Legal and Financial

Legal system

The legal system in Cyprus is modeled on the British system due to its colonial legacy. In addition, with EU membership, Cyprus has harmonized its laws and regulations in line with the acquis communautaire. In effect, this means that EU citizens can now buy more than one property in Cyprus.

The Land Registry system is one of the most advanced and reliable systemsh in the world, being based on the British equivalent. Purchasers of property in Cyprus will be far more secure with regards to matters such as title deeds than they might be in other Mediterranean countries.

Property ownership

Compared to many countries Cyprus has flexible property buying procedures. People of Cypriot origin and EU citizens are allowed to purchase however much property they choose. A non-EU citizen is entitled to FREEHOLD ownership of a villa, apartment, or a piece of land of up to 4,000 sq.m.

International business units may also acquire premises for their activities or for residence of their foreign employees.

Approval of the council of ministers

Having signed a contract of sale for your property, it will be necessary to make an application to the Council of Ministers to grant its approval for a non-Cypriot to acquire immovable property.

Selling your property

In case of selling property, foreigners are allowed to repatriate the funds immediately to the value of the purchase price (including any amounts spent on improvements and/or additions to the property).

Profits can also be repatriated.

Extremely low taxation

Cyprus is unique when it comes to the taxation aspects of living on the island. Cyprus has double taxation treaties with: Austria, Bulgaria, Canada, China, Czech Republic and Slovakia, Denmark, France, Germany, Greece, Hungary, Ireland, Italy, Kuwait. Norway. Poland. Romania, Russia, Sweden. UK, USA and Yugoslavia. Furthermore there are negotiations for the ramification of treaties with Egypt, Malta, Syria, Belgium, Finland and the countries comprising the Commonwealth of Independent States. The main purpose of these treaties is the avoidance of double taxation of income earned in any of these countries.

For example. UK citizens may take advantage of the Double Taxation Treaty existing between the UK and Cyprus. This enables you to receive private and public pensions and investment income in Cyprus FREE of UK withholding tax.

The remittance system compares extremely favorably with the tax system used in many other countries including popular sunspots like Spain. Recent tax reforms sharply reduce the tax burden and foreign residents are now taxed on a flat basis of 5% per-annum on pension income over € 3417. There is 0% on investment income (i.e. dividends & interest) brought into Cyprus. In special circumstances exemptions totaling up to € 6834 per person or € 13669 per married couple may apply.

Consequently, the total tax burden on alien residents is in practice often only 3%. This compares extremely favorably with competing destinations where property owners are subject to high tax exposure levels of up to 60%. Insurance pensions can be paid to retirees in Cyprus on a similar tax-free basis, and are index-linked by virtue of the Reciprocal Agreement, compared to their “frozen” status in other overseas destinations.

Duty free privileges

Duty free cars and household goods are just two examples of the products that one that moves to Cyprus can benefit from. Third country citizens benefit fully from these privileges.

With respect to the rights of EU citizens, duty free privileges have changed since Cyprus’ accession to the EU, where now only retirees are eligible.

Property taxes/fees

Property Transfer Fees : these are necessary in order to transfer FREEHOLD ownership to your name.

This can be done as soon as the relevant Government Authority has issued the title deed and the purchase has been settled.

The Property Transfer Fees are payable once only to the Land Registry Office according to the following scale:

However, if the property is purchased jointly by a couple (as is often the case) the property purchase price is split equally into two parts and then taxed, which is beneficial to the purchasers as the following example shows:

Immovable Property Tax: The registered owner of the property is liable for this annual tax which is based on the value of the property.

*Owners of properties whose total 1980 value is no more than €12,500 are exempted . Owners of properties whose 1980 value exceeds €12,500 will have to pay tax on their total 1980 value and not benefit from the €12,500 exemption. The taxable threshold pertains to the aggregate value of properties registered under a person

Capital Gain Tax: For foreign owned property that is sold, generous exemptions from capital gains tax exist and details may be obtained from Leptos Estates.

Estate Duty/Inheritance Tax: Estate Duty, which is paid on assets based in Cyprus, provides very generous allowances, which on effect, means that in most cases nothing or only a small amount is paid. You may also make out your will as a Cypriot resident, which will exclude you from country of current residence inheritance tax.

Stamp Duty:

Based on the new modified law for stamp duties 173 (1) 2013 which will be in force as from 1st March 2013, we will inform you that the stamp duty payable on the Contracts of Sale will be as follows:

1-5,000 NIL

5,001-170,000 1,50 ‰ on the value or part thereof

Over 170,001 2,00 ‰ on the value or part thereof with a MAXIMUM LIMIT of €20,000

Example Contract of Sale value €250,000

First €5,000 NIL

For next €165,000 will be paid €1,50 ‰ i.e.          € 247,50

For remaining €80,000 will be paid €2,00 ‰ i.e. €160,00

€407,50

IMPORTANT NOTE:

There is a maximum limit of stamp duty to be paid for one Contract of Sale/ agreement which is €20,000.

In order to reach the maximum limit of €20,000 the respective value of the Contract of Sale/ agreement should be:

Languages

The official languages are Greek and Turkish with English as an unofficial second language. French, German, Italian and Spanish are now a part of the national curriculum. Russian is also widely spoken.

European Union

Cyprus joined the EU on May 1st, 2004. Cyprus already exports 50% of its products to the E.U. and can expect to be transformed into a regional business center, as it has a democratic system of government, a free market economy, excellent telecommunications with direct dialing to over 200 countries, a favourable tax regime, bilateral investment agreements, double tax treaties and a strategic location at the crossroads of three continents.

Education

There are both junior and secondary schools in Paphos, of very high standards, catering for English and other students. The schools accept day students and also have boarding facilities. Additionally, there are a few colleges of higher education offering business studies, hotel management and many other subjects.

Banking Standard

The banking system in Cyprus closely follows the British pattern. The banks, having many convenient branches are efficient, modern and well equipped with the latest technology. Non-Cypriot citizens may open both foreign and local currency accounts. Many international banks have branches in Cyprus.

Major credit cards, such as Visa and MasterCard are widely used. Transactions and payments are simply made through your foreign deposit account.

Purchasing property in Occupied North of Cyprus

Foreign citizens are warned against the purchase of Greek Cypriot owned property, in the part of the Republic of Cyprus which has been under Turkish military occupation since 1974.

As a result of the Turkish invasion and subsequent occupation of 36.4% of the territory of Cyprus, 170,000 Greek Cypriots, who constituted 2/3 of the inhabitants of the occupied area, were forced to flee from their homes. According to the 1964 Land Registry Office Records, Greek Cypriots owned approximately 78% of the privately owned land in the territory now under Turkish occupation, while persons belonging to the Turkish Cypriot community owned approximately 21%.

The displaced persons are to this day prevented by the Turkish armed forces from returning to their homes and peacefully enjoying their properties. However, under Human Rights Conventions, as well as international and national law, they retain their title to their property.