Taxes in Cyprus

Cyprus Property Tax
In accordance with the current legislation of Cyprus, the acquisition of a new property subject to VAT was not charged for the transfer of ownership. The status was valid until December 31, 2014.

In the event that the property is sold for the first time and is not subject to VAT, while the date of the contract of sale and the date of registration in the land registry are within the limits of the period from 02/12/2011 to 31/12/2014, the rate of fees for the transfer of the right land ownership is reduced by 50%.

In other cases, when registering ownership of the acquired real estate, the buyer will have to pay fees for the transfer of ownership in the amount of 100%. The amount of fees charged is calculated based on the market value of the real estate at the time of purchase:

Стоимость недвижимости

Сборы — %

Сбор за переход права собственности

До € 85.430

3 %

€ 2.563

€ 85.430 —  € 170.860

5 %

€ 4.271

€ 170.861 и больше

8 %

 

The Director of the Land Cadastre may disagree with the declared value and approve the market value of the property. The date on which the property is valued is the purchase date specified in the contract of sale, transferred to the Land Registry. In the absence of such a date, the date of the direct transfer of ownership rights is considered as the date of assessment, unless proof of the date of purchase is provided.

In the event that the property is registered as a joint property, for example, in the name of the husband and wife or two other persons, then the purchase price is divided into two parts, which entails a reduction in the rate of fees for the transfer of property rights.

For example:

If the property is purchased for € 300 000
The property is registered for one person
  

If the property is acquired for 300 000, and real estate is registered for two people

  

To €85.430

3%

€2.563

The owner 1  €85.430

The owner 2  €85.430

3%

3%

€2.563

€2.563

€85.430-€170.860

5%

€4.272

The owner 1  €64.659

The owner 2  €64.659

5%

5%

€3.229

€3.229

170.861-300.000

 8%

€10.331

   

Total fees to be paid

 

€17.166

Total fees to be paid

 

€11.584

Real estate tax
A registered real estate owner is required to pay an annual property tax calculated on the basis of the market value of the property as of January 1, 1980.

Estimated cost
as of January 1, 1980

Tax rate

0 —  €40.000

0.6 %
(min summ €75)

40.000 —  €120.000

0.8%

€120.001 — €170.000

0.9%

€170.001 — €300.000

1.1%

€300.001 — €500.000

1.3%

€500.001 — €800.000

1.5%

€800.001 — €3.000.000

1.7%

Over €3.000.000

1.9%

 

The Law on Stamp Collecting
In order to protect the rights of the buyer it is recommended to transfer the contract of sale for storage, thus ensuring the seller / builder’s performance of the obligations assigned to him to the buyer in kind. In addition, by depositing a contract, the buyer receives property tax benefits. The buyer has the right to transfer the contract of sale for storage within 6 months after its signing.

The emblem tax in Cyprus is levied on ‘documents’ (i.e. written agreements / contracts) relating to assets located in Cyprus and / or actions that will be carried out in Cyprus or property located in Cyprus. The emblem fee is calculated based on the cost of the agreement at a rate of 0.15% for the first EURO170,860 and 0.2% for the subsequent amounts. Starting from 2007, the maximum amount of stamp duty levied is € 17,086 for each agreement. The person obliged by law to pay stamp duty is the buyer. The stamp duty payment must be made within 30 days from the date of signing the document for which the stamp duty is to be paid.

The absence of a stamp on the stamp collection on the document does not entail its invalidity, however, in this case a small penalty is charged.

Income tax on capital
Grounds for confirming the existence of a trade transaction
There are a number of criteria by which it is determined whether a particular operation should be treated as a trading operation and, accordingly, subject to income tax, or this operation is a capital operation.

Below are 10 factors that are taken into account when deciding whether a transaction is a transaction transaction:
— The content of the transaction
— Presence of possession
— Frequency of such operations
— Additional work
— Circumstances accompanying the sale
— Motive
— A way of financing costs
— Getting to know the owner
— Purchase method
— How the sales proceeds will be used

Calculation of income tax on capital
Tax on capital gains is charged at a fixed rate (20%). The subject of taxation is the proceeds from the sale of immovable property located in Cyprus, as well as from the sale of shares in a company that owns immovable property in Cyprus, while not registered on a generally recognized stock exchange. The rate remains unchanged for all subjects of taxation — be it private individuals or companies. Thus, the underlying factor is the location of the property, not the residence status of the owner.

Capital income is calculated after deducting income from sale, purchase price and additional expenses adjusted for inflation, as well as any other expenses that are not subject to taxation but are directly related to the sale of the structure (for example, interest on the loan and advertising costs )
It should be noted that if the property was acquired before 1980, the price of the acquisition, which is taken into account, will be considered the market price of the asset as of 01.01.1980g.

Tax deduction during life
These privileges apply only to individuals (not legal entities) and are used to reduce / eliminate taxable income from capital gains. Individuals are entitled to a one-time tax deduction for a lifetime from an amount not exceeding € 85430 (subject to certain conditions).

Tax deductions during life are as follows:
— An amount of € 17,086 from the proceeds from the sale of any type of property;
— An amount of € 25 629 from the income from the sale of agricultural land (if the main activity is agricultural activity, for example, farming):
— Real estate real estate, which is the main place of residence — € 85 430. To qualify for this privilege:
1. The house must be used by the owner exclusively for his own residence for at least 5 years (10 years — for a second time purchase).
2. Period of use does not necessarily have to be continuous. It may be interrupted due to overseas, for example.
3. Using a place of residence means using it by the owner.
4. The size of the allocated area does not exceed 1500 sq. M
5. If the accommodation is located on a land plot exceeding 1,500 sq. M, the amount of tax to be paid will be proportional to the income received from the sale of a land plot exceeding 1,500 sq. M.
6. The benefits do not apply to the situation, if the realization of the housing was carried out after one year after the termination of its use by the owner

Benefits
— A gift between relatives up to the third degree of kinship
— Alienation in connection with death
— A donation in favor of local authorities or any officially registered charitable organization carried out for educational or charitable purposes
— A gift in favor of a company whose shareholders are members of the donor family, provided that the shareholders


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