THE PROCEDURE TO BE FOLLOWED BY AN ALIEN ACQUIRING PROPERTY

(a)Application to the Ministerial Council or the District Officer of the
area the property to be purchased is located.
The above application should be completed and submitted to the District
Officer of the area the property is situated.
The information required to complete the form is as follows:

(22) Personal details of the applicant and his financial status.

(23) Particulars of the property.

(24)Particulars of the present owner, the sales contract and terms of payment.

(25) The type of acquisition, whether freehold, long lease, by shares etc. Then the District Officer in coordination with other Government Departments will make further enquiries and prepare a report of approval. This procedure may take up to 3 months, but in the meantime, there is no restriction in taking possession of the property. Please note that if you buy a property and it is not transferred in your name immediately, you are advised to file your sale contract at the District Land Registry within two months from signing [stamp duties must be paid within 30 days from the signing of the contract otherwise there is a penalty], if you do not file the contract and the seller changes his mind regarding the sale, you can only claim damages, whereas if you file your contract, you will be able to seek the remedy (through the courts) of SpecificPerformance (i.e. for the transfer of the property in your name). The filing of the contract operates also as a charge on the property.

b. Application to the Central Bank

On receipt of the approval from the District Officer to acquire the property in question, an application should be submitted to the Exchange Control Officer to confirm that the purchase was paid for in foreign exchange. This application should be submitted together with the following documents:

(1) Copy of receipt or evidence of the foreign exchange importation. The Central Bank of Cyprus will provide the required certificate, evidencing that the said purchase was paid for in foreign currency.
(2) The sale contract.
(3) Copy of the Ministerial Council's permission to acquire the said property.
(4) Title Deeds of the property if available.

(c) Application for transfer of ownership at the District Land Registry
The transfer of ownership is concluded by a simple procedure at the District Land Registry. The above application should be submitted in person to the Land Registry together with the following:
(5)   Title deeds of the property
(6) A copy of the Ministerial Council's permission to acquire the said property. (7) The Central Bank's certificate evidencing that the property was acquired using foreign currency. (8) Receipts of payments of all property taxes to date (these taxes may include, town taxes, sewage tax and road construction tax).

The information needed for this application is;
(9) Name and address of both the seller and purchaser. (10) The buyer's identity card or passport number. (11) Particulars of the property.
During the course of the registration procedures the District Land Officer will review the value of the property in order to determine the transfer fees and he may not accept the value of the property as stated in the sales contract, but as assessed by the Land Registry Values (it is based on the property pricejn the open market on the day of the original transaction/sales contract). The buyer is liable for the payment of the1 determined transfer fees.

The transfer fees are calculated as follows:

Property value (Cy£)	Transfer Fees	Accumulated Transfer Fee (Cy£)
0-50,000	3%	1500
50,000-100,000	5%	4000
100,000-and over	8%	-------

If the property is placed in joint names, e.g. the name of a couple (husband & wife) or two individuals, then the purchase value is split into two parts that results in reduced transfer fees. For example: Property purchased for Cy£100,000 payable fees are:

Property in one name		3%	Cy£1,500
	Up to Cy£50,000	5%	Cy£2,500
	Cy£50,000-Cy£100,000
Total Fees payable			Cy£4,000

Property in the names of two persons
Husband-Wife
Cy£50,000	3%	Cy£1,500 - Husband's share
Cy£50,000	3%	Cy£1,500-Wife's share
Total Fees payable		Cy£3,000

Thus you have a saving, on the above example, ofCy£1000.

Both the seller and the buyer may give a specific power of attorney to a third party to attend and conclude the transfer on their behalf. If ail documentation is in order, the transfer procedure only takes a few hours.

SIGNIFICANCE OF DEPOSITING YOUR SALES CONTRACT AT THE DISTRICT LAND REGISTRY

If you buy property, but the property is not transferred in your name immediately, you must deposit your contract with the District Land Office within two months from signing. If you do not deposit the contract and the seller changes his mind regarding the sale, then, your only remedy for the breach is damages, whereas if you deposit your contract you can seek (through the Courts) specific performance (i.e. the transfer of the property in your name). The depositing of the contract also operates as a charge on the property.

TRANSFER FEES
All transfer fees are payable by the buyer, as stated above.

IMMOVABLE PROPERTY TAX
Remember that prior to the conclusion of the transfer, you should pay all outstanding immovable property taxes and produce the receipt to the Land Registry. The annual immovable property tax is calculated on the market value of the property as at 1st January 1980.

Market value Cy£	Annual Tax Cy£ per thousand
Up to £100,000	zero
£100,001-£250,000	2.5
£250,001-£500,000	3.5
Over £500,000	4.0

INCOME TAX & CAPITAL GAINS TAX
Land dealers are treated under the Income Tax Laws whereas non-dealers under the Capital Gains Tax Laws. Capital Gains Tax is levied at the rate of 20% on gains arising from the disposal of immovable property or the disposal of shares of companies, the assets of which consist mainly of immovable property.

Note that no Capital Gains Tax is paid when selling shares of companies that are listed on the Cyprus Stock Exchange. The "gains" are the difference between the sale proceeds and the original cost of the property. In the case of a property, that was purchased before 1/01/1980 these "gains" are the difference between the sale proceeds and the market value of the property as at 1/01/1980. Inland Revenue fixes the assessed value on this date and it is known prior to the acquisition. The cost of acquisition includes any interest payments made for the acquisition, and any extensions to the property are deductible from the gains. Also the inflation rate (as is published by the Government) is added on the acquisition. Therefore, the tax is charged on gains that take into account
inflation (which for the last years is between 2.5-4.0%). Capital Gains Tax as a whole has minimal effects, since the appreciation of value coupled with the following allowances and inflation leaves little to be taxed, however these allowances are not applicable in the case of a company.

Allowances:
The following allowances are available to individuals:

• The first Cy£10,000 of gains arising from the disposal of any property.
• The first Cy£15,000 of gains arising from the disposal of agricultural land,
  by a farmer (subject to certain conditions),
• The first Cy£50,000 of gains arising from the disposal of a hoyse.us.ed by
  the owner for own habitation (subject to certain conditions). Two of the
  most basic conditions are (1) the only house owned by the seller and (2)
  must have lived in the house/flat/maisonette for the last 5 years.

Note that the above allowances are not available separately. An individual claiming a combination of the above allowances is only permitted a maximum of Cy£50,000 allowances.

Cyprus residents and companies registered in Cyprus are subject to Capital Gains Tax when disposing of property, wherever this is situated, either in Cyprus or abroad. Non-residents are taxed only when selling property situated in Cyprus. They can be completely exempt from this Tax if they prove that they acquired the particular property by importing foreign currency between 1/08/1980 and 13/07/1990. Losses are calculated in the same way as gains and they can be set off against capital gains of the same and future years.

ESTATE DUTY
Estate Duty was abolished as from 1/01/2000. British people settling in Cyprus should note that by establishing Domicile in Cyprus they will give Estate Duty benefits to their dependents - UK has a 40% Estate Duty on worldwide assets over the amount of 263,000 pounds sterling, against ZERO rate for Cyprus.

VALUE ADDED TAX
As from 1/1/2003 the VAT rate became 15% on specific goods and services. Real Estate was excluded from VAT but this has changed.
A law has been approved by the Cyprus Parliament imposing a 15% VAT charge on all new property, provided the initial application for a building permit was made after the 1/5/2004. All buildings that received a building permit prior to this date will have no VAT charge. Also all second-hand property including houses, apartments etc, have no VAT charge. Building plots/Building land are also exempt from VAT until the year 2007. Special regulations, which will treat the purchase/building of a permanent residence to a lower VAT charge [5%], have recently been passed by the Government.