Tax benefits in Cyprus
Cyprus has become a very popular destination when it comes to overseas property investment, increasingly so since it joined the European Union. Buying property in Cyprus has many advantages such as the climate, accessibility, widely spoken English and one great reason is the tax advantages that are to be found here.
Although not a Tax Haven, Cyprus does have many bonuses when it comes to Tax. In 2000 inheritance tax or gift tax was abolished, Pensions from overseas are taxed at a flat rate of 5% whilst any interest accumulated from foreign capital that is brought in to the country is exempt from tax. Cyprus has also signed double taxation agreements with many different countries. This double taxation treaty safe-guards its residents from paying tax in two countries and gives them the option to take advantage of the low rates in Cyprus.
There are also tax advantages for retirees who become residents of Cyprus where their pensions are taxed from abroad at a rate of 5% for amounts exceeding £2000 annually. Also, Cypriot tax residents are exempt from tax on their total annual income up to £10000, provided that thereafter they are taxed according to the scale that Cypriots are taxed.
Today properties in Cyprus are in great demand from people from the UK, the United States, the Middle East and more. So anyone wishing to invest in such a popular market will need to know some basic details on the taxes applied to buying to property.
Property Tax – Whether a resident or non-resident and you are letting your property you will have to pay tax on the income generated from such lettings at standard income tax rates. However, there is a 20% deduction allowed on income from property. Property tax is paid annually by all property owners irrespective of their residential status.
VAT – This was introduced to Cyprus in 2004 and the current rate is 15% or 5% for a property that is the principal place of residence. There is no VAT payable where the application for a planning permit was submitted prior to May 1 2004. In respect of this there a huge demand for any property that is unaffected by the VAT addition.
Capital Gains Tax – This is payable if you decide to sell your property and is applicable at a rate of 20% on any profit except for the first CYP10.000. The gains relates to difference between the original purchase price and the final sale price.
Stamp Duty – This is a one off fee charged on the purchase of the property. Rates do vary according to the property value and payment is to be made within 30 days of signing the sale agreement. The Stamp Duty levels are:
Purchase Price in CYP Stamp Duty in %
Up to 100.000 0.15
Over 100.000 0.20
Transfer Fees – This will be the most expensive tax paid after purchasing a property in Cyprus. These fees range from 3% to 8% depending on the property purchase price. The scale for these fees are as follows:
CYP 1.00 to CYP 50,000 is 3%
CYP 50,001 to 100,000 is 5%
CYP 100,001 and above is 8%.
Local Authority Tax – These Local Authority taxes cover the cost of things like refuse disposal and street lighting and the rates vary from CYP 30 to CYP 100 per annum depending on the size of the property.
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Why Invest In Cypriot Real Estate?
Recent changes in legislation allows foreign investors to purchase land and residential homes on the island. With this has came a real estate explosion of almost unequalled size. With demand so high, rental yields are staggering when compared to the low purchase price of Cypriot apartments.
There are many advantages in investing in Cypriot apartments which include the facts that there is 0% capital gains tax, 0% rental income tax and a staggering volume of demand with the population rising so quickly.
UPA
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