Published on and written by Cyril Jarnias
Cyprus, a Mediterranean jewel at the crossroads of Europe, Asia, and Africa, is increasingly attracting foreign real estate investors. With its sunny climate, pristine sandy beaches, and rich cultural heritage, the island offers an idyllic living environment. But beyond these natural assets, Cyprus also appeals through its legal and tax framework favorable to foreign investors. In this article, we will explore in detail the essential real estate laws and regulations to know for investing confidently in Cyprus in 2025.
Foreign Acquisition Rights: A Wide-Open Door to the Cypriot Real Estate Market
Good news for foreign investors: Cyprus is opening its real estate market wide. Indeed, non-residents, whether from the European Union or third countries, have the right to acquire real estate on the island. This open policy reflects the Cypriot government’s desire to attract foreign capital and energize its real estate sector.
However, some rules govern these acquisitions. Non-European citizens must obtain approval from the Council of Ministers to finalize their purchase. This procedure, although straightforward, involves submitting a detailed application. Foreigners are generally allowed to purchase up to two properties, whether apartments, houses, or land. Specific conditions apply, particularly regarding the size of acquired land.
For European Union nationals, the procedure is even simpler. They enjoy the same rights as Cypriot citizens in real estate acquisition, without needing special government authorization.
Good to Know:
Foreigners can purchase up to two properties in Cyprus, with a simplified procedure for EU nationals. Council of Ministers approval is required for non-Europeans.
The Cypriot Legal Framework: An Environment Conducive to Real Estate Investment
The Cypriot legal system, inherited from British law, provides a stable and transparent framework for real estate transactions. Here are the main laws and regulations to know:
The Immovable Property (Acquisition by Aliens) Law
This law governs property acquisition by non-residents. It defines purchase conditions, any restrictions, and procedures to follow. It also guarantees the protection of foreign investors’ property rights, ensuring a climate of trust conducive to investment.
The Immovable Property (Transfer and Mortgage) Law
This legislation governs property transfer processes and mortgage registration. It ensures the legal security of real estate transactions by clearly defining the rights and obligations of involved parties.
The Town and Country Planning Law
This law governs land use planning and real estate development in Cyprus. It defines buildable zones, urban planning rules, and building permit procedures. Understanding it is crucial for any investor wishing to develop a real estate project on the island.
The Contract Law
Based on English contract law, this law governs all contractual aspects of real estate transactions. It guarantees the validity and execution of sale and lease contracts.
The Real Estate Agents Law
This legislation regulates the activities of real estate professionals in Cyprus. It imposes strict qualification and ethical standards, offering additional protection to investors.
Good to Know:
The Cypriot legal framework, inspired by British law, offers great legal security to foreign real estate investors. The main laws to know concern property acquisition by foreigners, property transfer, urban planning, and contracts.
Real Estate Taxation in Cyprus: An Attractive Regime for Investors
The Cypriot tax regime is renowned for its attractiveness, and the real estate sector is no exception. Here are the main elements to know:
Value Added Tax (VAT)
VAT applies to the purchase of new real estate at the standard rate of 19%. However, a reduced rate of 5% applies for the purchase of a first residence, under certain conditions. This measure aims to promote homeownership, particularly for young households.
Transfer Fees
Transfer fees are progressive and range from 3% to 8% depending on the property value. However, exemptions and reductions are provided in certain cases, particularly for the purchase of a first residence.
Property Tax
The annual property tax was abolished in Cyprus since 2017, representing a significant advantage for property owners.
Capital Gains Tax on Real Estate
Capital gains realized from the sale of real estate are taxed at a rate of 20%. However, many exemptions exist, particularly for the sale of a primary residence.
Rental Income Tax
Rental income is subject to income tax according to a progressive scale. However, property-related expenses are deductible, allowing for tax optimization.
Special Regime for Non-Domiciled Residents
Cyprus offers an advantageous tax regime for non-domiciled residents. They benefit from a total exemption from tax on foreign-source income, including rental income and capital gains from real estate realized abroad.
Good to Know:
The Cypriot tax regime is particularly attractive for real estate investors. The abolition of property tax, reduced VAT rates for first residences, and numerous exemptions for capital gains are all advantages to consider.
Property Owner Rights in Cyprus: A Balance Between Protection and Flexibility
Cypriot law places great importance on protecting property owners’ rights, while ensuring a balance with tenants’ rights. Here are the main aspects to know:
Property Rights
Property rights are strongly protected in Cyprus. Owners have full control over their property and can dispose of it freely, subject to compliance with applicable laws and regulations. This protection extends to foreign owners, who enjoy the same rights as nationals.
Rental Rights
Owners have the right to rent their property, whether for long-term leases or seasonal rentals. The Cypriot lease law offers great flexibility in negotiating lease contract terms.
Eviction Rights
In case of lease contract breach by the tenant (such as non-payment of rent), the owner has the right to initiate eviction proceedings. The law provides accelerated procedures for certain cases, allowing for quick dispute resolution.
Development Rights
Owners have the right to develop their property, subject to obtaining necessary permits and authorizations. The Town and Country Planning Law governs these rights, defining buildable zones and urban planning rules to follow.
Protection Against Expropriation
The Cypriot Constitution protects owners against arbitrary expropriation. If expropriation is necessary for public interest reasons, fair compensation must be paid to the owner.
Inheritance Rights
Owners have the right to transfer their real estate through inheritance. Cypriot law recognizes the validity of foreign wills, thus facilitating estate transfer for non-resident investors.
Good to Know:
Property owners’ rights are solidly protected in Cyprus, with great flexibility in leasing and development. Protection against expropriation and recognition of foreign wills offer additional security to international investors.
Regulatory Developments: Cyprus Adapts to Modern Real Estate Market Challenges
The Cypriot regulatory framework for real estate is constantly evolving to adapt to new market realities and international standards. Here are the main recent and upcoming developments:
Enhanced Transparency
In an effort to combat money laundering and improve real estate transaction transparency, Cyprus has strengthened its due diligence requirements. Real estate professionals are now required to verify the source of funds used for property acquisitions.
Digitalization of Procedures
The Cypriot government has launched a comprehensive program to digitalize public services, including those related to real estate. The goal is to simplify and speed up property registration procedures and building permit acquisition.
Property Title System Reform
A major reform of the property title system is underway. It aims to resolve historical issues related to missing or defective property titles, thus offering greater legal security to investors.
New Environmental Regulations
Facing climate change challenges, new environmental regulations are being implemented. They impose stricter energy efficiency standards for new constructions and major renovations.
Regulation of Short-Term Rentals
To regulate the short-term rental market (such as Airbnb), new rules are being developed. They aim to regulate this activity while preserving the island’s tourist attractiveness.
Revision of the Investment Residence Program
Following controversies related to the former “golden passport” program, Cyprus has revised its investment residence program. The new rules aim to attract quality investors while strengthening controls and due diligence.
Good to Know:
The Cypriot regulatory framework is evolving to enhance transparency, simplify procedures, and adapt to environmental challenges. These developments aim to maintain the attractiveness of the Cypriot real estate market while meeting international standards.
Conclusion: Cyprus, a Prime Destination for Real Estate Investment
Real estate investment in Cyprus offers numerous advantages for foreign investors. A stable and transparent legal framework, attractive taxation, solidly protected property rights, and an evolving market make the island a prime destination for diversifying real estate portfolios.
The possibility for foreigners to acquire property, coupled with an advantageous tax regime, particularly for non-domiciled residents, creates an environment conducive to investment. Recent regulatory developments, aimed at enhancing transparency and modernizing procedures, only strengthen Cyprus’s attractiveness on the international real estate scene.
However, as with any foreign investment, it is crucial to research thoroughly and surround oneself with qualified professionals to navigate the subtleties of the local market. In-depth knowledge of Cypriot real estate laws and regulations is the key to successful and sustainable investment on this Mediterranean island with multiple assets.
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Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.
On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.
Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.
