All new properties for which a proven official application for planning permission was lodged with the relevant authorities before the 1st May 2004 ( the date of the accession of Cyprus to the E.U.) are exempt from VAT.
It follows that permissions lodged after 01.05.2004 carry a vat charge of the standard 15% on the purchase price of the property.
Under certain circumstances and on a case by case basis, subject to the property being the main permanent residence, an application can be submitted to the Ministry of Finance to obtain a grant as a retrospective refund of part of the vat paid.
Clients are encouraged to speak to their accountants on this subject.
VAT
Since 1/5/04 a new statute in respect of VAT on properties has been introduced. Disposals of newly-constructed properties for which a proper application for planning permit has been submitted with the relevant authorities after 1/5/04 are subject to VAT at standard rate.
Under certain conditions, a grant is given to entitled persons for the purchase of newly-constructed properties that are used as the main permanent residence.
The application for the grant is submitted to the Ministry of Finance by any physical person citizen of the Republic of Cyprus or of any other EU member state who resides permanently in the Republic of Cyprus. The grant is for properties whose total covered area does not exceed 250 m2 and is restricted to 130 m2. For more details you may contact a local accountant.
Tax Advantages
Cyprus is unique when it comes to the taxation aspects of living on the island.
The following income tax rates apply to individuals:
Chargeable income
(€) |
Tax Rate
(%) |
Accumulated tax
(€) |
| 0 – 19.500 |
- |
0 |
| 19.501 – 28.000 |
20 |
1.700 |
| 28.001 – 36.300 |
25 |
3.775 |
| over 36.301 |
30 |
|
Retirees who become residents in Cyprus are taxed on their pensions from abroad at the rate of 5% per annum while an annual exception for the first €3.417,20 is granted.
Additionally, Cyprus has established Double Taxation treaties with the majority of European and non-European countries, safe-guarding that its residents will avoid paying tax in both countries. This gives the option to the citizens of these countries to take advantage of the very low rates in Cyprus.
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