- Acquisition of Primary Residence
Reduced VAT rates apply on the acquisition and/or construction of residences for use as the primary and permanent place of residence. Such conditions vary each year so it is better to consult with us before signing up the property purchase agreement.
Renovation and repair of private residences is carried at the reduced rate of VAT of 5%
The reduced rate of 5% applies for renovation and repair of old private residences subject to the following conditions:
- a period of at least three years has elapsed from the date of the first use of the residence
- residence is used as the place of residence of vulnerable groups, or
- residence is in remote areas
Are currently reduced by 50% until further notice by the government.
Do not apply if the transaction is subject to VAT
Transfer fees tax brackets:
- from parents to children – Nil
- between spouses – 0,1%
- between third degree relatives – 0,1%
- to trustees €50
VAT does not apply on resales whilst a 19% VAT is charged on new properties.
a) Immovable Properties - Owned by a Company
Rental Income: Subject to Special Defence Tax at 30% on the 70% of rental income (2.25% x total rental income)
Company Profits: Subject to Corporation tax at 12.5% + Deemed Dividend Tax, if shareholders Cyprus tax residents and domiciled (does not apply for Cyprus tax residents who are not domiciled)
b) Immovable Properties - Owned by an Individual
Rental Income: Subject to Special Defense Tax at 30% on the 70% of rental income (2.25% x total rental income) + Applicable NHS
Profits: Added to the tax payers tax return and subject to income tax at appropriate thresholds. See table with applicable tax rates here.
c) Immovable properties classified as historic (diatiritea)
Short lets (via booking.com, airbnb etc) - are taxed normally as above
Long stays (rental agreement is available) are subject only to Special Defence Tax and NHS (NHS applies only if the owner of diatiriteo property is an individual and not a company).