In the recent years, Cyprus has transformed into a regional business centre with particular development in the property and real estate sectors. The warm climate combined with the island’s excellent infrastructure and high standard of living make Cyprus a highly advantageous location for investment in real estate.
Yiannis Papazacharia LLC, through a dedicated team of lawyers and comprehensive secretarial, taxation and accounting support, handles all matters and transactions relating to both commercial and residential freehold and leasehold property. Our expert team will be delighted to answer any enquires and take care of all matters arising from your transaction.
The procedure under Cypriot law on the acquisition of immovable property is clear, easy and straightforward.
Notes on the acquisition of property in Cyprus:
- Under the law of Cyprus, the term “alien” means:
- An individual who is not a citizen of the Republic of Cyprus, but not including an ”alien Cypriot” or an alien wife of a citizen who is not separated from her husband by virtue of an order of a competent court;
- A citizen of a country other than an EU member country
- An alien controlled company registered in Cyprus or in a EU member country.
- A company incorporated in a non-EU country, whether controlled by aliens or not
- A trust in which any alien is a beneficiary or otherwise has an interest.
Under the Immovable Property Acquisition (Aliens) Law Cap. 109 (as amended), no alien may acquire immovable property in Cyprus, other than by reason of death, without the prior permission of the Council of Ministers, after written application has been made on a specified form. Such permission is required both for the purchase of freehold property and for leases exceeding 33 years. Normally such permission is granted to bona fide alien individuals to acquire a flat, house or a piece of land for the erection of a house not exceeding three donums (4000 sq.m.).
The above-mentioned legal exception “otherwise than by reason of death” means that an alien may acquire immovable property in Cyprus without permission from the Council of Ministers, if he has inherited it as a legal heir or if it has been bequeathed to him as a legatee in a will.
The same individual cannot obtain permission for more than one property. Once permission is granted and the property is registered in the name of the alien, there is no restriction on the alien selling the property or disposing of it by will.
- Business Investment Purposes
Permission from the Council of Ministers may be granted for industrial or tourist investment purposes, but is normally not granted for investments in agricultural or estate development.
- Company uses
No permission is required for alien-controlled Cyprus companies for the acquisition of multiple properties for trade, developing or other use, provided that management and control are exercised or their main establishment is located in Cyprus or any other country of the European Economic Area.
- Contract of Sale and Leases
Under Cypriot Law, contracts of sale and leases or Deeds of Assignment must be in writing. It is also advisable that contracts of sale be deposited with the relevant District Land Registry Office within six months after the signing of the contract, so that the purchasers’ right to pursue the remedy of specific performance in the event of breach can be protected. Leases exceeding 15 years can be registered and registration should be affected within 3 months of the signing of the lease. Ownership in Cyprus is denoted by title deeds, issued by the District Land Registry Office. All contracts must therefore provide for the transfer and registration of the property in the purchaser’s name and for obtaining a title deed.
- Transfer of the Title Deed
Transfer of ownership for an alien can be affected once permission to acquire a property has been granted by the Council of Ministers. Transfer fees are payable by the purchaser to the District Land Registry Office based on the market value of the property at the time of purchase as follows:
|VALUE OF PROPERTY – €||RATE %|
|0 – €85,000||3%|
|€85.000 – €170.000||5%|
Special Legislation is in operation as from 02/12/2011 concerning the reduction of transfer fees in certain cases.
- Capital Gains Tax
As from 1 August 1980 Capital Gains Tax is levied at the rate of 20% on gains arising from the disposal of immovable property by individuals. Gains arising on the disposal of immovable property by individuals are exempt as follows:
€ 17.086 on the disposal of any property € 25.629 on the disposal of agricultural land; € 85.430 on the disposal of a residence which is used the main & permanent residency for at least 5 years before disposal.
The allowance granted is a once-in-a-lifetime benefit, unless it has not been exhausted in the first sale, in which case the balance in the individual’s favour is carried forward to the next sale.
- Immovable Property Tax
As from the 1st January 2013, Immovable Property Tax is imposed annually at the following rates on the current market value as at 1.1.1980 of immovable property situated in the Republic of Cyprus and owned as at 1st January each year.
|VALUE OF PROPERTY – €||RATE %|
*In case where the total value of the immovable property does not exceed the amount of €12.500, then no Immovable Property Tax is imposed.
The above rates apply to both legal and natural persons.
- A Special Note on Value Added Tax
V.A.T. on a new property is chargeable as of 1st May 2004.
The acquisition and/or construction of a first residence by eligilble persons will be subject to a lower VAT rate of 5%. The rate will apply for the first 200sqm of residence of a total covered area of up to 275sqm.
An eligible person is any individual who fulfills the following conditions:
- has completed 18 years of age at the time of submission of the application,
- is an EU or non EU citizen, and
iii. does not own any other place of residence in Cyprus.
The reduced rate applies only for residences which are used as the primary and permanent place of residence.
The equivalent amount is refundable to the VAT Authority for any part of the ten-year period if the use of the property for permanent residence is interrupted, except in case the property is transferred to the applicant’s children over 18 years of age.
Our firm has extensive experience in real estate transactions in Cyprus, with highly specialized and experienced staff who provide a full scale of services concerning all aspects of a transaction, including the below:
- Drafting, reviewing or amending of sale agreements
- Search at the Land Registry Office for legal encumbrances
- Legal advice on the terms of sale/purchase
- Lodging of sale agreement with the Land Registry Office
- Settlement of stamp duty
- Settlement of capital gains tax, if any
- Execution of agreement under Power of Attorney
- Obtaining permit for acquisition from the Council of Ministers for non-EU nationals
- Preparation and submission of all documents required for the completion of the conveyance and transfer of the title deed