01.01.2017 Cyprus property taxes in 2017
There have been a number of changes to various property taxes in Cyprus in recent times and a summary of the impact of those changes for individuals with property on the island are summarized below.
RECENT changes to property taxes in Cyprus will benefit both those who have purchased property and those planning to purchase.
Here is a summary of the taxes that apply as we entered 2017.
q Immovable Property Tax, payable to the Tax Department Immovable Property Tax (IPT) was reduced in 2016 to approximately a quarter of that in the previous year and is abolished in 2017.
q Property Tax, payable to Communities and Municipalities This ‘local’ property tax has not been abolished and those with property on the island will continue to pay this ‘local’ tax, which is calculated on the Land Registry’s assessment of the 1980 value of the property.
q Property Transfer Fees: The temporary reductions in Property Transfer Fees that that came into force in 2015 and applied to transfers that took place by 31 December 2016 was made permanent in July 2016. (a) If VAT was paid on the purchase price of the property, no Property Transfer Fees are payable. (b) If VAT was not paid on the purchase price of the property, the Property Transfer Fees are reduced by 50%. However if the Director of the Land Registry considers that the price stated on the contract of sale does not reflect the market value of the property at its date of purchase he may, at his discretion, charge the full Property Transfer Fees based on the Land Registry’s assessment of the market value of the property at its date of sale less the price stated on the contract of sale. (The Department of Lands and Surveys has an on-line Transfer Fees Calculator .)
q Capital Gains Tax. The Capital Gains Tax concession introduced in mid-2015 that exempted those who purchased property after it came into force and 31 December 2016 from paying Capital Gains Tax regardless of when the property was sold has not been extended. As a consequence those who buy property in 2017 will be liable for Capital Gains Tax when they sell the property.
q Stamp Duty. Stamp duty is calculated on the value of the purchase agreement and remains unchanged at the rate of: €0 to €5,000 – zero €5,001 to €170,000 – 0.15% Greater than €170,000 – 0.2%* * Capped at a maximum of €20,000.
We expect that we will see further changes to property taxes during the year ahead!
17.09.2016 The amount for citizenship has been reduced
The amount for citizenship has been reduced from 2.5 million euro to just 2 million euro!
The option to invest in Government Bonds is limited to 500.000 euro
The ability to obtain citizenship through bank deposits has been terminated
Collective investment criterion has been abolished. Only personal investment is needed
The parents of the investor may also obtain the citizenship with an extra residential property of 500.000 euro
01.09.2016 Cyprus (EU) passport/citizenship
The Cyprus Government through the Ministry of Interior, has approved the revised criteria for granting the Cypriot citizenship by investment, in an effort to further promote foreign direct investments in Cyprus.
The most important NEW changes are as follows:
- The applicant must have made an investment of €2.0 million (excluding VAT) in any qualifying investment category or a combination as described below (previously it was €5.0 million if applied individually or €2.5 million if applied through a collective investment scheme). The investment in government bonds of the Republic of Cyprus is now restricted to €500,000.
- The applicant must be the holder of a residency permit in Cyprus to qualify for receiving the Cyprus Citizenship. For this purpose, an application for a residency permit should be submitted to the Authorities, which will be issued simultaneously with the filing of the Citizenship application.
- The investor’s parents are entitled to apply for Cyprus citizenship by exception provided that they are owners of a permanent residence of at least €500,000 excluding VAT. For this purpose the investor and his/her parents may acquire one residential property of a total value of at least €1.0 million, excluding VAT (€500,000 being allocated to the investor and the remaining €500,000 being allocated to the parents of the investor).
A. Criteria for granting Cypriot citizenship by exception
Real estate and land developing
The applicant should have a direct investment in Cyprus of at least €2.0 million for the acquisition or development of real estate projects (residential, commercial, tourism or other infrastructure). It shall be noted that the acquisition of land is not considered to be a qualifying investment under this criterion.
Purchase or creation or participation in Cypriot businesses or companies
The applicant must have made an investment of at least €2.0 million in the purchase, creation, or participation in businesses or companies, that are based and operating in Cyprus. These businesses or companies should evidently have a tangible presence and substantial activity in Cyprus and employ at least five (5) Cypriot or EU citizens who have been legally residing in Cyprus for a continuous period of at least 5 years.
Investment in alternative investment funds (AIFs), financial assets of Cypriot businesses or organisations which are licensed by the Cyprus Stock Exchange Commission
The applicant must have purchased financial assets of at least €2.0 million (units in AIFs, bonds, debentures, other securities, etc.) registered and issued in the Republic of Cyprus, in companies or organisations with substantial economic activity in Cyprus which are regulated by the Cyprus Stock Exchange Commission.
Combination of the aforementioned criteria
The applicant may choose to have a combination of any of the above criteria amounting to at least €2.0 million.In the context of this criterion (i.e. combination of investments), the applicant may also purchase governmental bonds of the Republic of Cyprus of a maximum amount of €500,000.
B. Other conditions
It is noted that in addition to satisfying any one of the above criteria, the applicant must:
- Have a clean criminal record; and
- Acquire a permanent residence in Cyprus valued at least €500,000 excluding VAT. (This condition does not apply if the investment is in residential property, under criterion A1 above);
Discover the benefits of investing in Cyprus and acquiring the European citizenship. Contact our well-trained Customer Service team for more information on the immigration programmes of Cyprus and our properties.
01.08.2015 EU citizens review your Cyprus wills
01.08.2015 IPT payment deadline & discount
Earlier today Cyprus MPs voted to extend the Immovable Property Tax (IPT) payment deadline until the end of December; discounts offered for payments made by end November. By: Editorial Published: Thursday 17th September 2015 • Filed Under IPT payment deadline extended.
THE HOUSE on Thursday passed a law extending the deadline for payment of Immovable Property Tax (IPT) to the end of December, with a significant discount for those paying their tax earlier, by the end of November. For early payments by end-November, a discount of 17.5 per cent will be given, unless payments are made online or through a bank, in which case the markdown is 20 per cent. The final legislation passed was as amended by the parties.
Initially, the government bill entailed extending the payment deadline to the end of November and in addition offered an early-settlement discount of 15 per cent, 17.5 per cent if paid via a bank or online. The new, November 30 deadline for early payment discounts was an amendment tabled by main opposition AKEL. It was approved unanimously. But another AKEL amendment, providing for different discounts for different IPT rates, was defeated, as was also a proposal for exempting from IPT farming land worth up to €60,000. The Greens proposed payment of IPT for 2015 in three interest-free instalments, the first of which would be paid this year. Socialists EDEK proposed exempting from IPT properties valued up to €30,000. Both proposals, intended to alleviate the tax burden of low-income persons, failed to garner the necessary backing in parliament. The idea of increasing the discount came from DIKO, which argued that this would incentivise more people to pay their IPT and on time, thus also helping the state’s cash flow. But during a discussion earlier in the week, the finance minister did not appear to be on board, as the fiscal impact of the greater discount had not been calculated. According to data cited in parliament, last year the state collected €104m from IPT, local administration authorities a further €14m, while property transfer fees came to €53m, for a total of €171m. In 2014, 79.9 per cent of eligible people paid their IPT. Data showed that the lower the IPT rate, the higher the percentage of collection. For the 0.006 tax rate, the collection percentage was 92.21, 91.15 per cent for the 0.008 rate, 90.49 per cent for the 0.009 rate, 86.53 per cent for the 0.011 rate, and 82.08 per cent for the 0.013 rate. The collection percentage dropped to 72.43 per cent when it came to the 0.015 rate, 65.85 per cent for the 0.017 rate, and only 63.11 per cent of those charged with the highest rate, 0.019, paid their IPT.
01.08.2015 A thousand trapped buyers apply for deeds
During the nine days since the ‘hidden mortgage’ law came into force around 1,000 ‘trapped buyers’ who have paid for their property but cannot get their Title Deeds have submitted applications.
By: Editorial Published: Saturday 19th September 2015 •
SOME 1,000 applications have been filed in nine days and thousands more were expected from people who paid for their property but did not have title deeds either because it was mortgaged by the developer, or the state could not go ahead with the transfer because of outstanding taxes. The law aiming to resolve the problem faced by thousands of buyers, foreign and local, was passed on Thursday, September 3, and came into force the next day after its publication in the Government Gazette. “Around 1,000 applications had been submitted by Thursday, September 17 (nine working days),” Land Registry Director Andreas Socratous said. Officials expected an increased flow of applications and requests for information, he added. “Many thousands of people have contacted the department, either through telephone, or email, or they came in person, to ask for information,” he said.
The matter concerns some 78,000 cases of buyers who either do not have a title deed – 48,000 — for various reasons or the property has not been transferred to their name. The law aims to sort out the mess created by the failure to issue title deeds to people who paid for the property, either because the property was mortgaged by the developer, or the state could not go ahead with the transfer because of outstanding taxes. Since developers’ land and buildings are counted as assets that need to be offset against their debt to banks, this gives lenders a claim on people’s properties that had been mortgaged by developers.
The law grants the head of the land registry department the authority to exempt, eliminate, transfer and cancel mortgages and or other encumbrances, depending on the case and under certain conditions. It covers transactions up until December 31, 2014. To be able to apply, buyers must prove they have either paid the seller in full or only a small amount remained outstanding. Also, the sales contract must have been submitted to the land registry. Socratous said the procedure of transferring a property and issuing a title would take at least six to seven months in the best of cases, where titles exist and no serious objections would be raised.
01.01.2014 Revised Land Registry charges published
21.05.2013 Immigration permits for non-EU nationals
The Interior Ministry recently announced changes to the procedures for granting Immigration Permits (Permanent Residence) to third country (non-EU) nationals who intend to invest in Cyprus.
The Ministry of Interior or the Republic of Cyprus issued an Announcement on May 7, 2013 that Immigration Permits (Permanent Residence) will be issued to third country nationals under the following terms:
1. Investment/Financial Criteria:
(a) The applicant shall submit a statement from a Cyprus financial institution showing that an amount of at least €30,000 has been deposited in a reserve account, for a period of at least three years. This amount must show that it was transferred from abroad.
(b) The applicant and spouse are able to demonstrate that they have at their disposal a secured annual income of at least €30,000 increased by €5,000 for each dependent (including the spouse). This income may come from wages, work, pensions, share dividends, fixed deposits, rents etc. from abroad.
(c) The applicant shall submit with the application a title deed or purchase contract in its and/or its spouse name, filed at the Department of Lands and Surveys, for a residential or other building, of a market value of at least €300,000 (excluding VAT) and official proof of payment of at least €200,000 (excluding VAT), regardless of the delivery date of the house. Provided that the remaining value of the house will be paid from foreign funds into an account at a financial institution in Cyprus. In case of a couple, this condition will apply for both of them, in the sense that the couple will not be allowed to acquire more than two units totally.
The above amounts should be shown to originate from abroad. Note that the house purchase will be accepted even when made in the name of the Company and not in the name of the applicant, provided that the Company is registered in the name of the applicant and/or the name of applicant and his spouse and he/they are the sole shareholders. Provided that if the shareholder is another legal person, it should be demonstrated that the sole shareholder of such legal person is the applicant and/or applicant and spouse.
(d) For purposes of this policy, the applicant may buy up to two housing units (apartments or houses), or a housing unit and a store with an area of 100 sq.m., or a housing unit and an office with an area of 250 sq.m., given that the total market value meets the provisions of paragraph (c) above. The said sale must be for unit(s) sold by a development company to a buyer for the first time. From 07.05.2013, for the purposes of this policy, applications concerning resales of homes will not be accepted.
Note that purchase agreement documents for home resales deposited in the Land Registry before 7.5.2013 (date of deposit of purchase agreement will be confirmed by the Lands and Surveys Department) will be accepted for purposes of this policy. Provided that the houses/apartments can be independent of each other, but both must be sold by the same company.
(e) Immigration permits are issued to the applicant with dependents the spouse and children under the age of 18. Unmarried dependent children aged 18 to 25 years, may submit their own separated application for acquisition of immigration permit only if they are proven students and the father and/or mother present additional annual income of €5,000 for each dependent child. Note that each such dependent child shall submit with the application all required documents specified in the list (see section 6 hereinafter). Provided that such authorization will be valid until the age of 25 years. If the interested person wishes to obtain a new immigration permit, it must apply under the existing criteria as an independent person.
(f) Immigration permit may be issued to the applicant’s children over 18 years of age not financially dependent on the applicant, provided that for each of these children there is attributable market value of the acquired property of at least €300,000 (excluding VAT) as described in paragraph (c) above (i.e. if the applicant has a financially independent child aged 30 and wishes to obtain an immigration permit, he should buy a house total market value of €600,000, if he has two adult children, financially independent, must buy home value of €900,000 etc.).
In such cases, a certificate of payment of at least 66% of the market value of the home must be submitted along with the application (i.e. an amount of €400,000 for a home of a residential market value of €600,000) and each child will submit with its application all required documents (i.e. secured annual income of €30,000, deposit in a financial institution in Cyprus of an amount of €30,000 which will remain blocked for three years).
2. Quality Criteria:
(a) The applicant and spouse must submit a certificate of clear criminal record from the country of resident and generally must not constitute in any way a threat to public order or public safety.
(b) The applicant and spouse will attest that they will not be employed in any direct or indirect way in Cyprus. Note that the applicant and/or spouse may be shareholder(s) in a company registered in Cyprus and the income from the dividends of such company is not considered as an obstacle to obtain the immigration permit.
(c) The applicant and the member of its family included in the immigration permit must be visiting Cyprus at least once every two years.
(d) All required supporting documents, which are attached to the application for immigration permit as well as their translation in Greek or English must be duly certified.
3. Procedure for Submission and Examination of Application
(a) Applications must be submitted directly to the Civil Registry and Migration Department (CRMD) personally or through a representative (relevant phones 22403921 and 22403943) with a non-refundable fee of €500.
(b) Applications submitted in Cyprus, either personally or through a representative, will be submitted in a common dossier. (Each document of the application will be punctured and attached in the dossier and numbered in blue ink from the first to the last page, this being the responsibility of the person submitting the application). The dossier will include also a registration form for all documents submitted with the application and for any other supplementary documents by or on behalf of the applicant.
(c) The application shall be speedily processed by the CRMD and submitted to the Minister of Interior. For the purpose of this type of immigration permit, an interview with the applicant will take place only in certain cases considered necessary by the Director General of the Ministry of Interior.
(d) The Ministry of Interior will inform the applicant or his representative and the CRMD on the decision of the Minister of Interior.
(e) The holder of an immigration permit should be visiting Cyprus at least once every two years and comply with all the provisions of relevant legislation.
4. Transitional Provisions:
After the publication of this Announcement, any citizen of third country who applied for an immigration permit Category F may, if it wishes, submit to CRMD additional information to demonstrate conformity that the criteria in paragraphs 1-3 of the Announcement are fulfilled, through a new application form so that the review of the application is performed in accordance with the provisions of Regulation 6(2) of the Aliens and Immigration Regulations and based on the above criteria and relative procedure.
5. Time schedule for the issue of immigration permit:
If the criteria of this Announcement are met and unless there are reasons relating to either the criminal records of applicant, either on grounds of policy or public security, the application will be considered by the Minister of Interior in a positive way and the immigration permit will be issued. It is estimated that by applying the procedure described in this Announcement, the examination period of the application from the date of its submission, will not exceed 2 months.
6. Application Forms
Available online the following forms:
Application form (M.67).
List (check list) of documents submitted with the application (in Greek and English).
List (check list) of documents submitted with the application (in Greek and English) for adult children in accordance with paragraph 1(e).
Affidavit for the annual income of the applicant, together with other evidence (in Greek and English).
Declaration confirming non-employment of applicant in Cyprus (in Greek and English).