Cyprus tax: for owners and businessmen

Types of taxes

The non-residents receiving income on the territory of the Republic, subject to income tax (Income Tax and Corporation Tax). The term Income Tax applies to the taxation of incomes of physical persons and Corporation Tax – income of legal entities income tax rate which is 12.5%.

When selling immovable property situated in Cyprus, from the seller charged the tax on capital gains. The tax is levied at the rate of 20% of the profits (the amount of consideration received), reduced by the cost or market value as at 1 January 1980 adjusted for inflation. Inflation is calculated on the basis of the official consumer price Index. Index as at 1 January 1980 was $ 35,40.

Stamp Duty, or stamp duty applies to any transactions in a business environment (registration, purchase, issue of shares, etc.). International companies are exempt from stamp duty.

The value-added tax payable income from operations on realization of goods and services in Cyprus, as well as when importing goods. At the moment there are three tax rates: 15% standard; 5% – reduced; 0% – zero.

Tax social cohesion Fund is payable at the rate of 2% on the sum of earnings of all hired company employees (restriction on the amount of earnings is not). International companies are exempt from this tax, provided that the hired employees are foreign.

In accordance with the internal laws of Cyprus, tax paid in a foreign statemay be deducted from the payment of tax on the same income payable in Cyprus.

CBor for legal entities

All companies registered in the Cyprus register of companies,

must pay an annual fee of €350 should be paid before 30 June of each year. For groups of companies the total amount of the annual fee is €20 000. With wages, incomes, individual entrepreneurs and pensions in the private sector for the period from 1 January 2014 to 31 December 2016 will be charged a special fee at the following rates: 0% for sums of up to €1,500, 2.5% for amounts from €1500-€2500, 3% for €2500-€3500 and 3.5% for amounts exceeding €3500.

Taxes for owners of Cyprus property

The main feature of the taxation of the owners (individuals and companies) in Cyprus is the tax base, which is calculated by the prices on 1 January 1980.

In 2013, the government of Cyprus has carried out a revaluation of 500 000 real estate listings and new data published on the website of the Land cadastral chamber, but it resulted in a large number of complaints from owners concerning the uncertainty evaluation. The cost of some new homes in hundreds of times higher than the original. So, one of the hotels in Paphos that have a price of €6.5 million in 1980, was estimated at €162 million, while the Bank's current value was marked at €40 million. At the moment in Cyprus continues to be used to assess the value of real estate held in the last century and, according to the latest report on the tax system of Cyprus consulting company Pricewaterhouse Coopers, made in Cyprus in January 2015, the system of 1980 will remain relevant in the current year.

And while this anachronism is in the hands of property owners – because in the end the taxes are rather low. Cyprus is seeking to update its cadastre and bind the property prices to the realities, but it is a complicated bureaucratic process, to which the government of the Republic has, obviously, not ready.

Although experts say that in the foreseeable future, the database will still be updated and the amount of tax payments will change, today the property tax is calculated on the basis of the market value of immovable property on 1 January 1980 and is paid annually not later than September 30 of the current year. Estimated cost of accommodation is indicated on the document property "title" of the owner.

Table of calculation of tax payments for property owners of Cyprus

*Owners whose property has a cost of €12 500 or below (according to the calculation of 1980), are not subject to tax.

Subject to payment of the tax until 31 August 2015, taxpayers will be given a discount of 10%.

If one owner has several units of real property, the cost of them to fold, and the percentage is calculated based on the total amount.

Buyers of new properties, which separate the "title" of ownership had still not been issued, must apply to the tax Committee to determine the amount of tax. This often makes the developer, which gives to the owner, what tax he must pay.

To determine the cost of a new home as of 1980 very difficult.

Under contracts of sale concluded in the period from 2 December 2011 to 31 December 2016, the owners will not pay for the title fee, if the cost of the property includes VAT. When buying a property without VAT, the owner must pay 50% of the amount of this fee.

There is another relief in the form of reduced VAT rates for newly purchased property that will be used only for personal residence. Rate of 5%, while for the rest of the property – whether it's a second home or an investment for profit – the buyer will pay 19%. When applying VAT of 5% is necessary to consider that this property cannot be sold for 10 years without paying razzy in the VAT.

Plus

If the property owner paid the tax payable by 30 September, a month earlier, i.e. before 31 August, he is given a discount of 10%.

Owners must also insure their immovable property in Cyprus. Insurance renews once a year. The cost depends on the type of property and the wishes of the owner.
Every two months the property owner will receive bills for water and electricity. Bills can be paid through special websites or give an order to the Bank about automatic debiting of bills for electricity and water.
If the property is located in a beautiful complex with public areas and swimming pools, is looked after by the management company, approximately twice a year, owners pay municipal fees for cleaning, pool cleaning and maintenance of the landscape.
 

Portal HomesOverseas.EN thanks for the help in preparing the article Yulia Svidnitsky (Pafilia Property Developers), Elena Pokrovskaya (Kleanthis Savva Developers)

Olga Potaeva
HomesOverseas.ru