As a strategic location in the Middle East, it was subsequently occupied by several major powers, including the empires of the Assyrians, Egyptians and Persians, from whom the island was seized in 333 BC by Alexander the Great.
Subsequent rule by Ptolemaic Egypt, the Classical and Eastern Roman Empire, Arab caliphates for a short period, the French Lusignan dynasty and the Venetians, was followed by over three centuries of Ottoman rule between 1571 and 1878 (de jure until 1914).
Cyprus was placed under British administration based on the Cyprus Convention in 1878 and was formally annexed by Britain in 1914.
While Turkish Cypriots made up 18% of the population, the partition of Cyprus and creation of a Turkish state in the north became a policy of Turkish Cypriot leaders and Turkey in the 1950s.
Turkish leaders for a period advocated the annexation of Cyprus to Turkey as Cyprus was considered an “extension of Anatolia” by them; while, since the 19th century, the majority Greek Cypriot population and its Orthodox church had been pursuing union with Greece, which became a Greek national policy in the 1950s.
Following nationalist violence in the 1950s, Cyprus was granted independence in 1960.
In 1963, the 11-year intercommunal violence between Greek Cypriots and Turkish Cypriots started, which displaced more than 25,000 Turkish Cypriots and brought the end of Turkish Cypriot representation in the republic.
This action precipitated the Turkish invasion of Cyprus on 20 July,] which led to the capture of the present-day territory of Northern Cyprus in the following month, after a ceasefire collapsed, and the displacement of over 150,000 Greek Cypriots and 50,000 Turkish Cypriots.A separate Turkish Cypriot state in the north was established by unilateral declaration in 1983; the move was widely condemned by the international community, with Turkey alone recognizing the new stat
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Destinations: Paphos, Larnaca, Ayia Napa, Limassol, Nicosia
How to acquire a property in Cyprus
Fees and Taxes on Cyprus Property
1. Transfer fees: one-off payment.
The purchaser will be liable to pay the following transfer fees for the property acquired, when this is registered in his name at the Lands’ Office.
The fees are charged on the property’s market value at the date of purchase:
Property Value €
Transfer fee €
Up to €85,000 – 3% / €2,550
€85,001-€170.000 – 5% / €4,250
€170,001 and over – 8%
The director of the Lands Office may dispute the declared value and adopt a Market Value of the property. The adopted valuation date is the date of purchase provided the sales contract is deposited at the Lands Office. If not, the actual transfer date will be adopted as the valuation date, unless proof of the purchase date is provided.
If the property is placed in joint names, e.g. the name of a couple (husband & wife) or two individuals, then the purchase value is split into two parts which results in reduced transfer fees.
If €170.000 property is bought
Property on one name
Property in the names of two persons
Up to €85,000 – 3% / €2,550
Husband €85,000- 3% / €2,550
€85,001-€170,000 / 5% / €4,250
Wife €85,000-3% /€2,550
Total Fees Payable : €6,900
Total Fees Payable : €5,100
2. Immovable property tax.
The registered owner of the property is liable to an annual immovable property tax calculated on the market value of the property as at 1st January 1980.
Immovable property tax
[a] 0 – €40.000-6 ‰
(minimum amount €75)
[b] €40.000 – €120.000 – 8 ‰
[c] €120.000 – €170.000 – 9 ‰
[d] €170.000 – €300.000 – 11‰
[e] €300.000 – €500.000 – 13 ‰
[f] €500.000 – €800.000 – 15 ‰
[g] €800.000 – €3.000.000- 17 ‰
[h] Over €3.000.000- 19 ‰
3. Fees for the deposit of a sales contract in the Land registry:
The deposit of the sales contract is advisable in order for the purchaser to exercise the defence of Specific performance against the developer/seller and benefit from the property tax exemptions.
The purchaser has the right to deposit the sales contract within 6 months after signing of the contract. However the sales contract must be stamped within 30 days after signing. After this period a small penalty is imposed.
The contract stamp fees are:
No stamp fees for values upto €5000,
1.5‰ for values from €5001 upto €170.860 and
2.0‰ for values there after, with maximum fees €20,000
4. Income Tax and Capital gains tax: Dealers in land are treated under the income tax laws whereas non dealers under the Capital Gains Tax ones.
Capital Gains Tax is levied at the rate of 20% on gains arising from the disposal of immovable property or the disposal of shares of companies the assets of which consist mainly of immovable property.
The cost of acquisition and sale includes interest of payments paid for the acquisition.
Additions to the property etc., are also deductible from gains. On the acquisition cost, the inflation rate (as this is published by the Government) is added on.
Thus the tax is charged on gains which takes into account the inflation The Gains, Tax as a whole, has minimal effects since the acquisition cost coupled with the various allowances and inflation leaves little for taxation.
In Cyprus there is no inheritance tax and if one is domiciled in Cyprus (due to the double taxation agreement between Cyprus + other countries) one is exempted from such a taxation on one’s worldwide assets.
On the other hand there is an inheritance tax in most other countries and the tax rate can reach 40% and even more.
This is a substantial tax and one which comes at the worst possible time, so if one of the couple dies and the other spouse has no cash to pay the taxation, it may mean that she/he, will have to sell, perhaps, the family house to pay the tax and live in rented accommodation etc etc.
It is a tax at the worst moment, since in addition of one losing his partner, he has to pay on top and possible lower his standard of living.
Cyprus is considered as being a “tax heaven” not only because it has a low income tax (the lowest in Europe) pensions are taxed at 4½% instead of 22% in say the U.K. and in addition the no inheritance tax.
Tax planning is needed therefore because in order for a foreign person to reap the benefits of no inheritance tax, he must prove to his own country authority, that he is domiciled in Cyprus.
The word domicile is not related to the permanent resident in this context. The word domicile means that one has definitely decided to emigrate e.g. in Cyprus and live here permanently until the end of his life.
He must prove that he does not intend to return to his country of origin at sometime in the future and to prove that for all intend and purposes he wishes to become “one of the locals”.
It is a difficult job to persuade the original home tax authorities and we do suggest that you seek an accountant’s / tax expert’s advise.
But as an indication of whether you are (+) or not (-) domiciled in Cyprus there is a short (not by any means complete) list for the readers to check, which relates to the U.K. tax authorities.
Other countries of origin may have other parameters on the questions below (+) means it is for you establishing a Cypriot domiciled and (-) not.
Do you work in Cyprus(+)
Do you have a business in the U.K. – do you work in the U.K.(-)
How many years do you live in Cyprus(+)
How often do you visit the U.K.-often?(-)
Do your children, if young, live with you?(+)
Do you keep your U.K. house?(-)
Do you keep your British bank account (-)
Have you got married in Cyprus (+)
Do your children go to a local school?(+)
Do you keep substantial assets in the U.K.(-)
Is your business in Cyprus(+) and do you travel often in the U.K.(-).
Have you made a local will(+)
Did you buy a grave here(+)
Have your changed your nationality(+),
Did you obtain a local passport?(+)
Is your main bank in Cyprus?(+)
So it is not as easy as it looks. Despite the fact that it might be difficult for the tax authorities to ascertain your local assets (especially if it is registered on a Co’s name) the U.K. tax authorities are getting more and more keen to examine British citizens foreign assets (approximately 200.000 British nationals own property abroad) and based on recent reports, one must not exclude some form of an on spot investigation through local investigation offices.
1. If the property is the sellers’ primary residence, with land extent up to 1.500 sq.mts., there is a lifetime [i.e. once only] exception of €85.430. If it is in the names of both spouses then again the sum of €85.430 [i.e. €42.715 each] is in total. This is so, provided that one lives in the residence for the past five years prior to sale and there are no other previous claims [for the €17.000 mentioned below in paragraph 3].
If a previous allowance has been made, this previous allowance is deducted from the €85.430 allowance. This allowance of €85.430 holds good provided one claims it, within 12 months after the house is sold or within 12 months from not living in the residence.
2. If one has a house which was sold and has claimed the exception, which did not warrant the full allowance of €85.430 then the balance can be claimed from the new permanent residence, purchased.
He can claim the difference provided he lives in the new residence for a period of 10 years, prior to the sale. It is repeated here that the €85.430 is for life in total of any number of residences.
3. For any other kind of property (e.g. a holiday home, plots, land), only €17.000 is exempt, and this exemption is for each registered owner, [once only] not per property, so if a gain is made by two co-owners each one is allowed the €17.000 exception.
For agricultural land sold by a bona fide farmer, the exception increases to €25..630. [One cannot claim both  and  of these exceptions. The total amount that can be claimed for both allowances must amount to €85.430 maximum.
4. Exchange of property.
Capital gains tax is paid on the difference between the value of the property given and the value of the property obtained.
So, if for example, one exchanges a €500.000 property with another property of €300.000, then the capital gains tax is applied on the difference of €200.000. If the exchange is equal in value, then no Capital Gains Tax is paid.
5. Other Property Taxes: These are taxes paid to the Municipality and depend on the size and value of the property. It covers refuse collection, sewerage, street lights etc. and it varies according to the area and the property’s value, from ±€100 – ±€250 annually.
6. VAT on Real Estate: For those buildings for which an application for a town planning permit was submitted prior to the 1.5.2004, no V.A.T. is charged in the event of an acquisition.
For those after the above date, a V.A.T. of 19% is charged, but only once. So if you acquire a property for which V.A.T has been paid previously you will not be required to pay V.A.T. again. V.A.T is not added on the sales price for the purposes of calculating the property transfer fees.
In case of a house purchase which is classed as the main/permanent resident of the purchaser, and provided that it is not larger than 250m², the V.A.T. is refunded up to 10% (out of the 15%).
In case you buy property in order to sell it and which is not used, not even by the purchaser, not let etc, no V.A.T. is paid, but if you decide to sell it, a V.A.T. must be charged by the original buyer to the new buyer (to be paid to the Authorities).
If a person claims and receives a refund, he must live in the house for 10 years.
This means that the V.A.T. must be fully paid and then the Authorities will require proof that the applicant is using the property as his main/permanent residence (with the production of water/EAC/CYTA bills, payment of taxes etc).
The applicant will be required to declare that he/she has no other house as such (permanent), whereas foreign purchasers must live in the house 186 days p.a. at least.
So, it is reasonable to expect a required period of say 6 months after the property is lived in, in order to expect the refund. V.A.T. is paid only once, so if you buy a property and you pay V.A.T. and then you decide to sell it, no V.A.T. is charged.
If he leaves the house e.g. he decides to sell the property on the 8th year, he must refund the V.A.T. refund to the Authorities in proportion to the period outstanding out of the ten years e.g. 2/10. If he lives in the house for 10 years, he can acquire other property with the same V.A.T. rights.
In this context house includes also a flat.
It includes also those cases where a person erects a house. V.A.T. is charged on all buildings purchase and including V.A.T. on payments when building a house. Refund is only given to residents only (flats/ houses) and for no other type of buildings.
V.A.T. is “refunded” on buildings which are used as business e.g. hotels, offices, shops etc. i.e it is deducted from the V.A.T received, of the normal business transactions.