Cyprus is a small country situated in the eastern Mediterranean, known for its beauty, tourism, cultural history, high quality of life and also the low cost of living. The economy of Cyprus has evolved immensely in the past 30 years and today Cyprus has an excellent tourism industry and high quality telecommunications, banking and financial services. All these advantages of Cyprus have carried the country to the European Union. Cyprus is a full member of the European Union from the 1st of May 2004 and the Euro is the currency used in Cyprus from the 1st of January 2008.
The legal system in Cyprus is mainly based on the Anglo – Saxon legal system. The contracts are in the English language, especially when one of the parties is a foreigner.
Cyprus has one of the most advanced and effective Land Registry systems in the world.
Those who are interested in buying property in Cyprus will find below some useful information about the procedures, the transfer fees, taxes and other matters.
THE PROCEDURE IN BRIEF
According to Cyprus Law the purchasers need a written contract of sale, which will be stamped and lodged at the Land Registry Office for Specific Performance purposes. This gives the purchasers the security of a legal charge over the property, which will remain up until the time of transfer of the title deeds to them. The purchasers must lodge the contract of sale at the Land Registry Office within two months from the date of signing. Otherwise the purchasers will not be able to specifically enforce the transfer of the property to them through the Court, but will only have a claim in damages for breach of contract, in the even that the Vendor fails to transfer title to them.
Non-European citizens and European non-residents of Cyprus must apply to the Ministry of Interior for permission to acquire immovable property in Cyprus or to the Immigration Department for a Temporary Residence Permit so as to be able to accept the transfer of the Title Deeds to their own names.
European citizens can buy land without having to obtain any form of permission.
As soon as the above permissions have been obtained and as soon as a separate title deed has been issued by the Land Registry Office, the Purchasers will then be in a position to accept transfer of the title deed into their names.
Any Company that is registered in any member country of the European Union, and has its registered address and/or activities in Cyprus will be allowed to purchase immovable property in Cyprus without having to apply for the above permissions.
The contract of sale must be duly stamped and the stamp duty is 1,5 per thousand for the first € 170.860,14 of the purchase price and 2 per thousand for the balance of the purchase price. The stamp duty should be paid within 30 days of signing of the contract.
On transfer of the title deed into the name of the Purchaser, the Purchaser must pay transfer fees to the Land Registry Office.
Transfer fee rates are as follows:
Value of Property Transfer fees
up to 85.430,07 3%
between 85.430,08 – 170.860,14 5%
over 170.860,15 8%
However, if the purchase is made in joint names the effective value for calculation is halved.
IMMOVABLE PROPERTY TAX
The immovable property tax is based upon the value of the property on the 1st of January 1980. If the value of the property at that time exceeds € 170.860,14 then the registered owner of the property must pay immovable property tax according to the following scales:
CAPITAL GAINS TAX
Capital gains tax is imposed on the gains accruing to any person from a disposal of immovable property. Capital gains tax is imposed at the rate of 20% on the gain.
The following allowances are given:
(a)€ 17.086,01 personal allowance (can be used only once)
(b)€ 85.430,07 from the disposal of a dwelling house, provided that the house was the main residence of the taxpayer for a total period of not less than five years prior to the disposal.
Cyprus has double – taxation treaties with almost all European Countries as many others. The purpose of these treaties is the avoidance of double taxation of income earned in any of these countries.
The citizens of any of these countries can receive their pensions in Cyprus and they have the right to elect to pay the income tax in Cyprus at very favourable rates.
RESIDENCE IN CYPRUS – IMMIGRATION
For non-Cypriots wishing to stay longer than three months in Cyprus it is preferable to attend at the Immigration Department within three months of their arrival to apply for a temporary residence permit.
A written application for permanent residence may be made directly to the Migration Department in Nicosia, but it should be noted that such applications take a few months to be granted.
Special Categories apply for Non – Europeans. (Category F Residence Permit).
It is preferable to make a Will in Cyprus to cover movable and immovable property in Cyprus. The Will can be worded in such a way as to deal with Cyprus property only so as not to affect either property in other countries of any wills already existing in other countries.
A Will made in another country referring to Cyprus property may be valid in Cyprus, but is should be noted that on the death of the testator the Grant of Probate must first be obtained in the country where the will was made and then “resealed” in the Cyprus Courts, which inevitably leads to excessive delays and additional expense.
There is no Inheritance Tax in Cyprus.
Cyprus offers a high standard of health care both in the state hospitals and the many private hospital and clinics. Most of the Doctors have studied and/or trained in the U.K. or other European Countries. The insurance companies in Cyprus offer many advantageous private health schemes.
The above information has been compiled as a general set of guidelines only and for most of the procedures mentioned it would be advisable to seek legal advice