Tax Benefits for Real Estate Investors in Cyprus

Published on September 30, 2025 and written by Cyril Jarnias

Cyprus, a Mediterranean island at the crossroads of Europe, Asia, and Africa, has become a top destination for international real estate investors. With its sunny climate, sandy beaches, and rich cultural heritage, Cyprus offers much more than just a pleasant living environment. The country has successfully established a particularly attractive tax environment, making the island a true haven for real estate investors seeking tax optimization.

In this article, we will explore in detail the numerous tax benefits that make Cyprus a sought-after destination for real estate investment. We will examine the local tax system, international double taxation treaties, as well as the specifics of property and municipal taxes. Finally, we will compare these benefits to those offered by other countries, allowing you to fully appreciate Cyprus’s appeal in the international real estate investment landscape.

A Particularly Advantageous Local Tax Regime

The Cypriot tax system is designed to attract foreign investors, particularly in the real estate sector. With a corporate tax rate of only 12.5%, Cyprus positions itself among the most fiscally competitive European countries[1]. This advantageous tax policy also extends to individuals investing in real estate.

For rental income, Cyprus applies a progressive tax system ranging from 0% to 35%. However, real estate investors benefit from several allowances and deductions that significantly reduce the taxable base. For example, a standard 20% deduction is applied to gross rental income, in addition to deductions for maintenance, repair, and other property-related expenses[2].

Furthermore, Cyprus offers attractive tax exemptions on real estate capital gains. Capital gains realized from the sale of a property are tax-exempt up to 20%. This exemption can even reach 100% for properties acquired between 2013 and 2025, under the incentive measures implemented by the Cypriot government to stimulate the real estate market[3].

Favorable International Agreements: The End of Double Taxation

The tax appeal of Cyprus is not limited to its local taxation. The country has signed numerous double taxation treaties with over 60 countries, including most European countries, the United States, Russia, and China[4]. These agreements are particularly advantageous for international real estate investors.

Thanks to these conventions, real estate income generated in Cyprus is taxed only once, thus avoiding double taxation in the investor’s country of residence. For example, a French investor receiving rental income in Cyprus will only be taxed in one of the two countries, typically the one with the lower tax rate.

Moreover, these agreements facilitate the exchange of tax information between the signatory countries, which enhances transparency and legal security for investors. Cyprus is committed to adhering to international standards on tax transparency, particularly those of the OECD, which contributes to its reputation as a reliable and respected tax jurisdiction[5].

It is important to note that these agreements can vary by country. For example, the agreement between Cyprus and the United States includes specific provisions for real estate income, allowing for interesting tax optimization for American investors[6].

Property and Municipal Taxes: Controlled Costs

Unlike many European countries where property and municipal taxes can represent a significant burden for owners, Cyprus has adopted a more investor-friendly approach.

The property tax in Cyprus was abolished in 2017, representing significant savings for property owners[7]. This decision aligns with the Cypriot government’s intention to stimulate the real estate market and attract foreign investors.

As for the municipal tax, it does not exist as such in Cyprus. However, owners are required to pay municipal fees, which vary by municipality and the services provided. These fees are generally moderate and average between 0.1% and 0.3% of the property value per year[8].

It is also worth mentioning the transfer fees when purchasing a property. Cyprus applies progressive rates ranging from 3% to 8% depending on the property value. However, significant reductions are granted to first-time buyers and investors purchasing new properties, with a total exemption for the first €200,000 of the property value[9].

These advantageous tax measures on property ownership help reduce holding costs and improve the profitability of real estate investments in Cyprus.

Cyprus vs. Other Destinations: An Undeniable Competitive Advantage

To better appreciate the tax appeal of Cyprus for real estate investors, it is interesting to compare its regime to that of other popular destinations.

Compared to Malta, another Mediterranean island favored by investors, Cyprus generally offers more significant tax benefits. Although Malta proposes a corporate tax rate of 35%, its tax refund system can reduce this to an effective 5% rate. However, Cyprus’s 12.5% rate remains more advantageous and, above all, simpler to apply[10].

Compared to Portugal, which attracts many investors with its “Non-Habitual Resident” program, Cyprus stands out with its more advantageous taxation on real estate capital gains. While Portugal taxes capital gains at a rate of 28%, Cyprus offers exemptions that can reach up to 100% in some cases.

In comparison with Greece, a neighboring country and direct competitor in the Mediterranean real estate market, Cyprus presents a significant tax advantage. Greece applies a corporate tax rate of 22% and progressive rates up to 45% for individuals, significantly higher than Cypriot rates.

Finally, compared to countries like France or Germany, Cyprus distinguishes itself with generally lighter taxation on real estate. The absence of property tax and lower tax rates on rental income and capital gains make Cyprus a very attractive alternative for European investors seeking to optimize their taxation.

Conclusion: Cyprus, a Strategic Choice for Real Estate Investment

Cyprus stands out as a top destination for real estate investors seeking tax optimization. Its attractive tax regime, combining a low corporate tax rate, generous allowances on rental income, and significant exemptions on capital gains, offers a particularly favorable framework for real estate investment.

The double taxation treaties signed with numerous countries enhance Cyprus’s appeal on the international stage, allowing foreign investors to fully benefit from local tax advantages. Moreover, the abolition of the property tax and the moderation of property-related charges contribute to improving investment profitability.

Compared to other popular destinations, Cyprus distinguishes itself with a set of tax benefits that make it a particularly competitive option for international real estate investors. Whether for a secondary residence, a rental investment, or a wealth diversification strategy, Cyprus offers a tax and economic environment conducive to the success of your real estate projects.