Legalities Cyprus

There are certain legal procedures that have to be carried out when purchasing a property in Cyprus, however you should have a Lawyer who will act on your behalf and deal with all aspects of the purchase.

At present you currently need permission to purchase a property and this must be obtained from the Council of Ministers by written application. This must be submitted by the non – Cypriot purchaser after the agreement has been signed. However, the permission is granted more or less as a matter of course to al bona fide buyers.

In the meantime purchasers may take possession of their property without restriction. By law, a non – Cypriot in Cyprus is entitled to a residence permit but is not required to hold a permanent residence permit, the latter being easy to obtain once certain requirements are fulfilled. You need to submit an application and provide proof that you and your family are self supporting. The following documents must accompany your application:

• A copy of the sale/rental agreement
• Copies of pension/retirement income
• Any other document relevant to income
• Three photo’s and passport(s)

There is a charge of around CY£150 for the permission to purchase. The application for permanent residence may be submitted to the local immigration office in the area of residence.

Stamp duty

This is due at the time of signing the contract.

This is levied at the rate of CY£1.50 per CY£1,000 up to CY£100,000

Thereafter at the rate of CY£2.00 per CY£1,000.

The purchase contract must be stamped within 30 days of its dated signature or a fine will be imposed.

Legal fees

The legal fees usually charged by a lawyer are approximately CY£500. in reality they start at CY£300 but are dependent on the property purchase price and are subject to VAT (currently 15%) they cover the review and alteration if required of the Sale Agreement, revision of the general Agreement (which regulates the use of common areas where applicable) and submission to the land registry for specific performance. In addition there are stamp fees and the cost of the application to the Council of Ministers as explained above.

Transfer tax

The transfer of a title can be effective once the Council of Ministers permission has been obtained along with confirmation of receipt of the foreign funds. Upon transfer and registration in the purchasers name, the district Land Registry Office will charge transfer fees which are based on the market value of the property at the time of purchase as follows:

• Value up to  CY£50,000 = 3%
• CY£50,000 – CY£100,00 = 5%
• CY£100,000 plus = 8%

Mortgages

Mortgages are available in Cyprus. 70% mortgages are now available in any currency, however getting a mortgage in CY£ can be expensive so you should compare this rate with the Euro and sterling rate to see which offers the best deal. Euro mortgages have only been available in Cyprus since February 2005 and often offer the best value for money.

Tax Advantages

Non-Cypriot individuals residing in Cyprus pay income tax at a flat rate of 5%. This applies to the amounts remitted to Cyprus from pensions or income from overseas investments. The first CY£2,000 per annum are exempt, if you are retired. Personal effect, household goods and furniture may be imported duty free by immigrant retirees, provided that they are for personal use and have been in use for some time (approx 1 year). There is no duty on one car and retiree couples benefit from the additional concession of two duty free cars.

There is no inheritance tax in Cyprus

Double Taxation Treaty

Compared with other international finance centres, Cyprus offers a distinct benefit in the form of double taxation treaties. Agreements with an increasing number of countries eliminate the double taxation of income earned in any one of these countries. In practice the tax levied by one country is credited against the tax levied in the taxpayer’s country of residence. Where different tax rates apply, the tax payer will ultimately not pay more than the higher of the two rates of the respective countries. Such treaties combined with very favourable tax rates for international business entities in Cyprus open the doors to significant tax planning opportunities. The fact that Cyprus is not considered a tax haven but rather a country offering tempting tax incentives expels the distrust that international tax havens often arouse. Double taxation treaties exist between Cyprus and the UK and Ireland.

Wills

It is highly recommended that once you have purchased a property in Cyprus, in your own name, you have a will for your Cypriot assets only.