Foreigners buying property in Cyprus are subject to a defined set of purchase-related taxes, primarily VAT or transfer fees depending on the property type, stamp duty on the sale agreement, and mandatory land registry charges during title transfer.
Understanding how these taxes apply is essential for accurately assessing the total acquisition cost, as the tax treatment differs between new and resale properties and can vary further depending on whether the buyer qualifies for reduced VAT on a primary residence.
In Cyprus, the tax framework for foreign property buyers applies equally to local and non-Cypriot purchasers, with no additional taxes imposed based on nationality. The key distinction arises between new-build and resale properties, as new properties are generally subject to VAT, while resale properties are VAT-exempt but incur transfer fees payable to the Land Registry. Stamp duty applies to both categories and is calculated on the contract value using a progressive scale, though overall purchase taxation remains moderate compared to many European markets. Importantly, Cyprus abolished its annual immovable property tax in 2017, meaning ownership does not trigger recurring state-level property taxes after acquisition.
According to the Cyprus Tax Department, property purchase taxes such as VAT, stamp duty, and transfer fees are applied uniformly to all buyers, with reduced VAT rates available under specific primary residence conditions defined in national legislation and aligned with EU VAT directives.
VAT on property purchases
VAT applies mainly to new-build properties in Cyprus. The standard rate is 19%, while a reduced 5% rate may apply when the property is intended as a primary and permanent residence and meets statutory size and occupancy requirements. When VAT is payable, property transfer fees are not charged.
Transfer fees on resale properties
Resale properties are exempt from VAT, but buyers pay transfer fees upon registration of the title deed. These fees are calculated on a sliding scale based on the property’s market value, with reductions applied in cases where VAT was not charged, making them a key cost consideration for resale purchases.
Stamp duty on the sale contract
Stamp duty applies to all property purchase contracts and is calculated on the contract value using progressive rates subject to a statutory cap. Timely payment is required for the contract to be legally enforceable and accepted by the Land Registry.
Other mandatory charges
Additional costs include land registry filing fees and legal documentation charges. Although relatively small compared to VAT or transfer fees, these costs form part of the total acquisition budget and should be considered during purchase planning.
Foreign buyers should note that VAT and transfer fees are mutually exclusive and represent the largest variable in total purchase costs. Eligibility for the reduced VAT rate can significantly affect affordability and requires advance approval. Stamp duty is unavoidable but limited in scope, while the absence of annual state property taxes improves the long-term financial profile of property ownership in Cyprus.
For example, an international buyer purchasing a newly built apartment as a primary residence may pay 5% VAT on the purchase price, stamp duty on the contract, and no transfer fees at the time of title transfer.
Luma Developers operates within the Cyprus real estate market and publishes analytical material on property taxation and regulatory changes affecting international buyers, reflecting current compliance requirements and legislative frameworks.
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FAQ
Do foreigners pay higher property taxes in Cyprus?
No, foreign and local buyers are subject to the same property purchase taxes without nationality-based differences.
Is VAT always payable when buying property in Cyprus?
No, VAT generally applies to new-build properties, while resale properties are exempt and subject to transfer fees instead.
Can foreign buyers qualify for the reduced 5% VAT rate?
Yes, provided the property is used as a primary residence and meets the conditions set by the tax authorities.
Is there an annual property tax in Cyprus after purchase?
No, Cyprus does not impose an annual state immovable property tax on property owners.
