TAXATION

Land Transfer Fees

These are paid on transfers of immovable property and are calculated on the market value of the property as estimated by the Land Registry department.

Market Value	Percentage	Fees	Cumulative Fees
€	%	€	€
0 - 85.000	3	2.600	2.600
85.000 - 170.000	5	4.300	6.800
170.000 and over	8

Transfer fees paid on the transfer of property are refunded in five years provided the company still owns the property and there have not been ay changes to its shareholders.

On the transfer of immovable property from a family company to its shareholders as well as on transfers by donation between spouses, spouses and children or relatives up to a third degree of kindred, transfer fees are negligible.

Immovable Property Tax

Immovable property tax is imposed on the market value of immovable property as at 1st January 1980 and is calculated on the immovable property owned by the taxpayer on 1st January of each year.

Value of property	Rate	Tax	Cumulative Fees
€	%	€	€
0 - 170.000	0	0	0
170.000 - 400.000	2.5	640	640
400.000 - 850.000	3.5	1.500	2.100
850.000 and over	4

Exemptions

The following properties are exempt from immovable property tax:

• Public cemeteries
• Churches and other religious buildings
• Public hospitals
• Schools
• Immovable property owned by the Republic, foreign embassies and consulates
• Buildings under a preservation order subject to conditions
• Buildings of charitable organizations
• Agricultural; land used for agriculture or animal husbandry by a farmer

Capital Gains Tax

Capital Gains Tax is imposed on gains from disposal of immovable property situated in the Republic including shares of companies not listed on a recognized Stock Exchange which own immovable property situated in the Republic at the rate 20%.

In computing the capital gain the value of the immovable property as at 1st January 1980 (or cost if the date of acquisition is later), the cost of any additions after 1st January 1980 or the date of the acquisition if later, any expenditure incurred for the production of the gain and the indexation allowance, are deducted from the sale proceeds.

Exemptions

The following disposals of immovable property are exempt from the capital gains tax:

• Transfer at death
• Gifts between spouses, parents and children and relatives up to third degree
• Gift to a company whose shareholders are members of the donor's family and continue to be members of the family for a period of five years from the date of the gift
• Gift by a family company to its shareholders, if the commonly had also acquired the property in question via donation and provided the property remains in the possession of the shareholder for at least three years
• Gifts to charitable reorganizations or the Republic
• Exchange or disposal under the Agricultural Land (Consolidation) Laws
• Exchange provided the gain is used for the acquisition of new property and the tax is paid when the latter is disposed
• Expropriations

Deductions

Individuals are entitled to deduct from the gains the following:

	€
Disposal of principal private residence (subject to conditions)	85.000
Disposal of agricultural land by a farmer	25.700
Other disposals	1.700

Stamp Duty

Contracts for the acquisition of immovable property are subject to stamp duties at the following rates:

Type of Document	Duty
up to 170.000	€2,50 per €1.700
over 170.000	€3,50 per €1.700

Estate Duty

• Estate (death) duty was abolished as from January 2000.
• The law provides for a compulsory submission of an 'assets and liabilities' statement of the deceased person to the Commissioner of Income Tax within six months from the date of death.
• Local Authority taxes & rates. There is a requirement however that before property is transferred to the beneficiaries of the estate of the deceased, or clearance is obtained from the Commissioner of Income Tax for other taxes.

VAT

Real Estate is excluded from VAT as are most food items, medicine and other essentials. As from January 2003 the VAT standard rate on goods and services is 15%.

Tax Advantages

Cyprus is unique when it comes to the taxation aspects of living on the island.
Retirees who become tax residents of Cyprus are taxed on their pensions emanating from services rendered outside of Cyprus at the rate of 5% on amounts exceeding £2,000 annually. Such retirees may elect to be taxed under the standard tax rates if it is beneficial to them.

Double Taxation Agreements

Cyprus has an extensive network of Double Tax Treaties with many European and other countries. For individuals becoming residents of Cyprus this may prove very beneficial as income such as dividends, capital gains or shares etc. which would be taxed at zero or low tax rates.

Duty Free Privileges

Retirees that reside in Cyprus are allowed one duty free car per person as long as the purchased car is less than five years old.