THE TAX LIABILITIES/CHARGES FOR POSSESSION OF IMMOVABLE PROPERTY IN CYPRUS

Do you know after acquiring Properties in Cyprus, there are certain taxes and charges that need to be paid by the owner on a monthly or yearly basis?

Failure of payment on time will result to additional payment on the outstanding amount.

TAXES/CHARGES IN RELATION TO OWNING A PROPERTY IN CYPRUS

• Municipality Tax

  As the registered owner of the property, you are required to pay an annual Municipality Tax, calculated on the market value of the property as at 1st of January 1980. Rates vary from 0.1% - 0.2%. Municipality tax is payable to your local municipal authority on annual basis during the period from October to December.

• Sewerage Tax

  As the registered owner of the property, you are required to pay an annual Sewerage Tax, calculated on the market value of the property as at 1st of January 1980. Rates vary from 0.3% -0.35%. Sewerage taxes are payable annually to your local sewerage board on annual basis during the period from October to December.

• Local Authority Fees

  Depending on the size of your property, local authorities charge between €85 – €256 per annum for regular refuse collection, street lighting and similar community services. Communal Services fees are payable to your local municipal authority on annual basis during the period from October to December.

• Other utilities/insurance expenses (is based the decision of the owner and usage)

  A minimum monthly fixed charge plus electricity and water expenses are based the consumption. In addition, you can add internet/telephone connection by choosing between several services provided. Insurance expense is needed to cover any unexpected event.

TAXES IN RELATION TO RENTING OUT YOUR PROPERTY IN CYPRUS

• If the property is being rented out, the local authority fees and sewerage fees can arrange to be paid by the tenant.
• The municipality tax that mentioned above is still a liability of owner.
• Income tax on the rental income you receive from the property in Cyprus less 20% of the rental income and capital allowance of 3% on the construction/acquisition cost based on the Income tax rates (Zero rated when the annual personal taxable income below EUR19,500).
• Gesy (GHS) contribution from the rental income in Cyprus - 2.65%.
• Special defence contribution of 3% on 75% of rental income if you are a Cyprus residence and domicile. If you are not a Cyprus resident or you are a Cyprus resident but not Domicile defense tax is excepted.
• • If renting/leasing immovable properties to a tenant who carries out taxable activities from the properties, when the rental income at 12 months period above EUR15,600, the 19% of rental income needs to be charged on the said rental income. This 19% of VAT charged can reclaim any VAT suffered when acquiring the properties.

Here are examples, if the monthly income of EUR1,200 from a residential property, the purchase price EUR300,000, with 1980 value EUR80,000.

Then:

Scenarios/Liabilities	Not Residence and Domicile	Not Domicile, but resident	Domicile & Residence
Tax liabilities on rental income
Municipality Tax - approximately	EUR80	EUR80	EUR80
Sewerage Tax – approximately	EUR240	EUR240	EUR240
Local Authority Fees – approximately	EUR85	EUR85	EUR85
Subtotal	EUR405	EUR405	EUR405
Tax liabilities on rental income
Special Defense	0	0	EUR324
GESY (GHS)	EUR381.60	EUR381.60	EUR381.60
Personal income Tax (Assumption only this rental income & no other income)	0	0	0
Subtotal	EUR381.60	EUR381.60	EU705.60
Total	EUR786.60	EUR786.60	EUR1,110.60

You are welcome to contact us for further details, our team is ready to provide you tax compliance services for your properties and your personal tax filings in Cyprus.