In the recent years the real estate market in Cyprus experienced a remarkable boom. Moves by the government in the form of property taxation and investment incentives appear to be at the center of this notable rise.
Growth in the Cypriot real estate atmosphere is, in turn, driving the nations entire economy to recovery. It is happening for the first time after growth was recorded in the first quarter of 2015. This happened contrary to the European commission’s projections which predicted a 0.5% shrink in 2015. Cyprus has gone on to witness continuous growth over the years with the promise of even more to come.
More recently, the small island nation located in the Eastern Mediterranean continues to attract international buyers in ever-increasing numbers. Far from being only because of its unique weather, cuisine and fabulous beaches, the affordable prices of property, relative ease to acquire the “Golden Visa” and citizenship, advantageous tax regimes for non-national investors among many other reasons contribute.
In fact, there was a 20% increase in sales contracts across Cyprus in the first half of 2017. Sales transactions increased spectacularly by 46% in February 2018 with a later increase by 29% in April.
Here are some of the government’s encouragement schemes on direct investments in Cyprus over the years.
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ATTRACTIVE TAX REGIME AND INCENTIVES
To lift itself from the economic decline it experienced during much of the period before 2015, the government of Cyprus had to establish a property tax atmosphere which has succeeded to revitalize the nation’s general investment appeal. Some of the measures taken in this direction include;
– One of the lowest corporate taxes across the EU at 12.5%
– An attractive Double Tax Treaty network which covers over 60 countries
– Access to every single EU Tax Directive
– Reduced residential and commercial property tax rates (VAT). Commercial property in Cyprus attract a 19% VAT tax rate, meanwhile, residential property only attracts 5% on the first 200square meters of the first and primary permanent residence property.
– Dividend income exemption based on relaxed conditions
– Tax exemption on capital gains and gains from trading in securities
– Tax neutrality on Foreign Exchange Gains
– No inheritance or succession taxes
– No withholding taxes on outgoing dividends, interest or royalty settlements
– National deduction available for equity investment into companies in Cyprus.
– Very attractive personal tax regime for international professional and individuals not resident in Cyprus.
– No immovable property taxes.
– Specially tailored provisions for the investment funds industry
– Competitive Intellectual Property Regime
– Competitive Tonnage Tax for Shipping companies and an open registry approved by the EU.
– Tax deductions to encourage investment into Cypriot startups.
These tax incentives and a lot more have contributed to re-establish Cyprus as a modern, cosmopolitan, and transparent business center with tons of investment opportunities across a wide range of sectors.
THE CYPRUS CITIZENSHIP BY INVESTMENT PROGRAM
Also known as the ‘Golden Visa’ program of Cyprus, this unique scheme which has two main categories both awarding visas through real estate investment. While one offers permanent residency, the other is for citizenship.
The two Cypriot immigration investment schemes are among the fastest and most efficient residency permit and second passport granting programs in Europe.
To get Cypriot citizenship, your real estate investment in the residential or commercial sector must meet the €2.0 million requirement. Applicants are allowed to make the investment personally or via a company in which he/she is a shareholder.
Parents qualify for the second visa program by making a further investment of €500,000 investment in real estate.
With processing fees for a family typically amounting to 30,000- €40,000 including application and Government fees which should be around €17,000 for a family of three plus lawyer and other citizenship processing fees.
The whole process until you are awarded a Cyprus passport normally takes about 6 months.
With a relatively high acceptance rate (recently, the Council of Ministers established a limit of 700 citizenships to be granted annually), this is arguably the fastest and most guaranteed route to a European passport.
Since 2013, the ‘Golden Visa’ of Cyprus has directly channeled over €4 Billion of non-EU investor’s money into the country’s real estate industry serving as a lucrative revenue source for the government.
Qualifying for permanent residency in Cyprus through the Citizenship by Investment Program specifically requires a minimum investment of €300,000 into brand new real estate. The residency visa which is valid for life is granted within two months and covers the applicant’s entire family from the parents of both the main applicant and his/her spouse, to the dependent children who are up to 25 years old.
The residency permit can be succeeded by a spouse and dependents. Lastly, the investment can be made into two properties maximum, provided they sum up to the €300,000 minimum.
EFFORTS IN OTHER SECTORS
With tremendous efforts in Education (excellent education facilities including many UK universities having campuses on the Island), healthcare facilities, banking, shipping, science and technology, privatization and liberalism, etc. the atmosphere has never been this conducive for investments in Cyprus.
Cyprus currently has the lowest crime rate among European countries and is known to be the 5th safest nation in the world. Its strategic location at the crossroads of Europe, Africa, and Asia is now being taken advantage of as it returns to the list of top European FDI (foreign direct investment) destinations.
The government is even working towards joining the EU Schengen zone soon and the Island’s improved economic outlook and steady rise in tourist numbers continue to boost sales and direct investments in the property market.