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Corporation tax
The standard rate of corporation tax in Cyprus is 10%. This will apply to a Cypriot resident company holding property in Cyprus or abroad, or a non- resident company trading in Cyprus through a permanent establishment. The tax is reportable to the tax authorities on a calendar year basis.
Cypriot resident companies are subject to a special “contribution for defence” tax at the rate of 3% on 75% of rental income.
Capital gains
Capital gains tax is charged at the standard rate of 20% on gains realised on the disposal of real estate situated in Cyprus including gains on the disposal of shares in companies which are not listed on a recognised Stock Exchange and hold real estate in Cyprus.
Property tax
Property tax is payable annually on the value as at 1 January 1980 of Cypriot real estate held on 1 January each year. The tax is due by 30 September each year. Property tax rates are as follows:
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Value at 1 January 1980
CYP
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Rate
%
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0 - 100,000
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0
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100,001 - 250,000
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2.5
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250,001 - 500,000
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3.5
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500,001 and over
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4.0
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Property transfer tax
Transfers of real estate are subject to transfer fees calculated on the market value of the real estate as estimated by the Land Registry department. Transfer tax on the value of Cypriot real estate up to CYP 100,000 is calculated as follows:
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Market Value
CYP
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Rate
%
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Transfer Fees
CYP
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Cumulative Fees
CYP
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1 - 50,000
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3
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1,500
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1,500
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50,001 - 100,000
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5
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2,500
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4,000
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Transfer tax on the value of Cypriot real estate in excess of CYP 100,000 is charged at 8%.
VAT
VAT registration is compulsory for Cypriot-resident or non-resident companies if they:
i have made taxable supplies within Cyprus in excess of CYP 9,000 in the previous 12 months; or
ii expect taxable supplies made in the previous 12 months or less to reach CYP 9,000 in next 30 days; or
iii make zero rated supplies; or
iv. acquire goods over the value of CYP 6,000 from companies resident in other EU countries; or
v. receive certain “Third Schedule Services” over the value of CYP 9.000 from abroad.
Standard rated supplies such as the disposal or lease of real estate are subject to VAT at 15%. However a lower rate of 5% applies to certain other goods and services.
A refund of two thirds of the VAT incurred on the acquisition of certain residential buildings (where the property will be used for residential purposes for the first time) is available, provided that certain conditions are met. These conditions will be confirmed by regulation to be issued by the Ministry of Finance. The disposal of land is expected to be exempt from VAT until 31 December 2007.
The above is for general information purposes only. It is not intended to be comprehensive or to provide any specific tax advice.
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