Southern Cyprus

1_PROPERTY RESERVATION
The reservation fee depends
on the purchase price and typically ranges between €5,000
and €10,000. Your agent or
lawyer holds the reservation
amount until the contract of
sale is signed. The reservation
fee takes the property off the
market and fixes the sale price.
If the sale proceeds the reservation fee is applied towards
the purchase price.


2_LAWYER APPOINTMENT
Legal services could comprise
due diligence, CoS review and/
or preparation, contract negotiation, contract exchange/
completion, registration of the
CoS at the LRO, Representation
at the LRO for the title transfer, Application to the Tax Authorities for reduced VAT, and
application for permission to
buy immovable property in Cyprus. For the due diligence and
conveyancing (from contract
review to contract execution)
legal fees typically range between €2,000 and €5,000 or 1%
of the purchase price.


3_CONVEYANCING / DUE
DILIGENCE

It is highly recommended that
due diligence be completed
prior to contract signing. Your
lawyer will search at the LRO
to establish that the seller is
the rightful owner of the property and whether the title has
any legal encumbrances that
could potentially inhibit a sale.
In case the property is a piece
of land the lawyer could search
and verify the applicable zone,
building capacity and allowable
building density. For properties
that do not yet have separate
title deeds, your lawyer can
check with the relevant authorities to verify that the necessary
planning and building permits
exist. Where the vendor is a
company, your lawyer can complete the requisite search at
the Registrar of Companies.


4_CONTRACT NEGOTIATION
AND SIGNING

A CoS is a private agreement
between you and the seller. The
seller will typically provide the
CoS for you (and your lawyer)
to review. Occasionally the buyer’s lawyer may need to draft
the CoS. CoS are in English.
Where necessary, your lawyer
could arrange for a translation.
Stamp duty: Within 30 days
of contract signing, the buyer
must pay stamp duty on the
contract value as follows
A maximum stamp duty of
€20,000 applies.


5_APPLICATION FOR A
REDUCED VAT RATE

In accordance and in compliance with EU law, all new properties are subject to a standard
VAT rate of 19%. However, a
reduced VAT rate of 5% applies
for the acquisition of a primary residence subject to certain
terms and conditions:
• Only physical persons aged
18 or older are eligible to
apply
• The property must be used as
the primary and permanent
residence for next 10 years
• The reduced VAT rate has not
been previously used by the
same person
• The reduced VAT rate applies
only on the first 200 sqm. The
standard rate applies on the
remaining sqm.


6_REGISTRATION OF THE
CONTRACT OF SALE AT THE
LAND REGISTRY OFFICE (LRO)

Once contracts are fully executed and duly stamped, and
provided the purchaser pays
the first installment (normally 30%-40% of the purchase
price), the contract of sale
can be lodged at LRO for ‘specific performance’ (within six
months of signing). At this
stage the LRO is essentially
notified of the buyer’s details.
The ‘Sale of Immovable Property (Specific Performance) Law’
protects the buyer by preventing the vendor from reselling or
transferring the property elsewhere and from otherwise encumbering the property, for as
long as the contract of sale is
valid and legally effective.
Upon this registration the buyer may resell his property, even
prior to separate title deed issuance.


7_APPLICATION FOR CYPRIOT
CITIZENSHIP / PERMANENT
RESIDENCY

Third country nationals interested in obtaining Permanent
Residency in Cyprus or Cypriot
Citizenship can fulfil the financial
investment criteria by purchasing real estate assets of at least
€300,000 or €2.5million respectively. Although a permanent residency permit is a pre-requisite of
being naturalized as a Cypriot the
two processes can run in parallel.
*(refer to pages 18-20 for the detailed process)


8_APPLICATION FOR PERMISSION TO ACQUIRE IMMOVABLE PROPERTY IN CYPRUS
Cypriots and EU citizens are
entitled to buy immovable
property without any restrictions. Non-EU citizens can buy
immovable property, however,
permission from the Council
of Ministers is required. This is
primarily a matter of process;
the application is submitted
along with the signed CoS and
approval is typically granted
within a month. The Council of
Ministers’ approval is not a precondition to taking possession
of the property.


9_TRANSFER OF TITLE DEEDS
The process to issue separate
title deeds for each unit in a
development typically takes
a few years after the development is completed. A title deed
transfer is effected at the Land
Registry Office provided that
the buyer has paid all outstanding balances to the seller, pays
any applicable transfer fees
and taxes to the government
and has the necessary permit
from the Council of Ministers,
if applicable. It is a simple procedure and lawyers can act on
buyers’ behalf, pursuant to a
Power of Attorney.
Fees are calculated on the sale
price accepted by the Department of Land and Surveys as
follows:
Transfer fees apply to the property value per buyer hence total
transfer fees on a transaction
can be reduced if a property is
bought on joint names. Currently a reduction of 50% applies to the above rates and
properties subject to VAT are
completely exempt from transfer fees.

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