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Immovable Property Tax

Immovable Property Tax

Immovable property tax is imposed on an annual basis, on the market value as at 1 January 1980, of the immovable property situated in the Republic owned by each person as at 1 January of each year.

Rates

Property value(as at 1  January 1980)

 

   Rate   (%)        Tax   (€ ) Cumulative ( € )
  1 – 40.000* 0.6 240 240
40.001 – 120.000 0.8 640 880
120.001-170.000 0.9 450 1.330
170.001-300.000 1.1 1.430 2.760
300.001-500.000 1.3 2.600 5.360
500.001-800.000 1.5 4.500 9.860
800.001-3.000.000 1.7 37.400 47.260
3.000.001 and over 1.9    

 

* Property owners with total property value (as at 1 January 1980) not exceeding €12.500 are exempt from immovable property tax.

Exemptions

The following properties are exempt from immovable property tax:

  • public cemeteries
  • churches and other religions 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 organisations
  • agricultural land used for agriculture or animal

husbandry by a farmer

  • immovable property situated in inaccessible areas
  • property of a missing person under administration
  • Turkish-Cypriot property in the unoccupied area of the Republic leased from the Government Trustee by a refugee for private accommodation

 

ESTATE DUTY

Estate duty is not levied in relation to individuals who have died on or after 1 January 2000. The Deceased Persons Estate (Taxation Regulations) Law of 2000 provides for a compulsory submission of an «assets and liabilities» statement of the deceased person to the Commissioner of Taxation within six months from the date of death.

 

TRANSFER FEES FOR IMMOVABLE PROPERTY

Transfer fees

Transfer fees are paid by the acquirer to the Department of Land and Surveys on transfers of immovable property. The transfer fees are calculated on the market value of the property as estimated by the Department of Land and Surveys at the following rates.

 

Market Value (€ ) Rate (%) Fees (€) Cumulative Fees (€)
0-85.000 3 2.550 2.550
85.000-170.000 5 4.250 6.800
170.000 and over 8    

In the case of free transfers of property between the following parties, the transfer fees are calculated on the value of the property as at 1 January 2013 at the following rates:

  • From parents to children 0%
  • Between spouses 0,1%
  • Between third degree relatives 0,1%

 

Exemptions from transfer fees

The following transfers are exempt from transfer fees:

  • Under a qualifying reorganization
  • Under a qualifying loan restructuring (note 12)
  • In the context of bankruptcy, liquidation, disposal of mortgaged immovable property by the lender

 

Transfer fees for the period 2/12/2011 – 31/12/2016

For the above period the following apply:

  • Exemption from transfer fees if the transfer relates to a transaction that is subject to VAT
  • In case the transfer relates to a transaction not subject to VAT, the legislation provides for an exemption of 50% of the transfer fees. This applies to transactions where:
  1. a) Transfer fees apply or are due; and
  2. b) the transfer relates to plots of land, buildings or interests in land or indivisible interests that are sold for the first time from the date of issue of the relevant building permit; and
  3. c) The relevant contract is prepared and submitted for the first time to the local District Land Registry during the period of application of the law.
  • for any transfer of immovable property as well as the registration of any lease/sublease until 31 December 2016, a 50% reduction in transfer fees and lease/ sublease registration fees is provided. This reduction does not apply to transfers of immovable property that have been acquired under foreclosure procedures.

 

STAMP DUTY

Documents relating to property situated in the Republic or to any matters or issues executed or performed in the Republic are subject to stamp duty.

Types of document Amount /Rate
Letters of guarantee       €4
Letter of credit       €2
Receipts for amounts over  €4       €0.07
Customs documents       €18/€35
Bills of lading       €4
Bills of exchange (payable at sight on first demand or within 3 day from demand or sight)       €1
Charterhire document       €18
General power of attorney        €6
Special power of attorney        €2
Certified copies of contracts and documents        €2
Will        €18
Estate administration document        € 9
Contracts with a specified consideration . –for amounts up to  €5.000         0%
For amounts between € 5.001- 170.000         0.15%
For amounts over  € 170.000         0.2%

Maximum duty €20.000

Contracts without a specified consideration         €35
Issue of tax residency certificate by inland Revenue Department         €80

 

Exemptions

Documents relating to transactions that take place in relation to a company reorganization or loan restructuring (note 12) are exempt from stamp duty.

 

Income tax

Individuals

Imposition of tax

An individual who is tax resident in the Republic of Cyprus (the Republic), is taxed on income accruing or arising from sources both within and outside the Republic.

An individual, who is not tax resident in the Republic, is taxed on income accruing or arising only from sources within the Republic.

Tax residency

An individual is tax resident in the Republic if he/she is present in the Republic for more than 183 days in a tax year.

For the purpose of calculating the days of presence in the Republic:

  • The day of departure from the Republic is considered as a day out of the Republic
  • The day of arrival into the Republic is considered as a day in the Republic
  • The arrival into the Republic and departure from the Republic on the same day is considered as a day in the

Republic and

  • The departure from the Republic and return to the Republic on the same day is considered as a day out of the Republic.

Personal income tax rates

Tax income (€) Tax rate (%) Tax (€) Cumulative (€)
0-19.500 0 0 0
19.501-28.000 20 1.700 1.700
28.001-36.300 25 2.075 3.775
36.301-60.000 30 7.110 10.885
60.001 and more 35    

 

 

Exemptions

The following are exempt from income tax

Exemption

Dividend income The whole amount
Interest income  (Interest income arising in the ordinary course of the business, including interest closely connected with the ordinary carrying

on of the business, is not considered as interest income and is not exempt)

The whole amount
Remuneration from  employment exercised in the Republic

by an individual who was resident  outside the Republic before the commencement of the employment

20% of the remuneration or  €8.550 (whichever is lower )
Remuneration from any employment exercised  in the Republic by an individual who was resident outside the Republic before the commencement of his employment in the Republic, provided that the annual remuneration of the employee exceeds €100.000 50% of the remuneration
Remuneration from the rendering  of salaried services outside the Republic to a non-resident employer or to a permanent establishment outside the Republic of a resident employer for a total period in the year

of assessment of more than 90 days

The whole amount
Foreign exchange (FX) gains, with the exception of FX gains arising from

trading in foreign currencies and related derivatives

The whole amount
Gains arising from disposal of Securities The whole amount
Gains arising from a loan  restructuring The whole amount
Profits of a permanent establishment  maintained outside the Republic

(subject to certain conditions)

The whole amount
Rent from preserved building (subject to certain conditions) The whole amount
Lump sum received as retiring gratuity, commutation of pension, death

gratuity or as consolidated compensation for death or injury

The whole amount
Lump sum repayment from life  insurance schemes or from approved

provident funds

The whole amount

 

 

 

 

 

Deductible expenses

All expenses incurred wholly and exclusively for the production of income are deductible in calculating taxable income, including:

Deduction

Interest relating to the acquisition  of fixed assets used in the business The whole amount
Expenses for letting of buildings 20% of the rental income
Interest in respect of the acquisition of a building for rental purposes The whole amount
Subscriptions to trade unions or professional bodies The whole amount
Expenditure for the maintenance of  buildings under preservation order  (subject to certain conditions) Depends on the size of the building
Donations to approved charitable  organizations (with receipts) The whole amount
Special contribution  on salaries and pensions amount

 

The whole amount
Profits from the exploitation  and/or disposal of intellectual

property rights

80%
Expenditure incurred for the  acquisition of shares in amount

an innovative business

The whole amount

 

Non-deductible expenses

The following expenses are not deductible in calculating taxable income:

Non-deductible

Expenses not incurred wholly and exclusively for the production of income The whole amount
Business entertainment expenses amount in excess of 1% of the gross income or  €17.086 (whichever is lower)
Private motor vehicle expenses The whole amount
Immovable property tax The whole amount
Interest payable or deemed to be payable in relation to the acquisition of a private motor vehicle, irrespective of whether it is used in the business or not, or other asset not used in the business. This restriction is lifted after 7 years from the date of purchase of the relevant asset.* The whole amount
Expenditure which is not supported by appropriate supporting

documentation as required by the relevant Regulations

The whole amount
Wages and salaries relating to services offered within the tax year on which social insurance and other contributions, have not been paid in the year in which they were due** The whole amount

 

*Interest expense incurred for the acquisition of shares in a wholly owned (direct or indirect) subsidiary will be deductible for income tax purposes provided that this subsidiary does not own (directly or indirectly) any assets which are not used in the business. If this subsidiary does own (directly or indirectly) assets that are not used in the business, the interest expense that corresponds to the percentage of assets not used in the business will not be deductible. This applies to shares acquired from 1 January 2012.

**In case the above contributions (including any penalties and interest) are paid within 2 years following the due date, such wages and salaries will be tax deductible in the tax year in which they are paid.

Loans or other financial assistance provided to company directors or individual shareholders

Any amount received as a loan or financial assistance by a company’s director, or by a company’s individual shareholder, or by his/her spouse, or by any relative up to a second degree is considered as a monthly benefit equal to 9% p.a. calculated on the amount received. Such benefit, is included in the individual’s taxable income subject to income tax.

The amount of tax on the monthly benefit should be withheld from the individual’s monthly salary and paid to the Tax Department on a monthly basis under the PAYE system.

Annual wear and tear allowances

Annual wear and tear allowances available for companies  are also available to individuals.

Losses

Losses carried forward Individuals who have an obligation to prepare audited financial statements (i.e. those with turnover in excess of €70.000) may carry forward tax losses incurred during a tax year over the next five years, to be offset against taxable income.

Where a person, including a partnership, converts his/her business into a limited liability company, any unutilised tax losses can be transferred to the new company. Losses of a permanent establishment outside the Republic Tax losses arising from a permanent establishment maintained outside the Republic can be offset against taxable profits of the company arising in the Republic in the same year. However, any subsequent taxable profits from such a permanent establishment are taxable up to the amount of tax losses allowed.

Personal Tax Allowances

The following are deductible from income:  Social insurance contributions, contributions to approved provident and pension funds and the General Health Plan, contributions to medical or other approved funds as well as life insurance premiums in respect of the life of the claimant (note 13)

Allowances ->limited to 1/6 of the taxable income before this allowance

 

Tax credit for foreign tax paid

Any foreign tax paid on income subject to income tax in Cyprus is credited against any Cyprus income tax payable on such income, irrespective of the existence of a tax treaty

 

Income tax companies

A company which is tax resident in the Republic, is taxed on income accruing or arising from sources both within and outside the Republic.

A company which is not tax resident in the Republic, is taxed on income accruing or arising only from sources within the Republic.

Tax residency

A company is tax resident in the Republic if it is managed and controlled from the Republic.

Tax rate

Corporate income tax (12.5%)

 

Exemptions

The following are exempt from corporate income tax:

                                                                                                                                                Exemption

Dividend income The whole amount
Interest income (Interest arising in the ordinary course of the business including interest closely connected with the carrying on of the business,

and interest earned by a collective investment scheme, is not considered

interest income and is not exempt)

The whole amount
Foreign Exchange (FX) gains with The whole the exception of FX gains arising from amount trading in foreign currencies and related derivatives The whole amount
Gains arising from the disposal of Securities The whole amount
Gains arising from a loan  restructuring The whole amount
Profits from a permanent establishment  maintained outside the Republic amount (subject to certain conditions) The whole amount
Rent from preserved building The whole (subject to certain conditions) The whole amount

 

Deductible expenses

All expenses incurred wholly and exclusively for the production of income are deductible in calculating taxable income, including:

 

Deduction

Interest incurred for the acquisition  of a fixed asset used in the business The whole amount
Notional interest deduction (NID) on new equity Up to 80%of the taxable profit derived from assets financed by the new equity (as calculated prior to the NID deduction)
Expenditure for the maintenance of  on buildings under preservation order   (subject to certain conditions) Depends on the size of building
Donations to approved charitable organizations (with receipts) The whole amount
Profits from the exploitation and/or disposal of intellectual property rights 80%
Employer’s contributions to  approved funds on employees’ salaries The whole amount
Special contribution on salaries The whole amount
Expenditure incurred for the  acquisition of shares in amount an innovative business The whole amount

 

Non-deductible expenses

The following expenses are not deductible in calculating taxable income:

Non deductible

Business entertainment expenses amounts in excess of 1% of the gross income or €17.086 (whichever is lower)
Private motor vehicle expenses The whole amount
Immovable property tax The whole amount
Interest payable or deemed to be payable in relation to the acquisition of a private motor vehicle, irrespective of whether

it is used in the business or not, or other asset not used in the business. This restriction is lifted after 7 years from the

date of acquisition of the relevant asset *

The whole amount
Expenditure which is not supported by  appropriate supporting documentation as amount required by the relevant Regulations The whole

amount

Wages and salaries relating to services offered within the tax year on which amount social insurance and other contributions

have not been paid in the year in which they were due will not be tax deductible for the calculation of taxable income**

The whole

amount

 

* Interest expense incurred for the acquisition of shares in a wholly owned (direct or indirect) subsidiary will be deductible for income tax purposes provided that this subsidiary does not own (directly or indirectly) any assets which are not used in the business. If this subsidiary does own (directly or indirectly) assets that are not used in the business, the interest expense that corresponds to the percentage of assets not used in the business will not be deductible. This applies to shares acquired from 1 January 2012.

** In case the above contributions (including any penalties and interest) are paid within two years following the due date, such wages and salaries will be tax deductible in the tax year in which they are paid.

Losses

Losses carried forward

Companies may carry forward tax losses incurred during a tax year over the next five years to be offset against taxable income.

Group relief

Current year tax losses may be surrendered by one Cyprus tax resident group company to another. A group company which is tax resident in another EU country may also surrender current year tax losses to a Cyprus tax resident company, provided such company firstly exhausts all possibilities available to utilise its tax losses in its country of residence or in the country of any intermediary EU holding company.

Group relief is available if both companies are members of the same group for the entire tax year.

Two companies are considered to be part of a group for group relief purposes if:

  • One is a 75% subsidiary of the other, or
  • Both are 75% subsidiaries of a third company

The interposition of a non-Cyprus tax resident company does not affect the eligibility for group relief as long as such company is tax resident in either an EU country or in a country with which Cyprus has either a tax treaty or an exchange of information treaty (bilateral or multilateral).

Where a company has been incorporated by its parent company during the tax year, this company will be deemed to be a member of this group for group relief purposes for that tax year.

Losses of a permanent establishment outside the Republic

Tax losses arising from a permanent establishment outside the Republic can be offset against taxable profits of the company arising in the Republic in the same year. However, any subsequent taxable profits from such a permanent establishment are taxable, up to the amount of losses utilised.

Tax credit for foreign tax paid

Any foreign tax paid on income subject to income tax in Cyprus is credited against any Cyprus income tax payable on such income, irrespective of the existence of a tax treaty.

 

Special modes of taxation

Insurance companies

Insurance companies are generally taxable in the same way as all other companies. In the case where there is no tax payable or where the tax payable on the taxable income of the life business is less than 1.5% of the gross insurance premiums, then the insurance company pays the difference as additional tax.

Pension income from services rendered abroad

The pension income of any individual resident in the Republic, which arises from services rendered abroad, is taxed at a rate of 5% for amounts exceeding €3.420 per annum.

The taxpayer has the right to choose to be taxed either under the special mode of taxation as stated above or under the personal income tax rates. If the latter is chosen the pension is added to the individual’s aggregate taxable income.

Widow’s pension

The total amount of widow’s pension received from the Social Insurance Fund and/or other approved pension funds is taxed at the flat rate of 20% on amounts exceeding €19.500. The tax payer can however elect to be taxed in accordance with the personal income tax rates.

Intellectual property rights etc

The gross income arising from intellectual property rights, other exploitation rights, compensations or other similar income arising from sources within the Republic, of a person who is not resident in the Republic, is subject to withholding tax at a rate of 10% (unless a tax treaty provides for a lower tax rate).

Royalties received by a connected company registered in a European Union Member State are exempt from tax (subject to conditions). Rights granted for use outside the Republic are not subject to any withholding tax.

Film royalties etc

The gross income derived by a non-resident person in respect of royalties arising from film projection in the Republic is subject to withholding tax at a rate of 5% (unless a tax treaty provides for a lower tax rate).

Royalties received by a connected company registered in a European Union Member State are exempt from tax (subject to conditions).

Profits of professionals, entertainers etc

The gross income derived by an individual not resident in the Republic from the exercise in the Republic of any profession or vocation, the remuneration of public entertainers not resident in the Republic, and the gross receipts of any theatrical or musical or other group of public entertainers, including football clubs and other athletic missions from abroad, derived from performances in the Republic is subject to a 10% withholding tax.

Income from Oil & Gas related activities

The gross amount or other income derived from sources within the Republic by any person who is not resident in the Republic, which does not arise from a permanent establishment in the Republic, as consideration for services carried out in the Republic with respect to the extraction, exploration or exploitation of the continental shelf, subsoil or natural resources, as well as the installation and exploitation of pipelines and other installations on the ground, the seabed or above the surface of the sea, is subject to tax at the rate of 5%.

Payment of tax withheld

Tax withheld on payments to non-Cypriot residents should be paid to the Tax Department by the end of the following month.

In case where the tax withheld is not paid within the deadline, an additional penalty of 5% is imposed on the tax withheld in addition to any interest that may be imposed.

Annual wear and tear allowances

Annual wear and tear allowances are calculated as a percentage on the cost of acquisition of the asset, and are deductible from taxable income.

Plant and machinery Rate
Fork lifts, excavators, loading vehicles, bulldozers and oil barrels 25%
Motor vehicles of all types except for private saloon cars 20%
Personal computers (hardware) and  operating software 20%
Application software

– up to €1.709

– above €1.709

100%

-33 1/3

 

Plant and machinery used in agriculture 15%
Water drillings, industrial carpets, video recorders, televisions 10%
Any other plant and machinery 10%
Plant and Machinery (acquired during tax years 2012-2016) 20% unless the capital allowances rate on such assets is higher
Furniture and fittings 10%

 

Buildings Rate
Metallic frame of greenhouses 10%
Wooden frame of greenhouses 33  1/3%
Industrial, agricultural and hotel buildings 4%
Industrial and hotel buildings

(acquired during tax years 2012-2016)

7%
Commercial buildings 3%

 

Ships Rate
Steamships, tug-boats and ships used in the fishing industry 6%
Sailings vessels 4  1/2%
Ship launching machinery 12  1/2%
Used ships in accordance with special  agreement
New commercial ships 8%
New passenger ships 6%
Used commercial and passenger ships and capital additions remaining useful  economic life in accordance with the class certificate

 

Tools: All tools in general  33 1/3%

 

Specialized fixed assets Rate
Armored cars (used by businesses which provide security services) 20%
Motor yachts 6%
Wind generators  (the cost should include the cost of

installation reduced by any amount of subsidy received)

10%
Photovoltaic systems 10% (the cost should include the cost of

installation reduced by any amount of subsidy received)

10%
New airplanes 8%
New helicopters 8%
Specialized machineries for rail roading (e.g. Locomotive engines, Ballast wagon, container wagon and container sleeper wagon) 20%

 

 

Companies registrar rights and fees

Registration of a limited  company by shares or guarantee, with share capital  €105 plus 0.6% on nominal capital
Registration of a company without share capital €175
Registration of an increase  the in the company’s share capital €40 plus 0.6% on the additional

amount of increase

Registration of issue of shares where the value of the shares

issued is payable in cash or in kind

€20
Change of name of company €40
Reduction of capital €80
Application for registration of a general or a limited partnership €160
Application for registration of a business name €120
Filing with the Registrar of the following document: Annual Report €20
Annual Report which is overdue €40
Notification of a registered mortgage on immovable property in the Republic of Cyprus irrespective of the sum of money €20
Registration of a charge apart from a mortgage on immovable property within the Republic of Cyprus:

* On the form of notification  of the charge

-On the charge document securing maximum amount:

**For a sum of money up to €17.086

**For a sum of money exceeding €17.086 but not over €34.172

****For a sum of money exceeding  €34.172 but not over €85.430

*****For a sum of money exceeding  €85.430 but not over €170.860

****** For a sum of money over €170.860 where no amount is mentioned

*€40

**€100

***€200

****€340

*****€500

******€600

 

Payment of company annual levy

All companies registered in the Cyprus company register must pay an annual levy of €350. In the case of group companies the total amount payable is capped at €20.000.

  • The annual levy is payable from the year of incorporation.
  • The annual levy is payable to the Registrar of Companies by 30 June of each year.
  • Late payment of the levy will give rise to the following penalties:

– in case of up to a 2 month delay – a 10% penalty;

– in case of a delay between 2 and 5 months – a 30% penalty.

  • Non-payment of the levy may result in deregistration (strike-off) of a company by the Cyprus Registrar of Companies (which will not allow the company to submit documents or request certificates from the Registrar of Companies).
  • If a company is re-instated within a two year period from its strike-off a fixed penalty of €500 (in addition to the outstanding amount of the levy) is imposed. The fixed fee will be increased to €750 where a company is re-instated after the two year period
Immovable Property Tax