Legal & Financial

Legal Information

Residential Permit     

Residential permit is easily obtained for persons who have purchased property in Cyprus.

All citizens of the EU enjoy their full rights and privileges as EU citizens here in Cyprus, including the right to establish residency, buy property, work or open a business. They just have to complete an application form at the immigration office for formality purposes, and they automatically receive residential permit.

For non-EU citizens the procedure to follow is very easy. The applicant needs to submit an  application and provide proof that he and his family are self-supported. The following documents must accompany the application:

1. A copy of the sale/rental agreement
2. Copies of pension/retirement income
3. Any other document relevant to income
4. Three photos and passport

The application for permanent residence may be submitted to the local immigration office in the area of residence.


Property Ownership     

In comparison to many other countries the process of purchasing property in Cyprus by foreigners is very simple. Permission to buy property must be sought from the Municipality by written application, which must be submitted by the non-Cypriot purchaser after the agreement is signed. However, this permission is granted more or less as a matter of course to all bona fide purchasers. In the meantime, however, purchasers may take possession of their property without restriction. The application to the Municipality to acquire immovable property in Cyprus can be made within a reasonable amount of time after signing the contract of sale.

EU citizens are allowed to purchase however much property they choose and do not require permission to buy. Legal entities established in EU countries that hare their headquarters and registered office in Cyprus, do not require permission to buy any immovable property. Legal entities established in Cyprus and controlled by citizens of the EU require permission to buy immovable property in Cyprus as well as any other legal entities.
Non Europeans are entitled to a freehold ownership of a villa, an apartment or a piece of land, with maximum allowed extend of 4014 sq.meters (four thousand and fourteen square meters).

Properties in Cyprus are on average 20% - 30% lower in prices than Portugal, 30% - 40% lower than Spain and 50% - 60% lower than Italy and France.

Financing your Property

Most commercial banks in Cyprus are authorized to offer mortgage facilities to local as well as foreign applicants to assist in the purchase of their property. The base rate of interest for Euro charged is specified by the Central Bank of Cyprus and currently is approximately 5,5%. You can also get financing from banking institutions abroad.

Larola Holdings Ltd taking advantage of its strong relationships with most of the local banks, can assist you in the process of contacting for its customers as well as to speed up the application process.

Financing schemes for overseas buyers can be made on their local currency and allow repayment periods of up to 15 years or in Euro with repayment period of up to 25 years.

Property Taxes & Fees

Below you will find a general guide to the property taxes & fees applicable when purchasing immovable property:
    
    
Real Estate Transfer

The registration fees payable to the Land Registry Office for the registration of the immovable property in the name of the applicant are as follows:

 Value of property in Euros                              Transfer fee rate (%)

 up to 85.430,07                                                               3

 From 85.431,78 to 170.860,14                                     5

 From 170.861,85 and over                                            8

 The remaining Euros 34.172 @5%                        = Euros 1.7086
 Total fees payable                                                    = Euros 4.271
    
    
Immovable Property Tax

The annual immovable property tax is calculated on the market value of the property as assessed on 1st January 1980 and it referes to the immovable property registered in the name of the taxpayer on 1st January of each year. The rate of taxation is as follows:

 Market value of property in Euros                 Annual property tax (%)

 up to 170.860,14                                                          exempt

 From 171.860,15 to 427.150,36                                   0,25

 From 427.150,37 to 854.300,72                                   0,35

 over 854.300,72                                                               0,4
    
    
Capital Gains Tax

On disposal of the property, capital gains tax will be payable at the rate of 20% on the gain with the first 17.086 EUR being exempt for each person. The gains are the difference between the sales proceeds and the original cost of the property. In the case of a property which was purchased before 1/1/1980, the gains are the difference between the sales proceeds and the market value of the property as of 1/1/1980.

On top of this allowance, the seller is entitled to a further allowance regarding the transfer fees paid, inflation rate per year and the cost of any additions made to the house.
In sales of property used as a residence by the vendor, the first 85.430 EUR of the sale price are exempt, provided that he has been using the same as his residence for at least 5 years prior to the sale.
    
    
Stamp Duty

The purchaser is liable for the payment of stamp duty at the rate of 1.5 Euros per thousand up to the value of 100.000 Euros and thereafter at the rate of 2 Euros per thousand.

This should be paid within 30 days of signing the contract .

For example if the purchase price is Euros 100.000

first Euros100,000     0,15%                Euros 150    

next Euros50,000       0,20%                Euros 100
      

Total Euros 250
    
    
Local Authority Taxes & Rates

A rough guide could be approximately EUR 85 -256 per year depending on the size of your property. This tax is for refuse collection, street lighting, sewerage, etc.

The basic utilities, electricity, water and telephone are payable individually in accordance with the consumption and based on a meter reading.
    
    
VAT

Since 1/5/04 a statute in respect of VAT on properties was introduced. In addition to other amendments, this statute introduced VAT on the rate of 15%.

Properties with building permit before 01/05/04 are exempted of V.A.T.

Double Taxation Agreements  
  
Cyprus has double-taxation agreements with Austria, Belarus, Belgium, Bulgaria, Canada, China, the Czech Republic, Denmark, Egypt, France, Germany, Greece, Hungary, India, Ireland, Italy, Kuwait, Kyrgyzstan, Malta, Mauritius, Norway, Poland, Romania, Russia, Singapore, Slovakia, South Africa, Sweden, Syria, Tajikistan, United Kingdom, United States, Yugoslavia (former).

The main purpose of these treaties is the avoidance of double taxation of income earned in any of the above countries. A credit is usually allowed against the tax levied by the country of the tax payer's residence for taxes levied in the other country. Treaties are under negotiation with another 23 countries.

Duty Free Priviliges      
    Europeans who become permanent residents in Cyprus and were using in their country a car for at least six months, can bring their car to Cyprus and they will not pay import tax.
Furniture can be imported free of any taxes by Europeans or Non-Europeans who become permanent residents provided that they are for personal use and are not brand new.