1. Residential Permit

2. Property Ownership

3. Mortgage Finance

4. The Title Deed

5. Real Estate Transfer

6. Property Taxes, Fees, Rates

7. VAT

8. Double Taxation Agreements

9. Duty Free Privileges

1. Residential Permit 
 
Residential Permit is easily obtained for persons living in Cyprus, who have purchased property. 
 
Temporary Permit 
The granting of this permit requires the existence of a bank account in Cyprus and a sales agreement of the property purchased. Temporary residence status can be from one to four years. 
 
Permanent permit 
In addition to the above requirements, the applicant must establish evidence of a secured annual income of not less than CYP 5.600 per person plus CYP2.700 for each dependant person. (Because of the entry of Cyprus to the EU, it is possible that for Europeans the law in respect of permits will change.) For more information please contact the Ministry of Interior, Nicosia.

2. Property Ownership

In comparison to many other countries the process of purchasing property in Cyprus by foreigners is very simple.

Non Europeans are entitled to a freehold ownership of a villa, an apartment or a piece of land, with maximum allowed extend of 4014 sq.meters (four thousand and fourteen square meters).

Europeans are entitled to a freehold ownership of a villa or an apartment. The above restriction, in respect of Europeans, will hopefully soon be abolished because Cyprus entered the EU. It is very possible that such a change in the legal system will increase demand of real estate sharply with the related reflection on property prices. In respect of plots of land, Europeans can purchase as many and for any extent. This was one of the changes which took place because of the entry of Cyprus to the EU.

Foreign companies can acquire premises for their business or for holiday home for their directors.

Europeans who acquire permanent or temporary permit can register in their name as many properties as they want provided that they sign a confirmation to the government that they will stay for the following five years in Cyprus.

Properties in Cyprus are on average 20% - 30% lower in prices than Portugal, 30% - 40% lower than Spain and 50% - 60% lower than Italy and France.

3.Mortgage Finance

Most commercial banks in Cyprus are authorized to offer mortgage facilities to local as well as foreign applicants to assist in the purchase of their property.

General Information

• The loan can be granted in Foreign Currency (e.g. USD, EUR, GBP, CHF ETC) or in Cyprus Pounds. The repayment of the loan must be effected from external sources.
• It is advisable that the loan is in the currency that the applicant receives his income, so that there is no exposure in any exchange risk during the repayment period.
• For a loan in Foreign Currency the maximum repayment period can be 15 years.
• For a loan in Cyprus Pounds the maximum repayment period can be 25 years.
• The maximum loan amount will be 60% of the value of the purchased property. In exceptional cases the amount can be 70% of the value of the purchased property (depending on the credit rating of the customer).
• The loan is repaid by monthly or quarterly installments.

Securities:

1. For certain projects Aristo Developers Ltd has managed to set up finance schemes with local banks with minimal security requirements resulting in substantially lower costs.
2. In case there is not yet a separate title deed for the property, a Letter of Guarantee may be required from the seller’s Bank to guarantee the issue and transfer of the title deed in the purchaser’s name. The Letter of Guarantee will be renewed annually until the title deed is issued.
3. Assignment of the Purchaser’s rights deriving from the Contract of Sale in favor of the Bank.
4. Assignment of a Level Term Assurance Policy for the initial amount of the loan and for the full period.

Documents/Information required by the banks:

1. Customer’s profile (Personal details, occupation-duration of your employment contract if any with your current employers)
2. Passport copies (the page with the photograph & personal information)
3. Statement of existing debt (if any)
4. A reference Letter from the Banks you maintain an a/c with
5. Completion of the attached Declaration of Personal Income
6. Evidence of income either pay slip or confirmation of remuneration from your employer, or P60 or business accounts
7. Purchase agreement – (will need original one when ready for loan drawdown)
8. Copies of bank statements for the last three months
9. Copies of payments already made by the applicant for the property
10. To open and activate an account with the bank.

Permit from the District Authorities 
The loan amount can be released after the presentation to the Bank of the Permit issued by the District Authorities to the purchaser for the acquisition of immovable property in Cyprus.

4.The Title Deed

Transfer of ownership from Vendor to Purchaser is undertaken by a simple procedure through the Cyprus Land Registry Office, either by the buyer in person or by appointing a third party with a Power of Attorney.

The transfer of ownership requires a permit from the Council of Ministers.

5. Real Estate Transfer

Real Estate Transfer tax-fees are necessary in order to transfer FREEHOLD ownership to the name of the purchaser. The transfer fees will be paid when the transfer of the title deed in the name of the purchaser will take place. The Purchaser is responsible for the tax payment. The rates are on a graduated scale.

If the property is in joint names e.g. of a couple (husband and wife) or two individuals, then the purchase value is divided into two parts which results in reduced transfer fees.

The following example clearly illustrates this

For property purchased for CYP 70.000 in one name, the fees payable are CYP 2.500.

For property purchased for CYP 70.000 in the names of two persons, the fees payable are CYP 2.100.

6.Property Taxes, Fees, Rates

Immovable Property Tax

The annual immovable property tax is calculated on the market value of the property as at 1st January 1980.

Capital Gains Tax 
On disposal of the property, capital gains tax will be payable at the rate of 20% on the gain with the first CYP10.000 being exempt for each person. The gains are the difference between the sales proceeds and the original cost of the property. In the case of a property which was purchased before 1/1/1980, the gains are the difference between the sales proceeds and the market value of the property as of 1/1/1980. 
 
On top of this allowance, the seller is entitled to a further allowance regarding the transfer fees paid, inflation rate per year and the cost of any additions made to the house. 
 
Gains from the disposal of a dwelling house are exempt up to CYP 50.000 in total if the owner resides in it continuously for at least five years prior to disposal.

Stamp Duty 
The purchaser is liable for the payment of stamp duty at the rate of 1.50 CY Pounds per thousand up to the value of 100.000 CY Pounds and thereafter at the rate of 2 CY Pounds per thousand. 
 
This should be paid within 30 days of signing the contract and Costas Kyriacou & Son Ltd will, at the request of the purchaser, pay this and debit his account. 
 
For example if the purchase price is CYP 150. 000

Estate Duty 
Estate Duty tax has been abolished as from the first of January 2000 
(Statute No.78(1)/2000).

Local Authority Taxes & Rates 
A rough guide could be approximately CYP 50 -150 per year depending on the size of your property. 
 
This tax is for refuse collection, street lighting, sewerage, etc. 
 
The basic utilities, electricity, water and telephone are payable individually in accordance with the consumption and based on a meter reading.

7.VAT

Since 1/5/04 a statute in respect of VAT on properties was introduced. In addition to other amendments, this statute introduced VAT on the rate of 15%.

Tax Advantages 
 
Cyprus is unique when it comes to the taxation aspects of living on the island.

The following income tax rates apply to individuals:

Retirees who become residents in Cyprus are taxed on their pensions from abroad at the rate of 5% per annum while an exception for the first £2.000 is granted.

Additionally, Cyprus has Double Taxation treaties with many European and other countries, safe-guarding its residents from paying tax in both countries. This gives the option to the citizens of those countries to take advantage of the very low rate in Cyprus.

8.Double Taxation Agreements

Cyprus has double-taxation agreements with Austria, Bulgaria, Canada the People's Republic of China, the Czech Republic, Denmark, Egypt, France, Germany, Greece, Hungary, India, Ireland, Italy, Kuwait, Malta, Norway, Poland, Romania, Russia, (Armenia, Belarus, Kurdistan, Moldova, Tajikistan, Turkmenistan and Ukraine) Slovakia, South Africa, Sweden, Syria, the United Kingdom, the United States, Yugoslavia (Serbia and Montenegro) and other countries. 
 
The main purpose of these treaties is the avoidance of double taxation of income earned in any of the above countries. A credit is usually allowed against the tax levied by the country of the tax payer's residence for taxes levied in the other country.

9.Duty Free Privileges

Europeans who become permanent residents in Cyprus and were using in their country a car for at least six months, can bring their car to Cyprus and they will not pay import tax.

Furniture can be imported free of any taxes by Europeans or Non-Europeans who become permanent residents provided that they are for personal use and are not brand new.