How to buy property in Cyprus & what taxes are applicable

Dr. Antoine Saliba Haig | 20 Sep 2018

How to buy property in Cyprus  what taxes are applicable

The property market in Cyprus has experienced significant growth recently, especially within the last quarter of 2017. Residential property has therefore proven to be a steady investment, with high returns. The process of acquiring property in Cyprus is dealt within in different manners, depending on whether the buyer is a resident of Cyprus, a citizen of a Member State within the EU, or a non-EU national. Tax regimes have been put in place to promote Cyprus as the ideal jurisdiction to own property therein.

The process of buying property in Cyprus

As previously mentioned, buying property in Cyprus may require a permit depending on the person requesting the purchase of the property. If it is a citizen of the EU who has resided in Cyprus for a minimum of 5 consecutive years preceding the date of acquisition of immovable property, no AIP (Acquisition of Immovable Property) Permit is required. A permit is also not required where a citizen of the EU has not resided in Cyprus for a minimum continuous period of 5 years, yet is acquiring immovable property for business purposes or for the supply of services. If, however, such person intends to acquire property as a secondary residence, an AIP permit is required. An AIP permit is strictly required for individuals who are not citizens of the EU.

The procedure for property acquisition can be outlined in 7 main steps:

  1. Deciding on a property, and agreeing on a price with the seller;
  2. Drawing up a preliminary agreement and negotiating any terms to make this sale acceptable to both parties;
  3. The buyer and seller signing the preliminary agreement. If any of the parties cannot be physically present, they may sign off this power to their lawyers through a power of attorney agreement. 
  4. The preliminary agreement will be valid for 3 months; however, the parties may agree on a longer or shorter period. During this period any term and conditions which have been agreed upon must be fulfilled by both parties. 
  5. A deposit of 10% of the purchase price must be made when signing the agreement. This will be forfeited to the vendor if, without a legally valid reason, the buyer decides not to purchase the property. 
  6. Once the three months (or period stipulated) have finished, the signature of both parties on the Final Deed is required. 
  7. The passing of keys will take place, which officiates the transfer of property between the parties, and the completion of the agreement.

If the individual requires an AIP permit, the application form must be duly filled out. The applicant must provide details regarding his permanent residence, occupation, financial standing, the property in question etc. Supplementary documentation substantiating what was already stated in the application must also be provided.

Non-Cypriots are expected to request permission from the Council of Ministers upon buying property in Cyprus. This is merely a formality that may be applied for at any time.

Taxes on buying property in Cyprus

The buyer will be subject to different forms of taxes as a result of the transfer of ownership of the property.

Property Transfer tax rates are based on the market value of the property at the date of purchase.

  • Value up to €85,430 will be charged at 3%
  • Value between €85,431 – 170,860 will be charged at 5%
  • Value over 170,861 will be charged at 8%

VAT is also due when buying a new property. The standard rate in Cyprus is 19% when it has been obtained from the primary market. In 2012, a significant reduction in VAT was introduced, allowing individuals who have purchased a main place of residence in Cyprus, and have not previously made use of this scheme, with a VAT rate of 5%. Such a rate will apply for the first 200 sq.m of the property, and only if it serves as primary residence for 10 years.

Stamp Duty must be paid for the documents which have been issued for the acquisition of the property to take place. The rate is calculated as 0.15% for €5000 - €170,000 and 0.2% thereafter, where the maximum payable capital is €20,000 for every stamped agreement. Penalties will apply if these dues are not settled within 30 days from the transaction.

Annual Property Taxes must then be settled on an annual basis as part of the responsibility of owning property in Cyprus. This includes Local Authority Fees and Sewerage Tax.

Our Services

Chetcuti Cauchi Advocates’ property lawyers and advisors have extensive knowledge on the process of acquiring property in Cyprus, where they will be able to consult clients on any residential, commercial, mixed-used and industrial property acquisitions. Legal advice will be provided when buying, renting or developing property in Cyprus. Our firm will also work hand in hand with banks, architects and any other professionals to ensure a smooth transaction.

Once a property has been chosen, our Property and Development team will draft, review and negotiate the preliminary agreement as well as the deed of sale/purchase of the property in question.

Get in touch for securing the best deal with our help!

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Key Contacts

Dr Jean-Philippe Chetcuti

Senior Partner, Tax & Immigration

+356 22056411

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