Real Estate In Cyprus: Residentship and VAT Aspects

With new rules of acquisition residentship, Cyprus became one of the most popular places within the EU to move to.

This exploration delves into the meticulous legal frameworks governing the process, dissecting the intersection between property investment and the intricacies of securing permanent residency. Join us on this legal odyssey, where the complexities of real estate and immigration law converge, paving the way for a nuanced understanding of achieving residency through property ownership in Cyprus.

Prerequisites

An auspicious route for non-European Union citizens seeking a residence permit in Cyprus lies within the investment scheme. This avenue necessitates the procurement of a property valued at a minimum of EUR 300,000, exclusively from a developer and of recent construction. The funds for this acquisition must originate from the applicant’s personal account in a financial institution.

Moreover, foreign funds designated for the investment can be transferred to Cyprus from a corporate bank account, wherein the applicant and/or their spouse hold exclusive shareholding. This condition applies, provided that the shareholder is explicitly included in the residency application. The same principle extends to the transfer of the investment’s value, which should be deposited into the seller’s account at a Cypriot financial institution.

If a person decides to change his life and move to Cyprus to live, he will need to prepare himself for the procedure. Next documents may be required to submit:
Compile the necessary documentation meticulously to navigate the residency application process successfully:

  • Passport and Personal Information:

Ensure possession of a valid passport with an expiration date extending at least 12 months from the application date.

  • Professional Background:

Present a detailed Curriculum Vitae encapsulating relevant personal and professional information.

  • Financial Verification:

Substantiate an annual income of at least €50,000, with incremental allowances for the spouse (€15,000) and each dependent minor child (€10,000). This income, derived from abroad, spans salaries, pensions, dividends, rents, and more. Authentication necessitates a tax return declaration from the country of tax residency. Consideration of the spouse’s income is integral to the total income calculation.

  • Tax Residency Documentation:

Include tax return declarations from the country of tax residency, accompanied by original documents and a duly sworn affidavit.

  • Clean Record:

Provide a Criminal Record Certificate from country of origin, demonstrating a clean legal history.

  • Health Coverage:

Secure an active Health Insurance Policy Certificate covering inpatient and outpatient care, along with the repatriation of remains.

Be mindful that specific circumstances may require additional documents on a case-by-case basis.

Proceeding with the property acquisition, remember the following:

Property Documentation:

Obtain the title of ownership or a contract of sale for the selected property, ensuring all documents are duly stamped.

Financial Proof:

Substantiate proof of payment totaling at least €300,000 (plus VAT) for the property. Note that if the property is still under construction, a sales agreement and a receipt from the Land Registry are essential for submission.

VAT reduction and other issues

When buying real estate for living accommodation a purchaser should be aware of the next thing — VAT rate on Cyprus in general is 19%, but it can be reduced to 5%. 

The 5% VAT rate is applicable to the initial 130 square meters of a house’s building area, determined by the building factor and architectural plans submitted for a building permit (or when not required). This preferential rate is extended to residences valued at €350,000 or less, with the overall transaction not surpassing €475,000 and the total buildable area capped at 190 square meters. Individuals with disabilities benefit from an expanded scope, where the 5% VAT applies to the first 190 square meters, irrespective of the total size. The transaction value is subject to potential revision, and families with more than three children enjoy an additional area increase of 15 square meters for each child beyond three.
And other important things to remember: 

  • Upon acquiring the initial home with the reduced 5% VAT rate, a 10-year restriction is imposed, preventing the use of this benefit for another property. This measure safeguards the initiative for first-time buyers and prevents potential misuse.
  • While the 10-year rule generally applies, specific exceptions exist. If a person ceases using the first home as his primary residence within this period, notifying the Registrar within 30 days is mandatory. Additionally, he must pay the difference between the reduced and standard VAT rates for the period the property wasn’t his primary residence.
  • In cases of the beneficiary’s death or property transfer to an adult child not benefiting from the reduced VAT rate, the 10-year restriction is lifted. This ensures flexibility in specific situations while upholding the program’s integrity.
  • It’s imperative to note that if later found ineligible for the reduced VAT rate, full tax payment based on the standard rate becomes obligatory. Thus, understanding eligibility criteria and adhering to associated regulations is paramount.

Conclusion

In summary, Cyprus offers a compelling proposition for those seeking permanent residency through real estate investment. With a minimum property value of €300,000 and attractive incentives like the reduced VAT rate, the landscape is ripe for strategic acquisitions.

For a seamless journey, consider the expertise of Manimama. We not only assist in finding the right property but also guide through the intricacies of purchasing real estate and obtaining residency. We have contacts with developers and partners throughout Cyprus, and we are ready to offer you a brand new project — Alexandra Court. It’s a fascinating residential house with 8 apartments of different sizes in village Emba (only 10 minutes by car from Paphos). Prices start from €160 000 for general investing and there are variants for being eligible for residentship application. Don`t hesitate – contact us and make your dreams come true.

The content of this article is intended to provide a general guide to the subject matter, not to be considered as a legal consultation.


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Buying Real Estate with Crypto

Discussing the plan of making a deal of sell-purchase of real estate you must consider next steps.

Let us imagine that an investor has cryptocurrency that he wants to use to pay for real estate. Investor shall stick to the plan which is following:
  1. Preliminary Steps:
    • Research and Information Gathering: The investor conducts thorough research on UAB Manimama Exchange, familiarizing themselves with the company’s services, reputation, and terms of engagement.
    • Contact the Exchange Service Provider: Initiate contact with UAB Manimama Exchange to inquire about the process and requirements for utilizing cryptocurrency for real estate transactions.
  2. Account Setup and Verification:
    • Registration: Complete the necessary registration process on the UAB Manimama Exchange platform to become a client.
    • Verification: Undergo the full verification process by providing identification data to comply with regulatory standards.
  3. Cryptocurrency Transfer:
    • Wallet Creation: Open a cryptocurrency wallet with UAB Manimama Exchange to facilitate the secure storage of the investor’s cryptocurrency.
    • Transfer Funds: Initiate the transfer of cryptocurrency to the designated wallet, ensuring compliance with the platform’s guidelines.
  4. Documentation and Compliance:
    • Prepare Documentation: Collaborate with UAB Manimama Exchange to prepare all necessary documentation confirming the source of the cryptocurrency funds.
    • Compliance Check: Undergo a comprehensive compliance check to ensure adherence to legal and regulatory requirements.
  5. Cryptocurrency to Euro Exchange:
    • Exchange Process: Execute the exchange of cryptocurrency for euros through the UAB Manimama Exchange platform.
    • Receive Funds: Confirm receipt of euros into the designated wallet opened by UAB Manimama Exchange.
  6. European Bank Account Setup:
    • Consultation with the UAB Manimama Exchange: Seek assistance from UAB Manimama Exchange in opening a European bank account for the purpose of receiving funds after the cryptocurrency-to-euro conversion.
    • Account Setup: Follow the necessary steps to open a European bank account, facilitated by UAB Manimama Exchange.
  7.  Real Estate Transaction:
    • Engage with the Developer: Initiate communication with the seller of the property (currently we provide service to a Cyprus real estate complex Alexandra Court) to express the intent to purchase a property using cryptocurrency.
    • Coordinate Payment: Work collaboratively with UAB Manimama Exchange and seller of the property  to facilitate the final payment under the real estate purchase and sale agreement using the euros in the European bank account.
  8. Closing the Deal:
    • Legal Formalities: Ensure all legal formalities are completed, including the transfer of ownership and any additional documentation required for the real estate transaction.
    • Confirm Transaction Completion: Confirm the successful completion of the real estate transaction, with ownership officially transferred and all financial obligations met.

By following these outlined steps and collaborating closely with UAB Manimama Exchange, the investor can seamlessly leverage cryptocurrency for the purchase of real estate while navigating the necessary legal and compliance processes.


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