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ACQUISITION OF IMMOVABLE PROPERTY IN CYPRUS

Introduction:-

Cyprus is considered to be a promising business centre. Business people, both foreigners and locals, choose Cyprus in order to invest in immovable property due to the favourable location, the protective legal system, the well- established banking and accounting services, the extensive use of the English language and the continuing development that the island provides.

As of 1 May 2004 Cyprus is a full member state of the European Union and Euro currency was adopted in 2008. Hence, acquisition of immovable property is easier and ownership can be protected and fully enjoyed without discrimination.
The legal system in Cyprus is based on common law and it is generally modelled on the respective English legislation. However, the Cyprus laws on immovable property are considerably different from those applied in the United Kingdom. The ultimate law of Cyprus is the Constitution which establishes equality for all persons and respect human rights. Thus, investors can enjoy their ownership right without any interference from the State and/or third parties.

Acquisition of Immovable Property:-

Cypriots and Europeans having their permanent residence in Cyprus can acquire immovable property without restrictions. The residential status is confirmed if an individual resides in Cyprus for a minimum of 185 days per year.Foreigners and Europeans who do not permanently reside in Cyprus can acquire immovable property under special formalities.

Specifically, foreigners must obtain the permission of the Council of Ministers prior to the acquisition of immovable property. The legal heirs of the future owner of the immovable property are not required to obtain permission from the Council of Ministers in order to transfer the immovable property to their names. Permission will only be granted to a bona fide purchaser (no criminal record and suitable financial standards to support himself). The application to the Council of Ministers to acquire immovable property in Cyprus can be made within a reasonable amount of time after signing the contract of sale. However, future owners are able to take possession of the property immediately.

In general, the relevant application requires information about the personal details and financial standing of the applicant as well as the particulars of the property and its present owner. Specifically, it must be accompanied with the following documents:-

  • An application form (Comm 145) duly completed and signed;
  • Cadastral Survey Plan;
  • Copy of the certificate of ownership/title of deed; In case of house/block of flats, copy of the building permit. If separate titles of ownership have been issued for the flats of the block or if the house is explicitly mentioned on the title of ownership, copy of the building permit is not required. For plots under division, copy of the division permit is required;
  • Level plan of the property. Old houses mentioned on the title of ownership are exempted. A division plan must be submitted in the case of division of plots. In areas of residential development, the plan must be submitted indicating the position of the property in relation to the entire holding;
  • Financial position of the applicant (i.e. a bank statement);
  • Contract of sale duly stamped;
  • A copy of the applicant’s and the spouse’s passport. In case the spouse does not have the same surname as the Applicant then a marriage certificate or a relevant certificate from their Embassy has to be submitted; Copy of residence and work permit of the applicants in Cyprus (if applicable);
  • Particulars of the property;
  • The terms of payment and the way of acquisition; and
  • If the applicant is a company or shareholder in a company, then Certificate of Incorporation, Certificate of Shareholders, Certificate of Directors and Secretary, Certificate of Registered office and Memorandum and Articles of Association must be submitted together with the names, addresses and social insurance numbers of any current employees. Also, copies of the shareholders’ passports and those of their spouses must also be submitted.

The application will be completed and signed by the lawyer of the future owner and will be then submitted to the relevant District Office where the property is located. The letter of approval/refusal by the relevant District Office may take approximately 6 months to be provided.

Specific Performance:-

The transfer of the immovable property can be secured once the contract of sale is signed and submitted to the Land Registry. The duly signed and stamped contract of sale must be submitted to the Land Registry within 2 months from the date of its signature.

Upon submission the future owner/purchaser prevents the current owner of the property from transferring or charging the property to any other person by giving effect to the terms and conditions of the contract of sale.

Capital gains tax:-

Capital gains tax from the disposal of immovable property in Cyprus is levied at the rate of 20% with the first €17,086.14 being exempt for each person. The gains will be calculated on the difference between the sales proceeds and the original cost of the property. Other expenses may be added to the cost of the property. If there is joint ownership then the tax for each owner will be applied separately.

VAT:-

VAT (Value Added Tax) is levied at the rate of 19% of the value of the property. The VAT for purchasers of first residence is levied at the rate of 5% for the first 200 square meters by submitting a relevant application by which such discount will be requested.

Transfer of Ownership and Fees:-

In order for the future owner to register the immovable property under his name some transfer fees must be paid to the Land Registry. The payment of the transfer fees is under the responsibility of the future owner/purchaser. The transfer fees will be calculated based on the property’s market value at the time of the signature of the contract of sale and as specified below:

  • First €5,000 €0.00
  • €5,001 – €170,000 0.15%
  • Over €170,001 0.20%
Immovable Property Tax:-

As from January 2017, there is no immovable property tax.

For further information on this topic please contact us by email on el@elambroulaw.com. This document is not intended to be a substitute for legal advice and therefore provides only general information.

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