's value has been determined by the Land Registry, the seller must pay a fee equal to 0.4% of the sale price of the property.
-
When shares of a company not listed on any recognized stock exchange are sold, and the company directly or indirectly owns real estate for which Land Registry has determined a value, the seller must pay a fee equal to 0.40% of the last assessed value of the real estate, proportional to the shares being transferred.
For example:
Say you own 25% of the Shares of a Company that owns real estate with an estimated value of €1,000,000.
When you sell those shares, you will have to pay this levy in addition to other applicable taxes:
Calculate the Total Levy Based on Real Estate Value:
Total levy = 0.4% x €1,000,000 = €4,000.
Calculate Your Share of the Levy:
Since you own 25% of the company, you are responsible for 25% of the total levy.
Your share of the levy = 25% x €4,000 = €1,000.
Legal documents that are related to transactions involving property are subject to stamp duty. In essence stamp duty provides legal validity to a document ensuring that its enforceable and recognised by authorities.
Stamp Duty is calculated on the value of the Contract/Agreement as follows:
| From | To | Stamp Duty |
|---|---|---|
| €0 | €5,000 | 0% |
| €5,001 | €170,000 | 0.15% |
| €170,000 + | 0.2% |
The maximum amount of stamp duty that may be imposed on a document is capped at €20,000.
Stamp Duty is also applicable on other types of documents as well:
| Other Documents | Stamp Duty € |
|---|---|
| General power of attorney | €6 |
| Special power of attorney | €2 |
| Letters of guarantee | €4 |
| Letter of credit | €2 |
| Will | €18 |
| Contracts without a specified price | €35 |
| Certified copies of contracts and documents | €2 |
| Issuance of tax residency certificate | €80 |
As of 2017, immovable property tax has been abolished.
As of 2000, inheritance tax has been abolished.
However, the executor/administrator of a deceased person's estate is required to submit a statement of the deceased's assets and liabilities to the tax authorities within six months of the date of death.
