Complete Guide to Property Acquisition Tax in Cyprus: What Investors Need to Know

Stamp Duty

When buying real estate from a developer, you do not need to pay the transfer fee (also called the title fee). It only applies to secondary housing.

Only stamp duty is paid – total tax is determined by the cost of the property.

• 0 to €5,000 – 0%,
• €5,000 to €165,000 – 0.15%,
• over €165,000 – 0.2%

For example, the stamp duty for an apartment costing €400,000 will be around €707.

The fee is paid within the first 30 days after signing the sale and purchase agreement.

Value Added Tax (VAT)

A value added tax (VAT) rate of 19% is added to the purchase price.

The acquisition or construction of real estate that will be used as a main and permanent place of residence may be subject to a reduced rate of 5%. This does not apply to rental properties.

Reduced VAT rate is only available for properties that satisfy the following conditions:

• Obtain the commissioner’s approval by submitting an appropriate application;
• The property will be used as the main and permanent place of residence; and
• The applicant does not own any other property used as the main place of residence in the Republic of Cyprus.

The reduced 5% VAT rate applies to the first 130 sq. meters of the housing area, and the standard 19% VAT rate applies to the remaining square meters.

For large families, the reduced 5% VAT rate applies to the first 130 sq. meters, increased by 15 sq. meters for each additional child over three years old.

It is important to remember that after receiving the preferential VAT rate, you can only start renting out the apartment after 10 years.

When renting out the property, you will also have an obligation to pay capital gains tax, which is 20% of the profit received without taking into account expenses for property management services and repairs.

If you sell the property in less than 10 years, you will have to pay the difference between the increased and reduced rates.

For example, if you owned the apartment for 8 years and decided to sell it, you would have to pay the difference of 19% – 5% = 14% for the last two years.

Also, in order to keep the Golden Visa, property ownership must also be maintained.

Capital Gains Tax

For property that is sold in Cyprus – at a profit – that income will be subject to capital gains tax – 20%.

However, the rate is likely to be less than that, as there are many additional benefits available for new residents to leverage.

Additional Costs

There is no annual real estate tax in Cyprus; it was abolished 5 years ago, but there is a local municipal tax (Local property). Its amount depends on the municipality and the area of the housing, usually it is an amount in the range of €55 – €200 per year (on average 0.01 – 0.02%). You will also have obligations to pay annual fees: for regular garbage removal, sewerage tax, street lighting, and others. All taxes go to the municipality.

Real estate in Cyprus is recommended to be insured against the likelihood of natural disasters (for example, fires that occur due to the hot climate). Insurance costs around 1.5-2 euros for every thousand euros of the property’s value.