CYPRUS INCOME TAX LAW FOR NON-CYPRIOTS

Since its accession to full membership of the EU Cyprus has the benefit of various economic advantages. Cyprus now participates and has full access to the Union’s internal market allowing goods, services and individuals to move freely throughout Europe. EU nationals are now experiencing the new business challenges and opportunities of this new large economic market.

Cyprus has become an attractive place for property purchasers because of low taxation, low costs, high standards of living, the hospitality of the local population, safety and security and the excellent all year round climate.

The island has one of the most advanced and reliable land registry offices in the world and a very good banking system

Capital Gains Tax in Cyprus is limited to gains on the disposal of immovable property or of shares of non-public companies, to the extent that the underlying value of these shares is represented by immovable property.

The gain is the difference between sale proceeds and original cost or, for properties acquired prior to 1st January 1980, the value as per the general valuation carried out at that date. The original cost is adjusted for inflation in accordance with indices published by the Government. Tax is levied at 20% on the adjusted gain but there are lifetime exemptions for individuals for gains up to CY£10,000 (CY£15,000 for farmers in respect of agricultural land).

There is also a lifetime exemption of CY£50,000 for the disposal of a house used by the owner as a residence for at least five years.

Another exemption is the sale of shares in Cypriot public companies.

If a property is disposed the original cost can be immediately exported. The balance is blocked in a local bank account earning interest and can be transferred at the rate of CY£5,000 per annum plus interest.

Immovable Property Tax

This is levied on any individual or corporation owning immovable property on or after 1st January 1980 and is based on property values ruling at 1st January 1980. This annual tax is computed using the following rates:

The first CYŁ100,000 of the value of property owned by individuals is tax exempt and no property tax is levied on agricultural land while it is used as such by its owner.