Cyprus has proved to be an increasingly popular destination by foreigners for the acquisition of real estate for a plethora of reasons.
- The island of Cyprus has always been considered to be one of the top property destinations by foreign buyers. Despite the recent economic downturn that Cyprus had experienced as a result of the global economic recession, there is still a very strong interest for the real estate sector, especially from the Russian market, Middle East and Asia. The continuing demand for property by foreigners is attributed to many factors, including the relatively low cost of living, the high quality of lifestyle, the favorable policy to obtain a permanent residence through the acquisition of real estate and the fact that Cyprus is one of the top destinations for retirement.
- In addition, the unique hospitality of the local population, the attractive climate, the increasingly important role of safety (Cyprus is one of the safest countries in Europe with crime at a very low level) and security, have all played an important role. Demand and market activity has caused local property values to show a steady and at times sharp appreciation, but this trend has now a slower pace. Good properties are still abundant, and local property prices are still much lower than those of other European countries such as France, Portugal and Spain.
Buying Cyprus property as an investment
- Local property values have shown a steady upward movement over the years and properties, especially beach front properties, have shown a considerable appreciation. Relative to equivalent property found in other Mediterranean and Southern European countries, local property is believed to offer good value for money and the island’s increasing popularity by the international market further supports this.
- The legal system is Cyprus is largely based on the British equivalent and safeguards the purchaser’s rights in many ways. For the purchaser’s protection, once the agreement of property sale has been signed and a deposit paid, the Land Registry in Cyprus provides a simple and effective legal instrument called the “Specific Performance”. This procedure protects the purchaser’s ownership rights until the title deeds are issued and transferred to their name. The contract in the hands of the Land Registry cannot be withdrawn by anyone; and therefore the property cannot be leased, sold, transferred or mortgaged. This status can only be altered by the purchaser himself.
Summary of Benefits
- Cyprus has a very favorable tax regime / destination for individuals and companies.
- Over 80% of the country speaks English and there are excellent education facilities including several UK universities with campuses on the island.
- Cyprus has the lowest crime rate in Europe and is the 5th safest country in the world.
- There is a high standard of educational institutions and healthcare facilities.
- Cyprus is strategically located at the crossroads of three continents, Europe, Asia and Africa.
- Cyprus is set to join the EU Schengen zone soon.
- Property acquired is freehold, there is a low property tax and there is reduced VAT on property of just 5% (subject to conditions).
Cyprus offers an attractive and transparent tax regime, fully compliant with EU, OECD and international laws and regulations. Providing access to an extensive network of more than 60 Double Tax Treaties, and maintaining a corporate tax rate of 12.5%, one of the lowest in the EU, Cyprus offers international investors and domestic businesses confidence to invest, grow and prosper.
Some of the main features of the Cyprus tax system include:
- Dividend participation exemption
- Exemption on disposal of securities (e.g. shares, bonds, debentures)
- No succession taxes
- No withholding taxes
- Attractive IP regime
- Tonnage tax for shipping companies
Significant exemptions are also in place for non-domiciled individuals taking up residence in Cyprus:
- No tax on dividends and interest
- 50% exemption on income from employment in Cyprus of a person who was not previously resident in Cyprus.The exemption applies for ten years, provided that the income from employment in Cyprus exceeds €100.000 per annum.