For people moving to Cyprus for either partial or permanent residence there are many financial incentives that make the purchase of property and obtaining residency even more attractive than just for the location and the glorious weather. Some of the incentives are outlined below:

• The cost of living is substantially lower than most European countries, it is often stated that an average retired couple with no mortgage, running one car and enjoying an active social life can comfortably live on between CY£10,000 – 12,000 per year.
• Pensions from abroad are subject to a flat tax rate of 5%, with an initial annual allowance of CY£2,000 being tax exempt. There are many qualified specialist accountants who can assist you in transferring your pensions across to Cyprus and also providing asset and wealth protection advice.
• Interest earned on foreign capital remitted into Cyprus is tax exempt.
• Double taxation treaties concluded with numerous countries eliminate double taxation of foreigners residing in Cyprus. Where relief is not given under a double taxation treaty, relief from Cyprus tax is given unilaterally.
• The importation of personal effects, household goods and cars is duty free.
• Duty Free cars are still available for a limited period (EU accession will remove this benefit, timescale to be determined), enabling new purchasers moving to Cyprus to obtain new and used cars at extremely competitive prices.
• Cyprus has long been an attractive location for offshore international companies to operate from with numerous tax advantages, not least 4.25% corporation tax. Whilst no longer considered an offshore haven, Cyprus is now classified as a tax efficient location due to changes in taxation laws, in line with the EU accession. Cyprus is still however considered an extremely tax efficient location to run either local (onshore) or international (offshore) business from, with both types of companies now being taxed at 10% corporation tax and employees enjoying the first CY£10,000 tax exempt prior to a progressive sliding income tax scale. There is a spirit of entrepreneurialism on the island of Cyprus with many people operating as sole-traders and many starting their own businesses.

Costs of Property Purchase & Ownership

Below we have outlined information regarding the main costs associated with the purchase and ownership of a property in Cyprus, they are listed in the order that you are likely to encounter them.

i) Financing & Mortgages
All commercial banks in Cyprus are authorised to offer mortgage facilities to assist foreigners (non-Cypriots) in the purchase of property. The amount that the banks are prepared to loan is discretionary, but typically 60% - 80% of the value of the property can be obtained, with a repayment period up to 25 years depending on specific circumstances (i.e. age and long term income). With the accession to the EU many of the commercial banks are looking more favourably upon mortgages and are starting to offer special deals and generally making the process somewhat easier than in the past. Pasoudi Developers can help to point you in the right direction and arrange for you to meet appropriate financial advisors and banking personnel who can advise you.

ii) Stamp Duty
This is due at the same time as the Contract of Sale is signed, the duty must be paid and the contract stamped within 30 days of signature otherwise a fine will be imposed. It is applied to the full Contract of Sale purchase price, levied on a simple sliding scale as below:

• The first CY£100,000 charged @ 0.15% (CY£1.50 per CY£1,000)
• Over CY£100,000 charged @ 0.2% (CY£2.00 per CY£1,000)

Therefore on a property purchased for CY£150,000 the Stamp Duty would be calculated as follows:

• CY£100,000 @ 0.15% = CY£150
• CY£50,000 @ 0.2% = CY£100
• Total Stamp Duty = CY£250

iii) Immovable Property Tax
Immovable Property Tax based upon the value (like the old UK rateable value) of the property as at 1980, which obviously is considerably lower than current market values. Given that the first CY£100,000 (at 1980 valuations) is tax exempt then invariably most properties are exempt from Immovable Property Tax or face an inconsequential amount. It is charged annually on a sliding scale as below:

• The first CY£100,000 is exempt
• Between CY£100,001 and CY£250,000 is charged @ 0.25% (CY£2.50 per CY£1,000)
• Between CY£250,001 and CY£500,000 is charged @ 0.35% (CY£3.50 per CY£1,000)
• Over CY£500,000 is charged @ 0.4% (CY£4 per CY£1,000)

iv) Transfer Fees
Upon transfer of the property and registration in the purchasers name, the District Land Registry Office will charge Transfer Fees, which are calculated on a progressive sliding scale, on the market value of the property at the time of purchase, and are calculated as follows:

• The first CY£50,000 charged @ 3%
• Between CY£50,001 and CY£100,000 charged @ 5%
• Over CY£100,001 charged @ 8%

Therefore an example purchase of CY£150,000, would be calculated as below:

• CY£50,000 @ 3% = CY£1,500
• CY£50,000 @ 5% = CY£2,500
• CY£50,000 @ 8% = CY£4,000
• Total Transfer Fee = CY£7,500

However the good news is that if a property is bought in joint names, i.e. husband and wife, then each partner receives an equal allowance, which reduces the burden, see the below calculation using the same example of £CY150,000:

• Partner 1 CY£50,000 @ 3% = CY£1,500
• Partner 2 CY£50,000 @ 3% = CY£1,500
• Partner 1 CY£25,000 @ 5% = CY£1,250
• Partner 2 CY£25,000 @ 5% = CY£1,250
• Total Transfer Fee = CY£5,500

Also remember that the Transfer Fee is often deferred for sometime depending on how quickly the District Land Office can process the administration involved, a typical time period is 2 years from project completion.

v) Capital Gains Tax
Upon the sale of your property you could be liable for CGT. A capital gain of CY£10,000 per person (therefore CY£20,000 for a married couple) above the property purchase price is tax free, thereafter CGT is chargeable at 20%. There is also an indexation allowance taking into account inflation. On top of this allowance the seller is also entitled to a further allowance regarding the transfer fees paid and the costs of any additions or improvements made to the property. Any gains made from the sale of a property that can be proved to have been your primary dwelling house are exempt up to CY£50,000 in total if the seller has resided in the property continuously for at least five years.

vi) Inheritance Tax
Estate Duty was abolished in 2000.