Cyprus Investment Tax Planning

Taxes in Southern Cyprus

Real Estate Transfer Tax to transfer the freehold into the purchaser’s name. This is levied on a progressive scale starting at 5% for up to CYP10,000, increasing in five steps up to a maximum of 8% for above CYP75,000.

Immovable Property Tax for residents, based on the value of the property at a rate of 0.2% between CYP100,000 and CYP250,000; 0.3% for up to CYP500,000 and 0.35% for over CYP500,000. The first CYP100,000 is tax exempt.

Stamp duty is charged at a rate of 0.15% on the first CYP100,000, and 0.2% above this threshold.

Local authority taxes, depending on the size of the property, range from 0.1% to 0.5% per annum to cover refuse collection, sewerage, street lighting etc.

Capital gains tax charged on disposals of real property and shares in companies owning real property in Cyprus. The first CYP10,000 of a gain is tax exempt. This exemption limit rises to CYP50,000 if the seller has lived in the property continuously for the previous five years.

In certain circumstances, further allowances are granted for transfer fees, inflation and improvements made to the house, but the total exemption cannot exceed a CYP50,000 limit.

Taxes in North Cyprus

Main taxes involved in property purchase in Northern Cyprus:

15% VAT is charged on most new build properties and is payable at the time of transfer of title.

3% Purchase Tax is also payable upon transfer of title and it is based on the Land Registry Valuation of the property. This valuation is usually considerably less than the selling price as only bricks, mortar and size of land are taken into consideration, not fixtures and fittings.

Local council taxes of 1% of the 3% Belediye are also payable.

There is generally no Capital Gains Tax payable on a property purchase, as the vendor is usually liable to pay this, unless otherwise stipulated in your contract.

If you are selling your property, Capital Gains Tax will be calculated based upon whether you are a private individual or a professional vendor. Every individual in Northern Cyprus has a once in a lifetime tax free sale option (for a house and land not exceeding approximately 1 donum). On all subsequent sales, Capital Gains Tax will be payable at 3.5%, provided you do not sell more than 3 properties in one year, making you a professional vendor. For professional vendors, there are no tax exemption rights and Capital Gains Tax is payable on every sale at a rate of 6.25%.

Capital Gains Tax is not payable if you sell the property before taking on the title in the case of an off-plan purchase. However, you will have to pay stamp duty on the contract at 0.5% of the contract value. This amount is doubled if you pay within 2 to 6 months of signing the Contract and is tripled if you pay after this period.