Legal & Finance
Buying properties in Cyprus is very simple especially for foreign people who do not come from Cyprus. People of countries which are not in the European Union are able to own properties while offshore entities can buy a business building or a building as a residence for their foreign employees.
Those who wish to buy properties in Cyprus must request a written application from the Council of Ministers, submitted by the non-EU purchaser after the agreement. This permission is given as a matter of course to every purchaser. However, buyers can take their properties without any restrictions. The application to the Council of Ministers for immovable properties can be made within a reasonable amount of time after signing the contract. EU citizens do not need any permission to buy any immovable property.
As for the EU citizens who do not live in Cyprus also need the approval from the Council of Ministers. EU citizens with temporary or permanent permits can require as many properties as they want on the condition that they have already signed a confirmation with the government of Cyprus that they will stay in Cyprus for the following years.
Legal entities which were established in EU countries and have their headquarters and their registered office in Cyprus do not require permission to purchase any immovable property. However, legal entities established in Cyprus and controlled by citizens of the EU require permission to buy immovable property and any other legal entities as well.
Since 2004, when Cyprus entered the European Union, the standard VAT rate for buying houses was 19 %. However, due to a recent VAT Amendment Law, the VAT rate starts from 5% for purchasing properties and there are specific terms and conditions that must be set in order for the 5% to be applicable. First of all, the property must be used as the first as well as permanent residence of the applicant for the following ten years. The applicant should not acquire any other residence in Cyprus with a reduced VAT rate and also the applicant must be over the age of 18, thus legal entities are excluded.
For the first 200 metres of the property, a reduced VAT rate of 5% is applied and the architectural plans must be submitted to the local Authorities. For the rest of square metres, the rate is 19%.
In case someone wishes to buy a land, VAT is not charged.
Annual Property taxes and fees
There are different property taxes. The first one is the immovable Property ownership tax which has been abolished since 1st January. Until the end of 2016, the registered owner of the property was responsible to an annual Immovable Property Ownership tax calculated on the market value of the property as on 1st of January 1980. This tax was payable to the Inland Revenue Department of the Republic of Cyprus.
The second kind of Tax is the Local Authorities fees. Local Authorities charge €85 – €500 each year for rubbish collection, street lighting, sewerage and general services. The fees should be paid to your local municipal authority. Also, a registered owner should pay an annual municipality tax to the Municipal Authority calculated on the market value of the property. Rates vary from 1‰ - 2‰. The last tax that an owner must pay is the sewerage tax. Again, it is calculated on the market value of the property. The rates vary from 3‰ - 7‰ and this tax must be paid to the local sewerage board.
|Value of Property(as of 1/1/1980)
|Up to €40.000
|€ 40.001 – €120.000
|€120.001 – €170.000
|€170.001 – €300.000
|€300.001 – €500.000
|€500.001 – €800.000
|€800.001 – €3.000.000
In order to get credit in Cypriot Banks you should insure your properties. It is advisable to pay insurance at the same time instead of paying the whole amount. The system of real estate insurance in Cyprus is similar to the systems in other countries. It is good to know what insurance events property owners have to deal with.
Owners should try to save up some Euros and determine the balance between the money they save and the exact list of insurance risks that are important to them.
The insurance agreement includes the cost of housing and also the cost of furniture, electrical appliances and jewelries. This means that the owner who has insured his property in Cyprus and everything that was in it will receive full compensation claimed of the property value.
You do not have to be a Cypriot citizen in order to insure your property in Cyprus even if you have a different permanent place of residence.