Real Estate Taxation

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) Rate
Up to €40.000 0,6%
€ 40.001 – €120.000 0,8%
€120.001 – €170.000 0,9%
€170.001 – €300.000 1,1%
€300.001 – €500.000 1,3%
€500.001 – €800.000 1,5%
€800.001 – €3.000.000 1,7%
Over €3.000.000 1,9%