All material subject to strictly enforced copyright laws. © 2022 ITR is part of the Euromoney Institutional Investor PLC group.

Cyprus: Cyprus amends property taxes and fees

kokoni.jpg
christou.jpg

Zoe
Kokoni

Eleni
Christou

Despite global market challenges, the Cyprus real estate market has remained attractive to foreign investors. A number of legislative changes were introduced during 2015 and 2016, further adding to this attraction, including the reduction – and in some cases the abolition – of transfer fees, as well as the reduction of immovable property taxes, which are described below.

Immovable property tax

Every owner is liable for the payment of immovable property tax for all immovable properties situated in Cyprus and registered in the owner's name on January 1 of each year. The value of the immovable property is deemed to be the price based on the valuation on January 1 1980.

On July 14 2016, the Cyprus parliament agreed that immovable property tax for 2016 will be based on the 1980 values, but reduced by 75% of the amount paid last year (2015). Further, it was decided that the immovable property tax will be abolished in 2017.

The immovable property tax for 2016 will be calculated at 25% of the price of the property based on the valuations of 1980. The deadline for payment of the 2016 tax has been set at October 31 2016. Late payments made between November 1 and December 31 2016 will be calculated using an increased value of 27.5% of the 1980 valuations.

Taxpayers failing to pay before December 31 2016 will be subject to an additional 10% monetary penalty on the unpaid tax calculated on December 31 2016.

The property tax rates to be used for calculating the 2016 immovable property tax are as follows:

Value of property (as of January 1 1980)

Tax rate

€1– €40,000

6%

€40,001 – €120,000

8%

€120,001 – €170,000

9%

€170,001 – €300,000

11%

€300,001 – €500,000

13%

€500,001 – €800,000

15%

€800,001 – €3,000,000

17%

Over €3,000,000

19%


Land transfer fees

Land transfer fees are charged on the transfer of immovable property from one person or company to another individual or company. The fees are paid to the Department of Lands and Surveys.

In cases where an agreement is made under the Immovable Property Tax Law between December 2 2011 and December 31 2016 and is thus subject to VAT, land transfer fees will not be applicable. Properties not subject to VAT will be eligible for a 50% reduction of land transfer fees.

Exemptions from land transfer fees

No land transfer fees are payable in the following situations:

  • Immovable property transferred from a company to another company under a reorganisation scheme;

  • Sale, transfer and registration of property in the name of a purchaser when the total sale proceeds do not exceed €350,000 in bankruptcy procedures under the bankruptcy law; and

  • On the transfer and registration of immovable property in the name of a lender under a restructuring scheme.

Rates used to calculate the land transfer fees are as follows:

Value

Rate

Up to €85,000

3%

€85,001 – €170,000

5%

Over €170,000

8%


As mentioned above, the changes have added to the attractiveness of Cyprus to potential investors as they will lead to a reduction of costs. Additionally, an added benefit is available for groups considering restructuring as they will benefit from the exemption of land transfer fees. It is worth reminding potential investors of the decreasing trend in housing loans' interest rates as well as of the legislation passed in 2015, which provides protection for buyers in Cyprus by allowing owners to apply for their own title deeds.

Zoe Kokoni, Director (zoe.kokoni@eurofast.eu) and Eleni Christou (eleni.christou@eurofast.eu)

Eurofast Taxand Cyprus

Tel: +357 22699222

Website: www.eurofast.eu

More from across our site

But experts cast doubt on HMRC's data and believe COVID-19 would have increased the revenue shortfall.
EY’s plan to separate its auditing and consulting businesses might lessen scrutiny from global regulators, but the brand identity could suffer, say sources.
Multinationals are asking world leaders to put a scale on carbon pricing to tackle climate change at the 48th G7 summit in Germany, from June 26 to 28.
The state secretary told the French press that the country continues to oppose pillar two’s global minimum tax rate following an Ecofin meeting last week.
This week the Biden administration has run into opposition over a proposal for a federal gas tax holiday, while the European Parliament has approved a plan for an EU carbon border mechanism.
Businesses need to improve on data management to ensure tax departments become much more integrated, according to Microsoft’s chief digital officer at a KPMG event.
Businesses must ensure any alternative benchmark rate is included in their TP studies and approved by tax authorities, as Libor for the US ends in exactly a year.
Tax directors warn that a lack of adequate planning for VAT rule changes could leave businesses exposed to regulatory errors and costly fines.
Tax professionals have urged suppliers of goods from Great Britain to Northern Ireland to pause any plans to restructure their supply chains following the NI Protocol Bill.
Tax leaders say communication with peers is important for risk management, especially on how to approach regional authorities.
We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree