Cyprus Property Tax | Medousa Developers Paphos

Low Corporate Tax

At 12.5%, Cyprus has the lowest corporation tax rate in the EU

Dividend Benefits

Inbound dividends are not taxed, with provisions to exempt them from the Special Contribution for Defense Fund (SCDF). Outbound dividends face no withholding taxes unless paid to Cyprus tax resident individuals, who are subject to SCDF.

Capital Gains Tax Exemption

There is no capital gains tax on share disposals unless connected to immovable property in Cyprus. Properties located outside Cyprus are exempt from such taxes.

Inheritance Tax

Cyprus has eliminated inheritance tax, providing significant relief to property buyers and their heirs.

Double Tax Treaties

An extensive network of treaties ensures income from countries with relevant agreements is taxed only once, avoiding double taxation.

The Corporate Tax System at a Glance

Taxation is based on residency status (management and control test or incorporation test*)

12,5% corporate tax on trading profits

Notional Interest Deduction (NID) available for new capital introduced

Intangible Property (IP) Regime in line with OECD’s “nexus” principle (effective tax rate as low as 2,5%)

Corporate tax on sale of securities: 100% exemption

No withholding tax on outgoing payments (dividends-interest-royalties**)

Dividend income is exempt from taxation (subject to relaxed conditions)

Applicability of all EU tax directives

Foreign exchange differences are tax neutral

Group relief availability (for 75% holdings)

Tax exempt re-organisations

Advanced tax ruling practice offers safety and predictability for investments

Attractive and constantly expanding Double Tax Treaty network

*The incorporation test only applies if Cyprus incorporated companies are not tax resident in any jurisdiction. ** Except on certain payments to companies in jurisdictions that are blacklisted by the EU.

Personal Income Tax Benefits for Relocators

Personal income tax in Cyprus is designed to be favorable for individuals, especially those
relocating.
Important features include:

Property Tax Considerations for Buyers

No Immovable Property Tax:As of January 1, 2017, the annual immovable property tax has been abolished, reducing the overall tax burden on property owners.
Reduced Transfer Fees:The Department of Land and Surveys charges transfer fees based on the market value of the property. These fees are reduced by 50% if the purchase is not subject to VAT, providing significant savings.
VAT on New Properties:A reduced VAT rate of 5% applies on certain conditions of new primary residences.
Stamp Duty:Payable on contracts of sale, with rates depending on the contract’s value, but capped to a maximum amount, making
it manageable for property buyers.
Exemptions for Certain Transactions:Specific property transactions, such as debt-for-asset swaps and qualifying reorganizations, can be exempt from taxes.

Benefits for Non-EU Residents

Streamlined Residency Process:Cyprus offers a straightforward path to permanent residency through real estate investment, making it appealing for non-EU residents.

Favorable Tax Regime:● No inheritance tax.● No capital gains tax on propertieslocated outside Cyprus.● Reduced VAT rates on newprimary residences.● Exemption from SpecialContribution for Defense ondividends and interest for nondomiciledindividuals.

DIVIDENDS: 0% withholding TAX

Taxed in the state of residence of the recipient

INTEREST:
0% withholding tax

Taxed in the state of residence of the recipient

ROYALTIES:
0% withholding tax

We offer a diverse variety of multifunctional programs which include the needed set of features and support services to help you deal with your issue.

Additional Benefits for Relocating to Cyprus

Strategic Location:Situated at the crossroads of Europe, Asia and Africa, Cyprus provides easy access to major markets.
Quality of Life:With a high standard of living, excellent healthcare and a safe environment, Cyprus is a great place to live and work.
Residency Programs:Cyprus offers various residency programs, including permanent residency and citizenship through investment,
which are highly attractive for property buyers and investors.
Legal System:Based on English common law, the legal system in Cyprus is familiar to many expatriates and provides a robust framework for property and business transactions.

Exemptions for first employment in Cyprus

Exemptions regarding employment income

Individuals who were not Cyprus tax residents before the commencement of their employment in Cyprus, may be entitled to one of the following exemptions:

The 50% exemption rule under article 8(23A)● Individuals with an annual income in excess of €55.000 who take up first employment in Cyprus from 1 January 2022, will be eligible for an exemption from taxation of 50% of their employment income from sources in Cyprus.
Notes:● This exemption applies for a 17 year period commencing from the year of employment.● The exemption is granted to an individual who has not been a Cyprus tax resident for at least 10 consecutive years prior tothe commencement of the employment in Cyprus.● Subject to grandfathering provisions, individuals who commenced employment in Cyprus prior to 2022, may still claim an exemption under article 8(23A), with an extended duration of the exemption for 17 years as from the date of the commencement of employment in Cyprus.

The 20% exemption rule under article 8(21A)● Individuals who take up first employment in Cyprus after 26 July 2022 with annual remuneration lower than €55,000, will be eligible for a 20% or €8,550 exemption (whichever is lower) from their employment income from sources in Cyprus.
Notes:● This exemption applies for a period of 7 years commencing from the year following the year of commencement of employment in Cyprus.● This exemption is granted to an individual who had been employed outside of Cyprus at a non-Cyprus tax resident employer for at least 3 consecutive years prior to the commencement of the employment in Cyprus.

Overall, Cyprus’s tax regime, combined with its strategic location, quality of life, and favorable legal environment, makes it an excellent choice for individuals looking to buy property and relocate. Whether you are looking for a primary residence, a holiday home, or an investment property, Cyprus offers numerous benefits that can enhance your lifestyle and financial position.

Smart Relocation: Exceptional Tax Benefits & Lifestyle in Cyprus

Cyprus presents a highly attractive tax environment for individuals looking to buy property and relocate. Its classification as a low-tax jurisdiction, along with
its compliance with EU and OECD standards, makes it
an appealing choice.