Legal and Finance

Legal and Finance

With the experience that our company has gained throughout the years, and with the professionalism that characterizes us, we will provide you with all the knowledge and information you will need when purchasing a property in Cyprus.

Cyprus is a very popular place for the acquisition of holiday homes, apartments, offices, and land by foreigners. The popularity is attributed to many factors – like the low cost of living and its high standards, the hospitality of the local population, the attractive climate and the sense of security.

However there are some rules and regulations that must be followed.

Regulations
Foreigners are given permission to acquire one of the following:
– apartment
– house
– building plot or land up to approximately three donums (4,014 square meters)

An I.B.C. may also acquire premises for their business and for the residence of their foreign employees, provided they maintain a fully fledged office.

In certain cases, it is possible that the Council of Ministers will grant approval for the acquisition by a foreigner of a larger area of land, if the land is to be used for tourist development (e.g. Hotel or Hotel Complex), especially if the intended project is in an area where the Government wishes to promote tourism. A similar stand is taken for certain industrial sectors.

Particulars of present owner
Terms of payment
The way of acquisition (i.e. Freehold, leasehold shares in property company etc)
Copies of the government survey plans

The completed application form is submitted to the District Officer in the district where the property is situated. The District Officer together with other relevant government departments will make further enquiries and prepare a report, which is submitted, to the Council of Ministers through the Minister of Interior.

The letter of approval or refusal may take up-to six months or even longer. However, there is no restriction in taking possession of the property in the meantime.

The permit for the acquisition of immovable property by a foreigner is granted only if:
The house will be used only for his own residence and the building plot or land does not exceed 4,014 square meters
It is used for professional or commercial business
It is used in manufacturing in areas where the Council of Ministers believes that it will be for the benefit of the Cyprus Economy and the production of products that are related to the use of new technologies or technical knowledge.

The permit has the following conditions and restrictions:
The transfer to be effected within a year from the date of the permit or within three years in case of construction of a building on the property.
Thus on disposal of the property the whole amount can be exported (after the tax obligations have been met). The Central Bank of Cyprus requires a clearance certificate.

Immovable property tax
Immovable property tax is imposed on the market value of immovable property as at 1 January 1980 and is calculated on the immovable property owned by the taxpayer on 1 January of each year.

Rates

CAPITAL GAINS TAX
Capital Gains Tax is imposed on gains from disposal of immovable property situated in the Republic including shares of companies not listed on a recognised Stock Exchange which own immovable property situated in the Republic, at the rate of 20%.
In computing the capital gain the value of the immovable property as at 1 January 1980 (or cost if the date of acquisition is later), the cost of any additions after 1 January 1980 or the date of acquisition if later, any expenditure incurred for the production of the gain and the indexation allowance, are deducted from the sale proceeds.

Deductions
Individuals are entitled to deduct from the gains the following:
Disposal of principal private residence (subject to conditions) 85.430,07
Disposal of agricultural land by a farmer 25.629,02
Other disposals 17.086,01

Application to the Council of Ministers and application form details
The acquisition of real estate property by foreigners requires the approval of the Council of Ministers under the Immovable Property Acquisition (Aliens) Law Cap. 109. The details required for the application form are as follows:
Personal details of applicant
Financial standing of applicant
Particulars of the property
The costs to be paid in foreign currency
All taxes to be paid
The permit is given for the specific property and use only

Application to the Central Bank
The Central Bank will provide a certificate evidencing that the purchase consideration was paid in foreign exchange on submission of the following documents on form EC/NR/01:
Contract of Sale
Copy of the Council of Ministers’ approval to acquire the property
Certificate from the commercial bank evidencing the importation of foreign exchange
Registration certificate of the property

Application to the District Land Office
The transfer of ownership is effected at the District Land Office on submission of the following documents

Application form N.270
The registration certificate of the property
Copy of the Council of Ministers approval
Central Bank’s approval
Evidence of payment of all the property taxes to date.

Central Bank Exchange Control Regulations
As from 1 February 1997 the acquisition of real estate property in Cyprus by foreigners and International Business companies is no longer affected by foreign exchange controls.
Immovable property as at 1 January 1980 and applies to the immovable property held by the tax payer on 1 January of each year. Physical and legal persons, are both liable to this tax.
The tax rates are as follows:
Transfer fees **
When the Land Registry Office registers the immovable property in the name of the purchaser, the purchaser has to pay the transfer fees.

As from 19th March 1999 the transfer fees are as follows:

Stamp Duty
The purchase contract should be stamped of water supply, electricity and telephone lines.

It must be made certain that the seller has a valid title to the property and that there are no encumbrances which will present problems with the transfer of ownership.
In the case of purchase of an apartment or house it must be checked that the seller has secured the building and other permits and can be delivered with vacant possession.
Legal advice to be obtained.
In the contract of sale a provision should be made that the money already paid must be refunded should the council of Ministers refuse the application.
A copy of the contract of sale should be deposited with the District Land Office.
When buying an apartment, house etc it is very important to enquire as to the reputation and reliability of the developer.

Important: The information given does not constitute legal advice and is subject to change according to the laws of Cyprus; professional consulting can be given upon request.