Example 1:

On the transfer of immovable property at the Land Registry Office, which was purchased for CYP 110,000, a purchaser will pay CYP 4,800 in transfer fees

First ₤50,000 taxed @ 3% = ₤ 1,500
Next ₤50,00 taxed @ 5% = ₤ 2,500
And ₤10,000 taxed @ 8% = ₤ 800
₤ 110,000                              ₤ 4,800

Example 2:

If the property is bought and registered in the names of two individuals (i.e. husband and wife), then the market value of the property is divided in two parts resulting in reduced transfer fees.
On the transfer of a property at the Land Registry Office, which as purchased for CYP 110,000 and will be transferred in the name of two individuals, the purchaser will pay CYP 3500 in transfer fees:

First ₤100,000 taxed @ 3% = ₤3,000 (50,000 for each purchaser)
Next ₤10,000 taxed @ 5% = ₤500 (5,000 for each purchaser)
₤ 110,000                                 ₤ 3,500

Stamp duty
Unless otherwise stipulated in the contract, the purchaser is liable for the payment of stamp duty at the rate of 0.15% of the value of the property up to CYP 100,000 and 0.20% for over CYP 100,000.

Example:
The stamp duty on a contract for CYP 110,000 will be CYP 170 (CYP 150 for the first CYP 100,000 @ 0.15% and CYP 20 for the remaining CYP 10,000 @ 0.20%).
The contract should be stamped within a period of thirty (30) days from signing. Although the absence of revenue stamp on a contract does not render it void, the revenue stamp must be paid before depositing the contract to the Land Registry for specific Performance purposes (see point 4 above). The stamp duty plus a fine will be payable when the document is produced to the Land Office for the transfer of ownership of property, to any Government department or to the court. In order to avoid the payment of a fine, which could be substantial, the documents should be stamped within 30 days of their signing.

Mortgage fees
The registration fee of a mortgage is one per cent (1%) of the amount secured, plus the relevant stamps.

Immovable Property tax
The registered owner of a property is liable to an annual immovable property tax calculated on the market value of the property as on 1st January, 1980.

Immovable property (towns) tax
The registered owner of immovable property is also subject to minor taxation under other laws, such as municipal or village regulations. These taxes are calculated according to the area and the size of the property and cover sewerage, refuse collection, street lights. The charges range in total from CYP 50 to CYP 100 per annum.

Capital Gains Tax
Capital Gains Tax is levied at the rate of 20% on gains arising from the disposal of immovable property or the disposal of shares of companies the assets of which consist mainly on immovable property.
As a general rule, the gain is calculated as the difference between the sales proceeds and the original cost of the property. Interest on payments paid for the acquisition, additions to the property and inflation rate, as published yearly by the Government, are deducted from fees.
Capital gains tax as a whole has minimal effect, since the appreciation of values, coupled with the following allowances and inflation, tend to leave little excess.

Individuals are entitled to the following lifetime allowances on Capital Gains Tax:

· The first CY ₤10,000 of gains arising from the disposal of any property is exempted.
· The first CY ₤15,000 of gains arising from the disposal of agricultural land by farmer are exempted (subject to certain conditions).
· The first CY ₤50,000 of gains arising from the disposal of a house used by the owner for his/her own habitations are exempted (subject to certain conditions).

The above allowances are not available separately and an individual claming a combination of the above allowances is only allowed a maximum lifetime allowance of CYP 50,000.
Cyprus residents and companies registered in Cyprus are subject to Capital gains tax when disposing their property, whenever it is, in Cyprus or overseas. However, under certain conditions, Capital gains tax can be reduced significantly if the purchase of the immovable property is effected through a Cyprus registered company.

The following categories of immovable property disposals are exempted from the Capital gains tax:

1. Transfer by reason of death
2. Gifts between relatives up to third degree of kindred
3. Gifts to limited liability companies when, at the time of transfer and for a period of five years following the transfer, all the shareholders of the company are members of the family of the donor
4. Gifts by family companies to their members, but only in cases where the property transferred, was obtained by the company as a gift
5. Exchanges of immovable properties
6. Compulsory acquisitions
7. Gifts to charitable institutions
8. Gifts to charitable institutions or the Republic of Cyprus

Estate duty
Estate duty was abolished as from 1/1/2000

Communal expenses
Communal expenses are usually payable monthly or quarterly, in advance, and vary from development to development depending on the area and type of the property. They cover an immovable property’s owner share of the cleaning and maintaining common areas and gardens, communal swimming pool expenses, electricity in common areas, management fees and repairs.

6. Personal income tax
All Cyprus tax residents are taxed on all income accrued or derived from all sources in Cyprus and abroad. Individuals who are not tax residents of Cyprus are only taxed on income accrued or derived from sources in Cyprus. An individual is a tax resident in Cyprus if he/she spends in Cyprus more than 185 days in any one year. Days in and out of Cyprus are calculated as follows:
1. The day of departure from Cyprus counts as a day of residence out of Cyprus.
2. The day of arrival in Cyprus counts as a day of residence in Cyprus.
3. Arrival and departure from Cyprus in the same day counts as one day of residence in Cyprus.
4. Departure and arrival in Cyprus in the same day counts as one day of residence outside Cyprus.

The following income tax applies to individuals:

*CYP 2,250 plus the incremental amount over CYP 20,000 multiplied by 30%
Social insurance, provident fund, medical fund, pension fund contributions and life
Insurance premiums are deducted from income (only up to 1/6 of the chargeable income).

Pensioners
The pension for a person, who is resident in the Republic, paid for services which have been rendered abroad, is taxable at 5% on any amount exceeding CYP 2,000 in a tax year.

The following income sources of pensioners are taxable at the normal tax rate:
1. Interest Income
2. Dividend Income
3. Profits from the disposal of securities 9Shares, debentures, government bonds)
4. Profits from a permanent establishment which is maintained abroad
5. The emoluments from salaried services performed abroad for an aggregate period in the tax year exceeding 90 days.

7. Corporation tax
All companies tax resident of Cyprus are taxed on all their income accrued or derived from all sources in Cyprus and abroad. A non-Cyprus tax resident company is taxed on income accrued or derived from a business activity which is carried out through a permanent establishment in Cyprus.
A company is resident of Cyprus if it is managed and controlled in Cyprus.
Corporate Tax Rates:

For the years 2003 and 2004, any profits in excess of CYP 1,000.000 are subject to an additional tax of 5%.
All expenses incurred wholly and exclusively in earning the income of the company are deducted.

9. Double taxation treaties.
Cyprus has signed double taxation treaties with a considerably large number of countries and more are under negotiation. These treaties may affect favorably the ownership of immovable property in Cyprus and also groups of people who decide to relocate to Cyprus, such as retired residents, employees and business investors.
Some of the countries with which Cyprus has entered into double taxation treaties are UK, Ireland, Greece, USA, Canada, France, Italy, Russia, Belarus, Romania, China, Austria, Belgium, South Africa, Yugoslavia and many others.