ACQUISITION OF IMMOVABLE PROPERTY BY INTERNATIONAL BUSINESS COMPANIES AND EXPATRIATE DIRECTORS/EMPLOYEES

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

Restrictions

Aliens are given permission to acquire one of the following:

• apartment
• house
• building plot or land up to approximately three donums (2675 square meters)

• Transfer by Registration
• Long leases of more that 33 years
• The acquisition and control of shares in a company which owns real estate, if such an acquisition results in the company becoming controlled by aliens
• the establishment of a trust or other set up for the benefit of an alien

Application to the Council of Ministers and application form details

The acquisition of real estate property by aliens 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:

• a) Personal details of applicant
  
• b) Financial standing of applicant
  
• c) Particulars of the property
  
• d) Particulars of present owner
  
• e) Terms of payment
  
• f) The way of acquisition (i.e. Freehold, leasehold shares in property company etc)
  
• g) 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 six to nine 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 an alien is granted only if:

• a)  The house will be used only for his own residence and the building plot or land  does not exceed 2675  square meters. 
  
• b)  It is used for professional or commercial business
  
• c)  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:

• a)  The transfer to be effected within a year from the date of the permit or within three years in case of  construction or a building on the property
  
• b)  The costs to be paid in foreign currency
  
• c)  All taxes to be paid
  
• d)  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.

• a)  Contract of sale
  
• b)  Copy of the Council of Ministers’ approval to acquire the property
  
• c)  Certificate from the commercial bank evidencing the importation  of the foreign exchange
  
• d)  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 a)  Application form N.270

• b)  The registration certificate of the property
  
• c)  Copy of the Council of Ministers approval
  
• d)  Central Bank’s approval
  
• e)  Evidence of payment of all property taxes up to date

Central Bank Exchange Control Regulations

As from 1 February 1997 the acquisition of real estate property in Cyprus by aliens and offshore companies is no longer effected by foreign exchange controls. Thus on disposal of the properly the whole amount can be exported (after the tax obligations have met). A clearance certificate is required by the Central Bank of Cyprus.

Immovable Property Tax

This tax is imposed on the market value of immovable property as at 1 January 1980 and applies to the immovable properly 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:

Every registered owner whose immovable property exceeds C£100,000 must submit a declaration of immovable property (IR 301 and IR 302) and pay the respective tax every year before 30 September of that year.

Capital Gains Tax

On disposal of the property, there will be a capital gains tax at the rate of 20 per cent on any gain.
The first C£10,000 (or C£50,000 in the case of one’s private residence) is exempt and there is also an indexation allowance. However, there is no tax if the property was acquired between 1 August 1980 and 13 July 1990 with foreign exchange imported into the Republic.

Estate Duty

No estate duty is payable on death in the case of a retirement home because the property was acquired with foreign exchange.  

Transfer fees

When the immovable property is registered in the name of the purchaser by the Land Registry Office, the purchaser has to pay the transfer fees at the following rates

The purchaser is liable to the payment of transfer fees on the basis of the value of the property as assessed by the District Land office.

Stamp Duty

The purchase contract should be stamped within 30 days of its signing at the rate of 1,5 per thousand up to C£100,000 and thereafter at the rate of 2,0 per thousand.