Cyprus has become a popular destination for foreign investors, thanks to its straightforward purchasing process, relatively low taxes, and high quality of life. However, like any investment, it is crucial to understand the associated costs and local tax regulations. Let’s dive into the key taxes you should be aware of when buying property in Cyprus.

1. Transfer Fees
Transfer fees apply only when purchasing a resale property and are calculated based on the property’s value:

• Up to €85,000: 3% fee.
• €85,001 to €170,000: 5% fee.
• Above €170,000: 8% fee.

Example: For a property valued at €250,000, the transfer fee is calculated as follows:

• On the first €85,000: 3% = €2,550.
• On the next €85,000: 5% = €4,250.
• On the remaining €80,000: 8% = €6,400.

Total transfer fee: €13,200.

2. Value-Added Tax (VAT)
VAT is applicable only when purchasing a new property. The standard VAT rate in Cyprus is 19%. However, a significant discount is available:

• For properties intended as the buyer’s primary residence, with a total area not exceeding 200 square meters, the VAT rate is reduced to 5%.

Example: For a property worth €250,000, the discounted VAT rate results in: 5% × €250,000 = €12,500.

3. Stamp Duty
Stamp duty is payable in both cases (new and resale properties) at the time of signing the purchase contract. The rate is tiered as follows:

• Up to €5,000: Exempt.
• €5,001 to €170,000: 0.15%.
• Above €170,000: 0.20%.

Example: For a property valued at €250,000, stamp duty is calculated as:

• On the first €170,000: 0.15% = €255.
• On the remaining €80,000: 0.20% = €160.

Total stamp duty: €415.

4. Capital Gains Tax
When selling a property, capital gains tax in Cyprus is set at 20%. However, there are certain exemptions for properties used as personal residences or purchased under specific conditions.

5. Double Taxation Agreement
It is essential to note that there is currently no double taxation agreement between Cyprus and Israel. This means that Israeli investors may be subject to taxes in both Cyprus and Israel, depending on the tax laws of each country. To avoid double taxation, consulting with tax experts is highly recommended.

Conclusion
Investing in real estate in Cyprus offers excellent opportunities, but it is important to fully understand the associated costs and taxes. If you have further questions or are considering an investment in Cyprus, feel free to reach out.