TOFARCO Ltd offers this section to provide information about property investment in Cyprus.

TOFARCO encourages all its customers to seek professional counsel from professionals of the related financial and legal sectors prior to proceeding with an agreement. This document is for information purposes only and the Company does not have any responsibility for any of the following legal information.

Title Deed
The procedure of issuance of Title Deeds begins with the submission of the final drawings of construction by the project architect and goes through the Technical Department of the respective Municipality and after that is completed the Department of Lands and Surveys issues the title deeds. The transfer of ownership from Vendor to Purchaser is undertaken by a simple procedure at the Land Registry Department, either by the buyer in person or by appointing a third party with a Power of Attorney.

Residential Permit/ Temporary Permit
Residential Permit is easily obtained for Non-Cypriot residents of Cyprus, who have purchased property.
Temporary permit requires the existence of a bank account in Cyprus and a Contract of Sales for any residential property purchased. Temporary residence status can be from one to four years.

Permanent permit
In addition to the above requirements, the applicant must establish evidence of a secured annual income of not less than € 9.570 per person plus € 4.615 for each dependant person. Please contact the Ministry of Interior in Nicosia for further information or visit their website at www.moi.gov.cy

The Ministry of Interior or the Republic of Cyprus issued an announcement on 23/8/2012 that Immigration Permits (Permanent Residence) will be issued to foreign nationals under the following terms:

(a)The applicant can prove available secured annual income of at least €30.000, increased by €5.000 for each dependant person, such income originating from salaries, pensions, dividends, deposits, rents etc. generated outside Cyprus. Dependants are the spouse and children under 18 years of age.

(b)The applicant must submit with the application

• a title of ownership or
• a contract deposited with the Department of Lands and Surveys for the purchase,

of a house/flat or other building at a selling price of at least €300.000 (net of VAT) with proof of payment of at least €200.000 transferred from abroad. It is also acceptable to purchase two adjacent properties in the same development which may be united, consisting of two residencies, or a residence and a shop of up to 100 sq.m., or an office of up to 250 sq. m. provided the combined selling price is at least €300.000 (net of VAT).

The applicant must submit confirmation letter by a Cypriot Bank of a deposit of at least €30.000 transferred from abroad which will remain in a deposit account for at least 3 years. The applicant must submit a certificate of unblemished (clear) criminal record from its country and generally should not present in any way any threat for public order and security in Cyprus. Clean criminal record has to be provided also by children over the age of 16. The applicants must submit a statement that he or she does not intend to work or be engaged in any firm of business in Cyprus.

After the Permit is granted the applicant must visit Cyprus at least once every two years. For more details and information click here

Non Europeans are entitled to a freehold ownership of a house, an apartment or a plot of land, with maximum allowed extend of 4014 sq.meters (four thousand and fourteen square meters).

Foreign companies can acquire premises for their business or residences for their directors.
Europeans who acquire permanent or temporary permit can register in their name as many properties as they want provided that they sign a confirmation to the government that they will stay for the following five years in Cyprus. For more information click here.

Real Estate Transfer
Real Estate Transfer fees are imposed by the Department of Lands and Surveys in order to transfer FREEHOLD ownership to the name of the purchaser. The transfer fees are due for payment when the transfer of the title deed in the name of the purchaser takes place. The Purchaser is solely responsible for the payment of the transfer fees. The scale with which the transfer fees are calculated are as follows:

Property Price (€)		Transfer fee rate
up to 85.430		3%
from 85.431 to 170.860		5%
from 170.861 and over		8%

On 2/12/2011 a new law was introduced in Cyprus which provides the following:

(a) No transfer fees will be paid in case that VAT was paid for the same sale of the same immovable property and such sale is made between the 2/12/2011 and 31/12/2014.
(b) Reduction to 50% of the transfer fees in case where VAT was not paid but the following terms and conditions apply:

(i) It is the first sale of such property registered with the Land Registry Office after the issuing of the Town Planning Permission or the Building Permit.
(ii) The relevant Contract of Sale has been signed and deposited for specific performance to the District lands office within the period from 2/12/2011 until 31/1/2014.

(c) If the above (a) and (b) conditions are fulfilled, the date of actual transfer of the property may take place at any time.

In the case where by the property title is transferred in two or more names, then the Land Registry Department uses these rates with a different approach. For further information please visit the site of the Department of Lands and Surveys through the link at the site of the Ministry of Interior at www.moi.gov.cy

Property Taxes, Fees
Rates Immovable Property Tax
The annual immovable property tax is imposed on the market value of the property as at 1st January 1980 and applies to the immovable property owned by the taxpayer on 1st January each year.

Market value of property (1/1/1980)(€)		Annual Property tax (‰)
Up to 120.000		0%
120.001 – 170.000		4%
170.001 – 300.000		5%
300.001 – 500.000		6%
500.001 – 800.000		7%
Over 800.001		8%

Payment of VAT 5%

It applies to all foreign nationals (European and third country nationals)

1.The terms under which a buyer is entitled to a 5% VAT in general lines are as follows:

(a) The Property is under construction or completed and subjected to VAT (All buildings for which the town planning application was submitted on or after the 1/5/2004 are subjected to VAT).
(b) The Property is designated to be used as the residence of the buyer in Cyprus.
(c) The Property bought has not been used before.
(d) It must be used (in the case of ready made property) or intended to be used (in the case of property under construction) as the main and permanent place of residence of the buyer in the Republic (the buyer is not required to make Cyprus his/her permanent residence, but only to use the property as permanent space of residence, when in Cyprus).
(e) The VAT reduction applies only to the first 200 sq.m. of houses which do not exceed 275 sq.m.
(f) The applicant must not have another property as permanent residence in Cyprus.
(g) Applicant must submit an application and attach among other
i. Contract of Sale in case or purchase or a Contractors Contract in case of building a house (in the latter case a declaration by the building contractor is submitted that he is licensed to build the house).
ii. Proof of ongoing construction in case of building a house
iii. Architectural plans
iv. Proof that the applicant is using the house as a place of residence such as various bills. In the case of houses under construction, the bills or other proof of use must be presented within 6 months from the date of possession of the house.
v. Any other supporting data.

2. A copy of the application certified by the Authority to which it was submitted, is delivered to the seller or the building contractor, as the case may be, who is obliged to apply thereon the reduced VAT of 5%.

3. In any case that it is subsequently revealed that the applicant was not entitled to a reduced VAT, such person must pay the full amount of VAT.

4. In any case that the entitled person ceases to use the house as a place of residence at any date before the completion of a 10 year period, such person must within 30 days from such date inform the VAT Director and to pay the amount of VAT corresponding to the part of the 10 years period during which the house was not used as the place of residence.

Capital Gains Tax
On gains from disposal of immovable property situated in Cyprus, capital gains tax will be imposed at the rate of 20% with the first € 17.086,14 being exempt for each person. The gain is the difference between the sales proceeds and the original cost of the property. In the case of a property which was purchased before 1/1/1980, the gains are the difference between the sales proceeds and the market value of the property as of 1/1/1980.

The seller is entitled to a further allowance regarding the transfer fees paid, inflation rate per year and the cost of any additions made to the house. Gains from the disposal of a private residence are exempt up to € 85.430,07 in total if the owner resides in it continuously for at least five years prior to disposal.

Stamp Duty on Contracts
The purchaser is liable for the payment of stamp duty on the purchase price of the property at the rate of 1.5 per thousand up to € 170.860,14 and thereafter at the rate of 2.0 per thousand.

This should be paid within 30 days from signing of the contract of sale.

For example if the purchase price is € 256,290.22

first € 170.860		1.5‰ € 256.29
next € 85.430		2.0‰ € 170.86
		Total € 427.15

Local Authority Taxes & Rates
The Local Authorities charge approximately € 85 - € 260 per year depending on the size of the property that is located in its respective area.
This tax is for refuse collection, street lighting, sewerage, etc.
The basic utilities, electricity, water and telephone are payable individually in accordance with the relative Companies and are based on consumption.

Value Added Tax and Grant Schemes
All newly constructed projects have VAT added on the price at a standard rate. Under certain conditions, a grant is given to entitled persons for the purchase of those properties that are used as the permanent residence.
The application for the grant is submitted to the Ministry of Finance by any citizen of the Republic of Cyprus or of any other EU member state who resides permanently in the Republic of Cyprus. The grant is for properties whose total covered area does not exceed 250 m² and is restricted to 130 m². For more details please consult an accountant or visit www.moi.gov.cy


Personal Income Tax
The following income tax rates apply to individuals:

Chargeable income (€)		Tax Rate (%)		Accumulated tax (€)
0 – 19.500		-		0
19.501 – 28.000		20		1.700
28.001 – 36.300		25		3.775
over 36.301		30

Corporate Tax
As a member of the EU, Cyprus regulatory regime is in full compliance with the requirements of the OECD. Cyprus has the lowest Corporate tax rate in the EU, at 10%. The island’s low tax rate coupled with at extensive list of double tax treaties places it high on the list of preferred jurisdictions for international tax planners and investors. For more information please consult an accounting firm in Cyprus.

Mortgage Finance
The majority of commercial banks in Cyprus are authorised to offer mortgage facilities to local as well as foreign applicants to assist in the purchase of their property.
TOFARCO is in a position to assist all its customers in securing a loan with the majority of the commercial banks in Cyprus.

Obtaining Cyprus Nationality
It applies to all foreign nationals (European and third country nationals)

1. By Naturalisation

Requirements:
(a) 7-year legal stay in Cyprus with 5 years as a minimum number of cumulative stay in Cyprus
(b) Continuous stay in Cyprus during the year preceding the date of the application
(c) Clear criminal record
(d) Intention to stay in the Republic permanently

2. By Marriage to a Cypriot

Requirements:
(a) Completion of 3 year married life, 2 years stay with the Cypriot spouse in the Republic.
(b) Good character (clear criminal record).
(c) Has not entered or remained illegally in Cyprus

3. By exception

For more details please visit the website of the Ministry of Interior www.moi.gov.cy

Further to the above criteria, the applicant must
• Be at least 30 years old
• Be the owner of a permanent house in Cyprus
• Have a clear criminal record
• Not be included in the list of persons against whom a property detention order exists within the European Union.

General Information
• For a mortgage in Euro the maximum repayment period can be 25 years or more depending on the terms and conditions of each respective bank.
• The mortgage can be granted in Foreign Currency (e.g. USD, EUR, GBP, CHF Etc) or in Euro.
• For a mortgage in Foreign Currency the maximum repayment period can be 15 years.
• The maximum amount borrowed can be up to 70% of the value of the purchased property. First home buyers can borrow up to 80% of the value of the purchased property (depending on the various terms and conditions).

Financing Securities:
1. TOFARCO is in constant collaboration with commercial banks in order to secure financing schemes with minimal security requirements, for its customers, resulting in substantially lower costs.
2. Assignment of the Purchaser’s rights deriving from the Contract of Sale in favour of the respective Bank.