Table 2
Non EU citizens

This in Cyprus, unlike the UK, is legally binding and so "guzumping" does not exist. Contracts are consequently drawn up and this process takes only a few days. Upon signing of the contract, the buyer must pay at least 20%-30% of the value of the property. The remaining sum is paid according to the terms agreed with the seller which usually include periodic installments until delivery.

3. Approval by the Council of Ministers
According to Cyprus Law, foreigners must obtain the permission of the Council of Ministers prior to the acquisition of real estate property. Recently these powers have been assigned to the pertinent Authorities of every district, in order for the procedure to become speedier.

A foreigner- the law uses the term "alien" is any person who is not a citizen of the Republic, including an alien controlled company. The term does not include foreigners of Cypriot origin or non Cypriot spouses of citizens of the republic.

Acquisition of real estate property in Cyprus includes:
•Transfer of title deed.

•Long lease for periods of more than 33 years.

•The acquisition of shares in a company that owns immovable property, if such acquisition results in the company becoming controlled by foreigners.

•The establishment of a trust or any type of set-up, which is connected with the ownership of real estate, for the benefit of a foreigner, including tax benefits, although the proceedings for the obtaining of the permission might need a considerable amount of time to be completed, purchasers are entitled to occupy their properties until then.

Furthermore, any contract for the purchase or lease of property is valid even if the pertinent authority rejects the foreigner's request for permit. As such, when purchasing a property, it is advisable for the relevant contract to include provisions for such an event so as to secure a refund of any money paid or any other remedy.

The application to the pertinent authority requires information about the personal details and financial standing of the applicant and particulars of the property and its present owner. Also it must be accompanied by a number of legal documents.

As a general rule, permission is granted to bona fide applicants provided they have:
•No criminal record in their country or in Cyprus
•The financial means to support themselves in Cyprus. (An income of €20500 per annum between the couple is considered satisfactory)

As of 1 May, 2004, citizens of the E.U residing in Cyprus or Cyprus based companies controlled by citizens of a Member State are not considered to be foreigners. As for Citizens of the EU not residing in Cyprus, there is a transitional period until May, 2009, after which, they will be treated as equal to Cypriot citizens, regardless of their residential status.

4. Specific Performance - Safeguard for the buyer
Specific Performance Law safeguards a purchaser of immovable property from a transaction between a seller and a purchaser, especially when the purchaser is not allowed to immediately transfer the acquired property onto his/her name even though payment of the consideration has been effected.

According to the provisions of Specific Performance Law, the purchaser of immovable property may secure the transfer of the acquired property onto his/her name by depositing a duly signed and stamped copy of the contract at the Land Registry, within two (2) months from the signing of the contract.
By depositing the contract in the Land Registry, the purchaser prevents the owner from transferring the property elsewhere or changing it, for as long as the contract is valid and legally effective. No burdens, charges or encumbrances can affect the right of specific performance after the contract has been deposited with the Land Registry.

Depositing a copy of the contract to the Land Registry gives the purchaser the right to seek "specific performance" of the terms and conditions of the contract and thus to register the property onto the purchaser's name, even though the owner may not be willing to accommodate such procedures.

5. Fees, Charges and Property Taxes
Transfer Fees
The transfer of immovable property into a purchaser's name can be effected once permission to acquire the property has been granted from the Council of Ministers/Pertinent Authority (where that is necessary - see point 3 above).

When registering the property under his/her name at the District Land Office, the purchaser will be liable to pay the following transfer fees, calculated according to the property's market value at the time of signing of the contracts:

Example 2:
If the property is bought and registered in the names of two individuals
(i.e. husband and wife), then the market value of the property is divided in two parts resulting in reduced transfer fees.

On the transfer of a property at the Land Registry Office, which as purchased for €187950, and will be transferred in the name of two individuals, the purchasers will pay €5980 in transfer fees:
First €170860 taxed @ 3%, = €5125(85400 for each purchaser) Next
€17086 taxed @ 5% = CYP 500 (5,000 for each purchaser) CYP 110,000 CYP 3,500

Stamp duty
Unless otherwise stipulated in the contract, the purchaser is liable for the payment of stamp duty at the rate of 0.15% of the value of the property up to €170860 and 0.20% for over €170860.

Example:
The stamp duty on a contract for will be €187950 €290(€260 for the first €170860 @ 0.15% and €35 for the remaining €17090 @ 0.20%.)

The contract should be stamped within a period of thirty (30) days from signing.

Although the absence of the revenue stamp on a contract does not render it void, the revenue stamp must be paid before depositing the contract to the Land Registry for specific Performance purposes (see point 4 above)

The stamp duty plus a fine will be payable when the document is produced to the Land Office for the transfer of ownership of property, to any Government department or to the court. In order to avoid the payment of a fine, which could be substantial, the documents should be stamped within 30 days of their signing.

Mortgage fees
The registration fee of a mortgage is one 1 per cent (1%) of the amount secured, plus the relevant stamps
Immovable Property Tax
The registered owner of a property is liable to an annual immoveable property tax calculated on the market value of the property as on 1s January, 1980.

Capital Gains Tax
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 on immovable property.
As a general rule, the gain is calculated as the difference between the sales proceeds and the original cost of the property. Interest on payments paid for the acquisition, additions to the property and inflation rate, as published yearly by the

Government. are deducted form fees.
Capital gains tax as a whole has minimal effect, since the appreciation of values, coupled with the following allowances and inflation, tend to leave little excess.
Individuals are entitled to the following lifetime allowances on Capital Gains Tax:

•The first €17086 of gains arising from the disposal of any property are
exempted.
•The first €25630 of gains arising from the disposal of agricultural land by the
farmer are exempted (subject to certain conditions).
•The first €85430 of gains arising from the disposal of a house used by the
owner for his/her own habitation are exempted (subject to certain conditions).

The above allowances are not available separately and an individual claiming a combination of the above allowances is only allowed a maximum lifetime allowance of €85430.

Cyprus residents and companies registered in Cyprus are subject to Capital Gains Tax when disposing their property, wherever it is, in Cyprus or overseas. However. under certain conditions, Capital Gains Tax car be reduced significantly if the purchase of the immovable property is effected through a Cyprus registered company.

Non-residents only taxed when selling property situated in Cyprus but they can be completely exempt from Capital Gains Tax if they can prove that the purchase cooperation was paid with foreign funds imported between 1 August 1980 and 13 July 1990.

1. Transfers by reason of death.
2. Gifts between relatives up to third degree of kindred.
3. Gifts to limited liability companies when, at the time of transfer and for a period
of five years following the transfer, all the shareholders of the company are
members of the family of the donor.
4. Gifts by family companies to their members, but only in cases where the
property transferred, was obtained by the company as a gift.
5. Exchanges of immovable properties.
6. Compulsory acquisitions.
7. Gifts to charitable institutions.
8. Gifts to charitable institutions or the Republic of Cyprus Estate Duty.

Estate duty
Estate duty was abolished as from 1/1/2000.

Communal Expenses
Communal expenses are usually payable monthly or quarterly, in advance, and vary from development to development depending on the area and type of the property. They cover an immovable property's owner share of the cost of cleaning and maintaining common areas and gardens, communal swimming pool expenses, electricity in common areas, management fees and repairs.

6. Personal Income Tax
All Cyprus tax residents are taxed on all income accrued or derived from all sources in Cyprus and abroad. Individuals who are not tax residents of Cyprus are only taxed on income accrued or derived from sources in Cyprus.

An individual is a tax resident in Cyprus if he/she spends in Cyprus more than 185 days in any one year. Days in and out of Cyprus of Cyprus are calculated as follows:

(a) The day of departure from Cyprus counts as a day of residence out of Cyprus.
(b) The day of arrival in Cyprus counts as a day of residence in Cyprus.
(c) Arrival and departure from Cyprus in the same day counts as one day of
residence in Cyprus.
(d) Departure and arrival in Cyprus in the same day counts as one day of residence
outside Cyprus.

The following income tax applies to individuals:

Social insurance, provident fund, medical fund, pension fund contributions and life insurance premiums are deducted from income (only up to 1/6 of the chargeable income).

Pensioners
The pension for a person, who is resident in the Republic, paid for services which have been rendered abroad, is taxable at 5% on any amount exceeding €3417 in a tax year.

The following income sources of pensioners are taxable at the normal tax rate:
1. Interest Income
2. Dividend Income
3. Profits from the disposal of securities shares, debentures, government bonds)
4. Profits from a permanent establishment which is maintained abroad
5. The emoluments from salaried services performed abroad for an aggregate
period in the tax year exceeding 90 days.

7. Corporation Tax
All companies tax resident of Cyprus are taxed on all their income accrued or derived from all sources in Cyprus and abroad. A non-Cyprus tax resident company is taxed on income accrued or derived from a business activity which is carried out through a permanent establishment in Cyprus.
A company is resident of Cyprus if it is managed and controlled in Cyprus.

Corporate Tax Rates:

8. DOUBLE TAXATION TREATIES
Cyprus has signed double taxation treaties with a considerably large number of countries and more are under negotiation. These treaties may affect favorably the ownership of immovable property in Cyprus and also groups of people who decide to relocate to Cyprus, such as retired residents, employees and business investors
Some of the countries with which Cyprus has entered into double taxation treaties are UK, Ireland, Greece, USA, Canada, France, Italy, Russia, Belarus, Romania, China, Austria, Belgium, South Africa, Yugoslavia and many others.