Cyprus Tax Overview
A guide to the various taxes applicable when buying or renting a property in Cyprus
as well as Capital Gains Taxes and more.
Owners of rental property in Cyprus, who are non-resident, are liable to pay taxes
in Cyprus if their income exceed € 19.500. An Individual is considered as non-resident
in Cyprus if s/he does not spend 183 days or more in any tax year (calendar year)
in Cyprus or does not have their primary residence there.
The Cypriot tax authorities tax nonresident property owners on their Cypriot sources
of income only. An individual is considered resident in Cyprus if s/he spends 183
days or more in any tax year (calendar year) in Cyprus.
Non-resident property owners are entitled to earn €19,500 in rental or other sourced
Cypriot income before the have an obligation to submit an annual Cypriot tax return.
The following taxes are payable in Cyprus: -
Cypriot Income Tax
Tax Residents in Cyprus Rents from Cypriot sources and worldwide income must be declared
by Cypriot tax residents.
Non-resident:Are taxed on Cypriot sourced income only, including rental income.
Rental income up to €19,500 is not taxable in Cyprus.
The following yearly allowances are allowable:
- a) 20% reduction on the gross rent.
- b) Interest payable for the acquisition of the property can be deducted
- c) A 3% Capital Allowance deduction allowable against the cost of the rented property
(for 33 years from the date of purchase).
The details below outlines the current individual tax rates:
- 0 – €19.500 Chargeable Income - 0 Tax
- €19.501 – €28.000 Chargeable Income - 20% Tax Rate - €1.700 Accumulated Tax
- €28.001 – €36.300 Chargeable Income - 25% Tax Rate - €3.775 Accumulated Tax
- over €36.301 Chargeable Income - 30% Tax Rate
Special Defence Contribution
Cypriot Tax Resident: Charged at 3% of gross rents from Cypriot sources or outside
Cyprus after 25% allowable deduction. Cypriot Non-Residents: Not liable to special
defence contribution.
The special defence contribution is payable by the recipient of the rent in two
installments on the 30th June and the 31st December each year.
Cypriot Corporate Income Tax is payable if property is purchased through
a company and is calculated @ 10% on the company profits after costs.
Cypriot Immovable Property Tax - The annual Cypriot immovable property tax
is imposed on the market value of the property as at 1st January 1980 and applies
to the immovable property owned by the taxpayer on 1st January each year.
- Market value of property up to €170.860 is 0% Tax
- €170.860 to €427.150 is 0.25% Tax
- €427.151 to €854.300 is 0.35% Tax
- over €854.301 is 0.40% Tax
Cypriot Capital Gains Tax
Cypriot Capital Gains Tax is payable by both residents and non-residents at a rate
of 20 per cent on gains from the disposal of immovable property in Cyprus.
Subject to certain conditions, individuals may claim the following deductions:
- • Up to €85,430 if the disposal relates to a private residence.
- • Up to
€25,629 if the disposal is made by a farmer and it relates to agricultural land.
-
• Up to €17,086 on any other disposal.
These deductions are granted once in the lifetime of the individual, until fully
exhausted and if an individual claims a combination of them, the maximum deduction
granted cannot exceed €85,430.
Stamp Duty on Contracts
Stamp duty is payable by the purchaser at the following rates:
- For amounts up to € 170.860 - 15% Annual Property Tax
- For amounts over €
170.860 - 20% Annual Property Tax
- Plus €256.29
- Maximum fee of €17,086
This should be paid within 30 days from signing of the contract of sale.
Transfer Fees
Real estate transfer fees are imposed by the Land Registry in order to transfer ‘freehold’
ownership to the name of the purchaser.
The transfer fees is due for payment when the transfer of the title deed in the
name of the purchaser takes place. The Purchaser is solely responsible for the payment
of the transfer fees.
The transfer fees rates are as follows:
- Value of property up to €85.430 then 3% transfer fee applies
- €85.431 to
€170.860 value then 5% transfer fee applies
- €170.861 and over the 8% transfer
fee applies
The purchase value will be divided into two parts which results in reduced transfer
fees where the property is held in joint names e.g. husband and wife or two individuals.
Property Tax International specialise in the preparation and filing of Cypriot income
tax returns for non-resident property owners.
Worldwide Income Tax residents are more often than not required to be taxed on their worldwide
income including rental income from an overseas property investment. Cyprus has
a double tax treaty with substantial number of countries around the world.
Most double tax treaties provide relief for taxes paid in one country against tax
due on the same income in the taxpayer’s tax resident country.
Property
Tax International strongly recommends you consult with the tax authority
in your home country regarding Double Tax Treaty’s and identify what income is covered
under such agreements.
While Property Tax International Limited makes every effort to ensure that the information
contained herein is accurate, we take no responsibility or liability for any inaccurate,
delayed or incomplete information, nor for any actions taken in reliance thereon.
The information provided above is intended as a guide only.