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Tax incentives target rich foreigners

A 50 per cent cut in Property Transfer Fees and other tax incentives have been announced by the Cyprus President in efforts designed to attract high-net-worth foreign investors to the island.

Cyprus Property Tax incentivesPRESIDENT Nicos Anastasiades on Wednesday announced tax incentives, including a 50 per cent cut in property transfer fees, to boost economic activity as Cyprus moves to attract rich foreign nationals.

Speaking at the 54th AGM of the Institute of Certified Public Accountants, the president said the cabinet had made decisions that made the island’s tax framework fairer and more competitive, and most importantly, limited the tax burden, offering incentives for economic activity.

“Our clear and explicit goal is to become the first government in the history of the Republic of Cyprus to reduce public debt and reduce the tax burden at the same time,” Anastasiades said.

Heavy taxation cripples people and businesses and suffocate the economy, he added.

The basic reforms include tax breaks to encourage the flow of new capital in businesses, and extension of increased capital allowances on equipment and buildings until the end of 2016.

To attract foreign entrepreneurs and rich individuals, the government plans to introduce the ‘non-domiciled resident’ status.

“The substantive incentive these individuals will gain, provided they opt to be Cyprus tax residents, will be the exemption from the special defence contribution,” the president said.

The administration will also keep in place the tax incentives relating to the revenues of an individual who was not a resident of the island before the start of his employment.

Anastasiades also announced a 50 per cent cut in property transfer fees to “encourage transactions in the real estate sector.”

The government also plans to introduce full exemption from the capital gains tax of any future sale of immovable property acquired between the day the law is enacted and the end of 2016.

“As long as it is bought by December 31, 2016, no capital gains will be paid,” he said, no matter when it is sold.

He referred to the decision to integrate municipal and state immovable property taxes into one, calculated on the 2013 evaluation at a rate of 0.1 per cent.

“I think the tax reform we are proposing makes our tax regime more attractive and confirms the basic political direction of our fiscal policy, through consolidation, rationalisation and proper administration, which prevents the imposition of any new taxes,” he said.

Anastasiades reminded his audience of the situation in Cyprus two years ago when the banking sector was on the brink of collapse and the state was bankrupt.

Two years later, Cyprus was on the way to recovery, he said, but noted that problems still existed.

“There are of course vulnerable groups who are suffering; there is certainly a large number of jobless people,” he said.

“I am certain that we will manage to overcome the problems affecting the people and not only the figures.”

Readers' comments

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  • Aggis Demetriou says:

    When are you guys going to realize Titles won’t be issued there are no titles unless your developer has clean final approval a clean tax record and a submission or titles to the lands office

    Then and only then you will get titles…..

  • Richard says:

    @SteveR

    Hear Hear – and with the clean title deeds – a significant write down of corruptly issued loans. President Anastasiaides – really simple. Clean up the mess your banks, developers and all of your bent lawyers on the island made up till 2010.

    You will find all of the people burned up till 2010 will GLADLY follow SteveR and hand over to a new generation of people and clear off the island for good. All of you can then do just what you like with the houses, apartment complexes, businesses, shopping complexes, crocodile farms, marinas, the 20+ year long awaited golf courses and theme parks (that never happened) and everything else..

    Enslaving anyone – anywhere – never does any good. Ask people in Africa, Haiti, Cuba, Korea etc

  • Steve R says:

    And all this comes down as to whether you have a clean Title Deed. No movement will take place otherwise. If people could get their Title Deeds then the market would be awash with properties for sale. I for one would put my property up for sale and get the hell out of this corrupt island.

    It would be such a shame because Cyprus is a beautiful place but you do not feel financially safe here.

  • Ian says:

    Seems like yet another example of getting foreigners to pay for Cyprus.

    They don’t seem prepared to dig into their own pockets to pay for their own Country

  • houlou says:

    @chris, alas your calculations are right, you need to contest the 2013 land registry valuation in that case if you can….I guess the proposed law is ok for people with property whose value has not rocketed after the 2013 valuation …but in your case the value of that plot has massively increased rightly or wrongly…..thing is it is time that the plethora of taxes are combined as long as you get a decent breakdown I see no issue……plus the local community council were a law unto themselves conjuring up and imposing all sorts of taxes…. as for the increase yes not right….

  • chris says:

    Last year most of us paid 0.6% on the 1980 valuation, now they will charge us 0.1% on the 2013 valuation.
    As an example land valued at 14000 euros in 1980 at 0.6% tax was 84euros.

    At 2013 prices the land is now worth 270000 euros (so say the tax department) at 0.1% that’s 270 Euros, more than 200% increase.

    I hope I have made a mistake in my calculations, otherwise a lot of people will end up in financial difficulty.

  • houlou says:

    “The substantive incentive these individuals will gain, provided they opt to be Cyprus tax residents, will be the exemption from the special defence contribution,” the president said.

    Defence my posterior, that 30% tax on frugal savers interest on monies that haven’t already been slashed is joke….just like road tax and the rest….not used at all for the intended purposes…..

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