Global Property Guide

Financial Information for Residential Property Buyers


Living There

Last Updated: April 12, 2017

INDIVIDUAL TAXATION

Cyprus upperclass properties

Residents in Cyprus are taxed on their worldwide income. Married couples are assessed and taxed separately.

Foreign individuals become residents in Cyprus if they stay in the country for a period or periods exceeding a total of 183 days in a tax year.

INCOME TAX

Income is classified in different categories: (1) business profits (including income from a profession or a vocation and from farming and animal husbandry), (2) income from employment, (3) discounts (dividends and interest are listed but exempt), (4) pensions, charges, and annuities, (5) rents, royalties, remuneration, or other profits from property, and (6) net consideration in respect of trade goodwill.

Residents are taxed on almost all kinds of income, and taxable income is generally an aggregate of all income, less deductions and exemptions.

INCOME TAX

TAXABLE INCOME, (€) TAX RATE
Up to 19,500 0%
19,500 - 28,000 20% on band over €19,500
28,000 - 36,300 25% on band over €28,000
36,300 - 60,000 30% on all income over €36,300
Over 60,000 35% on all income over €60,000
Source: Global Property Guide

Taxpayers are entitled to the following general deductions:

  • Donations made to approved charities
  • Social Insurance Fund contributions and similar contributions paid abroad
  • Life insurance premiums and pension plans contributions and medical funds contributions

A specific limit for life insurance of 7% of the insured capital sum and an overall limit of one-sixth of taxable income is set for the general deductions.

RENTAL INCOME
Rental income is subject to income tax in Cyprus and a standard deduction of 20% of gross rental income is allowed to account for income-generating expenses. Taxable rental income is computed as gross rental income less 20% of gross rental income.

CAPITAL GAINS TAX

Capital gains from the sale of immovable property acquired after January 1, 1980 are subject to 20% tax. Taxable capital gain is computed as gross selling price less acquisition costs and improvement costs.

However, individuals can deduct lifetime exemptions from the capital gains, which is given only once per taxpayer during his lifetime. The deductible amount varies depending on the property seller and the property.

  • An individual selling his private residence may deduct a lifetime exemption of €85,430, provided that the owner occupied it for at least 5 years.
  • A farmer disposing or selling agricultural land may deduct a lifetime exemption of €25,629.
  • Any other property disposal may deduct a lifetime exemption of €17,086.

The following disposals of immovable property are not subject to capital gains tax:

  • Transfers of property arising on death
  • Gifts made from parent to child or between husband and wife or between up to third degree relatives

PROPERTY TAXATION

Real Estate Tax

Real estate tax is levied on the value of properties located in Cyprus. The base of the tax is the estimated market value of the property on January 1, 1980.

TAX ON IMMOVABLE PROPERTY

TAXABLE VALUE (€) TAX RATE
Up to €12,500 0%
€12,500 to €40,000 0.60% on band over €12,500
€40,000 - €120,000 0.80% on band over €40,000
€120,000 - €170,000 0.90% on band over €120,000
€170,000 - €300,000 1.10% on band over €170,000
€300,000 - €500,000 1.30% on band over €300,000
€500,000 - €800,000 1.50% on band over €500,000
€800,000 - €3,000,000 1.70% on band over €800,000
Over €3,000,000 1.90% on value over €3,000,000

Real estate tax is payable by the end of September each year and it is not deductible for income tax purposes.


CORPORATE TAXATION

INCOME TAX

Corporate income in Cyprus is taxed at 12.5%. Expenses incurred in the production of income are deductible from gross corporate income.

CAPITAL GAINS TAX

The capital gains of a company are subject to 20% tax. Taxable gain is computed as gross selling price less acquisition costs and improvement costs. If the capital gains resulted from the disposal of property due to reorganization, the gains are not taxable.

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