Taxation of property in Cyprus

Taxation of the property of natural persons is regulated by the Property Tax Law (Ο ΠΕΡΙ ΦΟΡΟΛΟΓΙΑΣ ΑΚΙΝΗΤΟΥ ΙΔΙΟΚΤΗΣΙΑΣ ΝΟΜΟΣ, N94(I)/2020, hereinafter in this section - the Law).

The object of taxation by this tax is real estate located in Cyprus, in particular (clause 1, article 2 of the Law:

• land and rights to use it;
• buildings and other structures and the rights to use them;
• trees, vines, and other plantings;
• springs, wells, wells, and water rights;

Taxpayers are individuals - owners of the specified real estate. Moreover, if the total value of the real estate in Cyprus does not exceed €12,500, then no tax is levied (clause 2, article 3 of the Law).

Procedure for declaring and paying tax
The tax period is a calendar year, that is, the tax is paid annually during the period of ownership of real estate (Article 3 of the Law).
The taxpayer must submit a declaration by September 30 of the year following the year in which there was a change in data on real estate objects in his possession (Article 7 of the Law). That is, if in some year an individual did not make transactions with real estate or its value did not change, then it is not necessary to submit a declaration.
If the declaration has not been submitted or all objects of taxation are not indicated in it, then the tax authority has the right to independently calculate the tax and send the corresponding notification to the taxpayer (clause 2, article 13 of the Law).
Also, if the value of the property in the declaration was underestimated by more than 25%, then the taxpayer must pay an additional 10% of the amount of tax additionally assessed in connection with this. And vice versa, if the amount of the prepaid tax was overstated, then the difference minus 10% of the amount of the overpaid tax is subject to return to the taxpayer (clauses 1, 2, article 14 of the Law).
The tax is payable before September 30 of the relevant year (clause 3, article 15 of the Law). However, if the taxpayer is unable to pay the tax, the tax authority has the right to suspend the payment of the tax for a period determined by it. In this case, the tax is subsequently payable with interest, and an encumbrance is imposed on the property of the taxpayer. (clause 4, article 15, article 17 of the Law).
It is important to note that the Law provides for strict liability for providing knowingly false information. In addition to the obligation to pay tax in an increased amount (up to two times), a taxpayer, as well as any individual who gives appropriate advice, incites or encourages the provision of false information, may be fined or imprisoned (Article 20 of the Law).
Late payment of tax is subject to a penalty of 5% of the tax due. Also, for failure to provide the necessary information, an additional fine of €100 is imposed, and if the information was not provided on the basis of the request of the tax authority, a fine of €200 (Article 21A of the Law).

Tax calculation
Property tax is calculated based on the value of the property. In this case, the price is considered to be the price at which, in the opinion of the tax authority, the property could be sold on the open market (Article 6 of the Law).
The tax rate depends on the value of the property and is (clause 1, article 3 of the Law):

• 6% - from €1 to €40,000;
• 8% - from €40,001 to €120,000;
• 9% - from €120,001 to €170,000;
• 11% - from €170,001 to €300,000;
• 13% - from €300,001 to €500,000;
• 15% - from €500,001 to €800,000;
• 17% - from €800,001 to €3 million inclusive;
• 19% - at a cost of more than €3 million.

At the same time, a 10% discount is provided if the tax is paid no later than 30 days before the tax payment deadline.

The taxation of the property of natural persons is regulated by the Seal Law (Ο ΠΕΡΙ ΧΑΡΤΟΣΗΜΩΝ ΝΟΜΟΣ, N200(I)/2022, hereinafter referred to in this section as the Law).

Stamp duty is charged for paperwork (taxable document). As a general rule, the payer of stamp duty is determined depending on the type of document being drawn up, and such is (Article 29 of the Law):

• for transactions with real estate located in Cyprus - the buyer;
• for lease transactions - the tenant;
• for bills - the issuer;
• under insurance policies - the insured;
• for securities - the buyer (recipient).

At the same time, if rights to several objects are formalized in one document, then the fee is charged for each such object as if they were formalized in a separate document (Article 6 of the Law).

Documents are not subject to stamp duty, in particular (Appendix 1 to the Law):

• real estate mortgage agreement;
• employment contract;
• a contract for the sale of goods;
• contract of purchase, mortgage of the vessel upon registration in the Cypriot registry;
• a document on the transfer of securities listed on the stock exchange.

Upon payment of the stamp duty, the corresponding seal (stamp, stamp) is affixed to the document (main document). If the seal is not properly stamped, the document will be considered unsigned (Articles 11, 16 of the Law). Documents subject to stamp duty must be stamped at the same time or before they are signed (Article 19 of the Law). If the document is drawn up in another country, then it will be valid in the territory of Cyprus only after affixing a stamp (Article 21 of the Law).
No document on which the stamp duty has not been properly paid will not be taken into account in the framework of registration actions or legal proceedings (Articles 35, 36 of the Law).

Procedure for declaring and paying tax
As a general rule, all information required for the payment of stamp duty must be disclosed on the taxable document. The official (registrar) certifies that the stamp duty has been paid (Article 32 of the Law).
Each employee (organ of any level of government) is obliged to check the documents received in accordance with his official duties for the purpose of issuing stamps on the payment of stamp duty. In case of failure to verify the proper performance of duties, the employee does not take such a document to work but transfers the case to the tax inspector, who, in turn, requires the payment of a fee and an appropriate fine (Article 34 of the Law). In addition, in such a case, an additional fine of €2 is payable.

In case of non-submission of the document or non-payment of the fee within the prescribed period, the payer will have to pay an additional 10% of the fee, as well as a fine in the same amount (clause 5, article 9 of the Law).
It is possible to pay the fee after drawing up the taxable document, within 30 days. In this case, in connection with the payment of the fee at a later date, a fine is payable in the following amounts:

• if the amount of the fee is from €2 to €35 - a fine in the amount of the unpaid fee;
• for collections over €35 - the above penalty plus a penalty of 10% of the unpaid amount exceeding €35.

If the fee is paid after 6 months, then the above penalty is doubled (Article 20 of the Law).

Tax calculation

The fee is calculated by the commissioner, for this he must be presented with all the documents necessary for the calculation (Article 31 of the Law). The Commissioner's decision on the amount of the stamp duty may be appealed to the Supreme Court of the Republic of Cyprus (Article 33 of the Law).

The stamp duty rate depends on the type of document and is, in particular (Appendix 1 to the Law):

1) contract (including lease, pledge, guarantees, articles of association / corporate agreement):

• for amounts from €1 to €5000 - €0;
• for amounts from €5,001 to €170,000 - €1.5 for each €1,000 of the contract value;
• over €170,001 - €2 for each €1,000 of the contract value;

2) contract without specifying the amount - €35;

3) a debt document in the amount of €4 - €2;

4) an insurance policy (except for property insurance), under which the insurance payment:

• no more than €850 - €0;
• from €851 to €1700 - €4;
• from €1701 to €8500 - €7;
• over €8500 - €18.

5) property insurance policy - €2;

6) power of attorney - from €2 to €6;

7) transfer of trademarks and patents - €1 for every €200 (€18 if the transfer is free).