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Personal Taxation

Whatever your taxation planning needs, Cyprus Resale Properties can refer you independent financial advisers either in Cyprus or in the UK who can answer your local and international taxation queries. In general terms, your taxation liability is determined by your tax domicile, your tax residence and how you hold and structure your income sources and streams. Generally, if you spend more than 183 days per year in Cyprus, you can become a tax resident of Cyprus, and are taxed on your global income according to Cypriot taxation regulations.

Double taxation treaties

Cyprus has concluded 40 bilateral double taxation treaties between states, including the UK, Germany and Russia, to avoid the double taxation of income earned in various countries. Where various different national taxation rates apply, the taxpayer will not need to pay twice, but can deduct tax already paid abroad from that due in the home jurisdiction of tax liability.

Cypriot personal income taxation

The tax year in Cyprus is the calendar year, i.e. from 1st January to 31st December. Permanent residents with their tax domicile in Cyprus are treated as Cypriot citizens. In Cyprus, €17,086.01 (CYP 10,000) p.a. per person is the tax-free personal allowance, compared to the personal income tax threshold of GBP 4,895 p.a. per person in the UK. After the tax free allowance has been made for the first €17,086.01 (CYP 10,000) earned, the following tax rates apply: €17,087.72-€25,629.02 (CYP 10,001-15,000) 20%; €25,630.73-€34,172.03 (CYP 15,001-20,000) 25%; over €34,172.03 (CYP 20,000) 30%. The following can be deducted in calculating the tax liability: There will be a deduction of 20% for the first 3 years in Cyprus, limited to €8,543.01 (CYP 5,000); Life assurance premiums; Contributions to the state social security and welfare fund and pension funds. Contributions to the social security fund are currently payable by both employers and employees at 6.3%.Personal income tax returns are due for submission annually by 30th April. Cyprus Resale Properties can refer you to accountants and tax advisers who will respond to your individual queries.

Taxation for personal rental income from Cyprus

For investors who are not generally tax residents of Cyprus, rental income from Cypriot property is basically taxable in Cyprus, however amounts can be offset against your income tax due in the UK/Russia to the extent foreseen by the double taxation treaty between your country of residence and Cyprus. In Cyprus, 20% of rental income can be deducted for expenses assumed to be required for the upkeep of your rented property. If you are a Cypriot tax resident, rental income incurs a very small further defence levy calculated as 3% of 75% of the total annual amount of your rental income. For example, for €4,271.50 (CYP 2,500) rental income p.a., this levy totals €96.11 (CYP 56.25).
Taxation for pension income in Cyprus

Pensions drawn from outside Cyprus and transferred to Cyprus enjoy very low taxation. Pensions are either taxed at normal income tax rates or at the option of the tax payer, at the flat rate of 5% on the excess of €3,417.20 (CYP 2,000).

Inheritance tax was abolished as of 1st January 2000.
Professional legal advice is recommended for inheritance tax mitigation, since you may be able to look at implementing legal tax-planning vehicles, such as trusts to the advantage of yourself and your heirs. We can help you to find lawyers and accountants able to provide detailed individual advice.

Utility Setup Fees

Electricity
Electricity Authority of Cyprus (EAC)
€ 17.09 (CYP 10.00) - transfer into owners' name

Telephone
Cyprus Telecommunications Authority (CYTA)
€ 0.00 (CYP 0.00) - deposit for fixed line
€ 0.00 (CYP 0.00) - deposit for mobile line

Water & refuse
Each municipality charges according to their expenses and regulations.
The amounts that are given below are not standard, and might be changed by the municipalities at any time.

Munciplaity of Pafos
€ 73.49 (CYP 43.00) - Installation of water meter no.
€ 34.17 (CYP 20.00) - Transfer water meter into owners' name
€ 99.10 (CYP 58.00) - Refuse collection (payable once per year)

Communal Board of Chlorakas
€ 153.77 (CYP 90.00) - Taxes (payable once a year)
€ 239.20 (CYP 140.00) - Transfer water meter into owners' name

Communal Board of Tala
€ 230.66 (CYP 135.00) - Taxes (payable once a year)

Communal Board of Kissonerga
€ 59.80 (CYP 35.00) - Refuse Brace Non permanent residents
€ 76.89 (CYP 45.00) - Property tax (payable once a year)
€ 76.89 (CYP 45.00) - Refuse Brace Permanent residents
€ 85.43 (CYP 50.00) - Property tax (payable once a year)
€ 170.86 (CYP 100.00) - Deposit for water Brace Transfer to owner's name, will be
€ 170.86 (CYP 100.00) - Deposit for tax returned when title deeds are issued

Communal Board of Konia
€ 51.26 (CYP 30.00) - Refuse (payable once a year)
€ 85.43 (CYP 50.00) - Taxes (payable once a year)
€ 34.17 (CYP 20.00) - Deposit for water

Communal Board of Peyia
€ 170.86 (CYP 100.00) - Refuse (payable once a year)

Communal Board of Argaka
€ 68.34 (CYP 40.00) - Refuse (payable once a year)
€ 119.60 (CYP 70.00) - Taxes (payable once a year)

Communal Board of Polis
€ 75.18 (CYP 44.00) - Refuse (payable once a year)
€ 8.54 (CYP 5.00) - Transfer water meter into owners' name

Communal Board of Tremithousa
€ 111.06 (CYP 65.00) - Taxes (payable once a year)
€ 512.58 (CYP 300.00) - Deposit for water

Property taxation in Cyprus

Transaction costs of property purchase are very low compared to the UK.

Stamp duty is due on contracts up to the value of €170,860.14 (CYP 100,000) at 0.15% and over €170,861.85 (CYP 100,001) at 0.2%.

Capital gains tax is paid on gains arising from the sale of immovable property. Tax due is at the flat rate of 20%. Transaction costs of the purchase are allowable deductions, including agency fees, as are various investments made in any improvements to the property and an indexation allowance. Total deductions allowed are €17,086.01 per owner on disposal of any property and €85,430.07 on disposal of residence, provided that this has been your place of residence for at least 5 years prior to sale. Up to €25,629 if the disposal is made by a farmer and it relates to agricultural land.

The Property Transfer Fees are payable ONCE only to the Land Registry Office according to the following scale:

Value of Property in Euros Transfer fee Rate
Up to € 85,430 = 3%
From € 85,431 - € 170,860 = 5%
Over - € 170,860 = 8%

For example:
Purchase price in Euros € 200,000
1st € 85,430 x 3% = € 2,563
2nd € 85,430 x 5% = € 4,272
3rd € 29,140 x 8% = € 2,331

TOTAL € 9,165

Buying in joint names

However, if the property is purchased jointly by a couple (as is often the case) the property purchase price is split equally into two parts and then taxed, which is beneficial to the purchasers as the following example shows:

For example:
Purchase price in Euros € 200,000
1st € 85,430 x 3% = € 2,563 x 2 = € 5,126
Balance € 14,570 x 5% = € 728 x 2 = € 1,457

TOTAL € 6,583
Saving: € 2,582

Immovable Property Tax

Every registered owner whose immovable property exceeds € 170,860 is required to submit a Declaration of Immovable Property (IR 301 and IR 302) and pay the respective tax every year before 30 September. The tax rates are as follows:

Value € Annual Tax [Euros per Thousand (%)]
up to € 170,860 exempt
€ 170,861 - € 427,150 = 0.25%
€ 427,151 - € 854,301 = 0.35%
over € 854,301 = 0.4%