Concept
Cyprus is a rare case of a jurisdiction that is open and permission-based at the same time. A non-EU citizen buys here without quotas, without a reciprocity test and without military-zone carve-outs, yet formally every transaction passes an administrative filter: a permit under the Acquisition of Immovable Property (Aliens) Law, Cap. 109. Refusals are rare, which creates the false impression that there is no filter at all.
The real difficulties sit in a different layer. The first is title: a Cypriot developer sells not a finished object but an obligation, and the contract of sale deposited with the Land Registry substitutes for the title deed for years. The difference between "a right to demand transfer" and "registered ownership" matters more here than any difference in rates. The second is the tax design, rewritten more heavily in 2026 than in the preceding decade.
How the Transaction Works
The Cap. 109 permit is formally granted by the Council of Ministers, but in practice the application is received and the decision letter signed by the District Administration (District Officer). The standard limit is a flat or a house, or a plot of up to three donums (about 4,014 sq m) for the construction of a single house; since May 2013 practice allows up to two properties — two residential units, or a residence plus commercial premises of up to 100 sq m — with one permit per family. Examination takes from two weeks to a month, the property may be occupied while the application is pending, and after registration there are no further restrictions: the property can be sold freely.
The regime is changing, however. Since August 2025 parliament has been discussing a replacement for Cap. 109 — prompted by circumvention through the purchase of a Cypriot property-holding company and the assignment of contracts. By February 2026 the relevant committee had consolidated the proposals into a single text: a ban on acquisitions in agricultural and rural zones and near military installations, ports, airports and beaches, a mandatory holding period, and separate regulation of assignment contracts. The law has not been passed, but a transaction should be planned on the assumption that the window is narrowing.
The second element is the contract itself. Under the Sale of Immovable Property (Specific Performance) Law 81(I)/2011, the buyer deposits the contract with the Land Registry within six months of signing. Deposit grants priority over subsequent encumbrances, the right to compel transfer of title through the court, and fixes the transfer fee base at the contract date rather than the registration date. Missing the deadline does not void the contract but strips away all of this protection — the only protection a buyer has during the years of waiting for title. From 1 January 2026 the contract no longer needs stamping: Law 239(I)/2025 repealed stamp duty in full. The source of funds package is assembled before the deposit is paid: the bank, the lawyer and the developer each verify the money independently.
Entry Taxes
| Charge | Rate | Comment |
|---|---|---|
| Transfer fees | 3% up to EUR 85,430, 5% up to EUR 170,860, 8% above | the 50% reduction has been permanent since July 2016; zero where VAT is charged |
| VAT, new build | 19% | the resale market is not subject to VAT |
| VAT, reduced rate | 5% | first 130 sq m and first EUR 350,000, provided total area is under 190 sq m and price under EUR 475,000 |
| Stamp duty | none | abolished from 01.01.2026 |
| Lawyer and registration | about 1% | plus Land Registry charges |
The logic runs on two circuits. A new build from a VAT-registered developer: VAT is paid, transfer fees are not payable at all. A resale: no VAT, transfer fees calculated on the scale and halved. On a EUR 500,000 property the gap between the circuits is roughly EUR 95,000 of VAT against roughly EUR 17,000 of transfer fees — which often drives the choice of property more than location does.
The 5% reduced rate looks attractive but is not designed for investors. The condition is that the property be used as the main and permanent residence in Cyprus; the relief is available once every ten years; a declaration is filed with the Tax Department. Residence status is not required at the time of application, but actual occupation is, and if the property is sold or ceases to be the main residence within ten years, the difference between 5% and 19% is repaid to the state pro rata for the remaining years. The transitional regime (first 200 sq m with no price ceiling) for applicants with older paperwork has been extended to 31 December 2026 — after which only the Law 42(I)/2023 version applies.
What the Purchase Provides
Citizenship by investment closed on 1 November 2020 and has not returned. What remains is the fast-track permanent residence scheme under Regulation 6(2): an investment from EUR 300,000 plus VAT — a new build from a developer on first sale, or commercial property, shares in a Cypriot company or units in a local fund — plus verified annual income from abroad of at least EUR 50,000, with EUR 15,000 for a spouse and EUR 10,000 for each dependent minor child.
The criteria in force date from 2 May 2023 and are noticeably stricter than the previous ones: the income threshold was raised from EUR 30,000 and annual monitoring was introduced — the holder confirms each year that the investment, the income and the health insurance remain in place, and files a clean criminal record every three years, failing which the permit is cancelled along with the status of family members. Adult children and parents no longer qualify under a single application.
Permanent residence is a right to live, not a tax regime: tax residence is determined by a separate 60-day or 183-day test, and it is that status which unlocks the non-dom regime. For those who need only long legal presence without a purchase, digital nomad visas are the closer fit.
Ownership and Rental
There is no annual property tax in Cyprus: immovable property tax was abolished from 1 January 2017. What remains is municipal tax, refuse collection and the sewerage charge — typically EUR 90-300 per year in total, rarely more. For a market with an average ticket of half a million, that is effectively zero.
Rental income is taxed at progressive income tax rates: 0% up to EUR 22,000, then 20%, 25%, 30% and 35% on income above EUR 72,000. A 20% wear-and-tear allowance is deducted automatically from gross rent, so the taxable base is 80% of receipts regardless of actual expenses.
The key 2026 change sits precisely here. The Special Defence Contribution (SDC) of 3% on 75% of gross rent has been abolished. This used to be the central argument for non-dom status: a domiciled resident paid SDC, a non-dom did not. The rental exemption has now been zeroed out for everyone, and the value of non-dom has shifted back to where it was always strongest — dividends and interest. The GESY contribution of 2.65% on gross rent remains for Cyprus tax residents. A non-resident pays Cypriot income tax on Cypriot rent on the same scale.
Personal Ownership or a Cyprus Company
The corporate rate rose from 12.5% to 15% on 1 January 2026 — details in the breakdown of the Cyprus holding. For a rental portfolio a company still adds up: expenses and loan interest are fully deductible and the rate is flat instead of 35%. For a single property held "for oneself" it is almost always more expensive.
Three arguments against the wrapper. First: capital gains tax of 20% arises on the sale of Cypriot property regardless of whether an individual or a company owns it, but lifetime exemptions are available only to individuals. Second: the sale of shares in a company more than 20% of whose market value derives from Cypriot immovable property is also caught by CGT — the threshold was reduced from 50% in 2026, and the classic share deal has stopped being an exit. Third: corporate structures are precisely the target of the Cap. 109 replacement now in preparation.
Exit and Succession
CGT is 20% of the gain. Deductible from the proceeds are the indexed acquisition cost, transfer fees, legal fees, agent commission and documented improvements. From 1 January 2026 lifetime exemptions increased several times over: EUR 30,000 general (previously EUR 17,086), EUR 150,000 for a main residence held and occupied for at least five years (previously EUR 85,430), EUR 50,000 for agricultural land. One historical relief still applies: property bought at market value from an unrelated party between 16 July 2015 and 31 December 2016 is exempt from CGT on any future disposal. On top of this the seller pays 0.4% to the Central Agency for the Equal Distribution of Burdens.
Cyprus has had no inheritance tax since 2000. But forced heirship exists: under the Wills and Succession Law, Cap. 195, where a spouse and children survive, no more than a quarter of the net estate may be disposed of freely; where a spouse or parents survive but no children, no more than a half. A foreign national escapes this by expressly choosing the law of their nationality in the will under Regulation 650/2012; without an express choice, Cypriot law with its full forced share applies to the Cypriot property.
Pitfalls
Title that does not exist
The classic Cypriot story: the buyer has paid in full, but the title deed has not been issued because a bank mortgage sits over the developer's land which the buyer knew nothing about. Law 139(I)/2015 allowed "trapped buyers" to obtain title without the developer's consent, but on 20 June 2024 the Court of Appeal held the key provisions unconstitutional as infringing the rights of mortgagee banks, and applications stopped being accepted. Law 110(I)/2025 restarted the procedure with creditor protection built in: the encumbrance is released with the bank's consent or by court order, and only for contracts deposited before 31 December 2014 or filed with the district court before 31 December 2024. The practical conclusion has not changed since the nineties: a Land Registry search before the deposit, not after.
Buying off-plan
Depositing the contract and a payment schedule tied to construction stages are the minimum. Beyond that you look at encumbrances on the plot, the building permit, and whether the developer's bank is prepared to release the specific unit from the mortgage in writing.
Share of land instead of a title deed
Some properties are sold as a share in a common plot rather than as a separately registered title. This is not fraud, but liquidity, mortgageability and succession all behave differently for such a share. The question "has a separate title already been issued, or is it merely planned" is asked before signing.
The north of the island
The territory north of the ceasefire line is not controlled by the Republic of Cyprus; the entity proclaimed there is recognised by no state other than Turkey. Before 1974 most privately owned land in the north belonged to Greek Cypriots, and the Republic of Cyprus treats dealings in another person's property as a criminal offence (Art. 303A of the Criminal Code, up to seven years' imprisonment). The CJEU ruling in Apostolides v Orams confirmed that judgments of the Republic are enforceable in other EU states. This is a different market with a different risk profile, and comparing its prices with those in the south is not meaningful.
The general logic of choosing a country, a payment route and a form of ownership is in the hub on purchasing real estate abroad.
This material is for reference purposes and does not constitute individual legal advice.