Cyprus VAT rules are quite complex, especially when it comes to property investments. Failing to abide by VAT rules is also one of the biggest pitfalls of property investments and a situation you definitely want to avoid when you are looking for a good way to become financially secure through this type of investment.
Despite the complexities of VAT rules in Cyprus, it is still one of the best investment types you can possibly make. Property investments and especially hi-rise and hi-end property in popular regions like Limassol are currently doing tremendously well and investors have been known to gain great returns on these types of investments.
How to play it safe when it comes to VAT rules
The best way to be 100% safe and legal when it comes to Cyprus VAT rules is by working through a Cyprus property lawyer. Real estate lawyers can help you with your property purchase and will explain all the VAT rules and requirements for you as best possible. They can also explain to you the best ways for you to reduce your VAT payments so you can enjoy the biggest possible profit margin from your investments.
Different VAT requirements for private and company-owned properties
When you buy property in Cyprus as a registered company you get quite a few additional benefits than you would have by investing in privately owned property. Cyprus Company Formation projects enjoy VAT benefits like the following;
- 5% Taxation
- 0% tax on Non-tax resident companies
- 0% withholding tax on dividend payments
- 0% tax on dividends received
- Full tax exception on payment of dividends
Annual property tax rate is affected by property value
Property tax rates are adjusted according to your property value. For example; Property with a value between € 40,001 and €120,000 has an annual tax rate of 0.80% and property with a value between €500,001 and €800,000 has a 1.5% tax rate.
VAT on property transfer fees
If you paid VAT on the purchase price of the property then you are not liable property transfer fees but if you did not pay VAT upon purchase then you have to pay 50% property transfer fees on the purchase price of the property.
A lower tax rate for the Cyprus Investment Program investors
Those that invest in Cyprus through the Cyprus Investment Program with the main goal to become a Cyprus citizen also enjoy a much lower tax rate if the property is part of the investment capital.
As you can see, different VAT rules apply depending on your nationality, type of investment and methods for investing in property. With the right property lawyer at your side, you can make the right decisions with regards to your property and cut back on your payable VAT a great deal. You will also stay 100% legal when it comes to your property which also reduces plenty of nasty pitfalls that could cost you your property or investment.