The island of Cyprus has always been considered one of the top property destinations, and now with the recently introduced new tax laws, there is certainly no time to waste for potential property buyers.
Significantly, the new regime makes Cyprus currently the ONLY COUNTRY IN EUROPE to provide incentives of this level that effectively give investors tax-free profits until the end of 2016:
The law reducing the Property Transfer Fees for transfers that take place before 31 December 2016 has been published and will be particularly welcomed by those waiting for their deeds.
For transfers that take place before the 31st December 2016:
(a) If VAT was paid on the property, no Property Transfer Fees are payable.
(b) If VAT was not paid on the property, the Property Transfer Fees are reduced by 50%.
Capital Gains Tax
The enacted tax law includes a 100% capital gains tax exemption in relation to the disposal of real estate in Cyprus purchased between July 16, 2015 and December 31, 2016. Capital Gains Tax is normally paid on the profit made upon property disposal at the rate of 20%.
Since 8th June 2012, any person that is buying his/her first permanent residence in Cyprus can apply for a reduced VAT rate (set at 5%). It is no longer required (as it was previously) to become a permanent resident first and then to apply for the special rate of 5% Cyprus Property VAT. The Purchaser must complete a form with the VAT Authorities (the same as all Cypriot nationals) declaring his/her intention and commitment to use the house that he/she is purchasing, as the permanent residence for himself and /or his family in Cyprus.