Legal System
The legal system in Cyprus is mainly based on the British legal system. The Land Registry in Cyprus is probably the most advanced and reliable system in the world, and is also based on the British equivalent. Purchasing property in Cyprus, therefore, is far more secure, with regard to title deeds, than it might be in other Mediterranean counties.

Banking Standards
The banking system in Cyprus closely follows the British pattern. The banks have many convenient branches, which are efficient, modern and well equipped with the latest technology. Non-Cypriot citizens may open foreign currency (e.g. Sterling) and local deposit accounts without difficulty. Many international banks have branches throughout the island. Major credit cards, such as those within the Visa and MasterCard networks, are widely used in Cyprus. Transactions and payments are simply made through your foreign deposit account. All commercial banks in Cyprus are able to offer mortgage facilities to assist with the purchase of a property. The loan will be in foreign currency. The amount available to borrow varies between 60%-80% of value of the property with a repayment period of up to 10 years. Interest rates generally run about 2% above base rate so it would seem sensible to try and arrange your finance in the UK wherever possible.

Currency
The Cyprus currency system is based on the decimal system. One Cyprus Pound is divided into 100 cents. Coins range in value from one cent to 50 cents, and four bank notes are in circulation: £1, £5, £10 and £20.

Health Care
The cost of medical treatment in government hospitals is very low. Those wishing to consult doctors privately will find a wide choice of competent doctors, specialists and surgeons practicing on the island. The minimum charge for a private consultation is CY£10. The standard of medical treatment provided to citizens is high and continuously improving. Additionally, a number of companies offer medical insurance schemes that cover excellent and immediate medical care. Diverse schemes are tailored to individual needs and budgets, and can cover hospitalisation at the hospital or clinic of your choice, outpatient consultants and drugs, and even nursing at home.

Tax Advantage
Compared with other international financial centres, Cyprus offers a distinct benefit in the form of double taxation treaties. In practice, the tax levied by one country is credited against the tax levied in the taxpayer's country of residence. Where different tax rates apply, the taxpayer will ultimately not pay more than the higher of the two rates of the respective countries. Such treaties combined with very favourable tax rates for international business entities in Cyprus, opens the door to significant tax planning opportunities. The fact that Cyprus is not considered a tax haven, but rather a country offering tempting tax incentives, expels the distrust that international tax havens often arouse.
To date double taxation treaties exist between Cyprus and the following countries: Austria, Belarus, Bulgaria, Canada, China, Czech Republic, Denmark, Egypt, France, Germany, Greece, Hungary, India, Ireland, Italy, Kuwait, Malta, Norway, Poland, Romania, Russia, Slovakia, Sweden, Syria, United Kingdom, South Africa, United States and Yugoslavia. There are negotiations for the ramification of treaties with Egypt, Malta, Syria, Belgium, Finland and the countries comprising the Commonwealth of Independent States. The main purposes of these treaties is the avoidance of double taxation of income earned in any of these countries.

For example British citizens may take advantage of the double Taxation Treaty existing between the UK and Cyprus. This enables you to receive your pensions and investment income into Cyprus FREE of UK withholding tax. This Treaty is unique to Cyprus since it includes both public and private sector pensions. Furthermore, Cyprus taxes the assets of expatriates only on a remittance basis. Many expatriates can, therefore, keep assets growing free of tax in an offshore bank, investments or trust, and simply bring into Cyprus what they need.

The remittance system compares extremely well with the more common world-arising tax system, used in many other countries, including favoured sunspots like Spain. Recent tax reforms sharply reduce the tax burden in alien residents, in recognition of their value to the economy.

Individual alien residents are now taxed on a flat basis of 5% per annum on pension and investment income brought into Cyprus. In special circumstances exemptions totalling up to CYP 4,000 per person or CYP 8,000 per married couple may apply. Consequently, the total tax burden on alien residents is in practice often only 3%. This compares dazzlingly with competing destinations where property owners are subject to high tax exposure up to levels of 60%. Insurance pensions can be paid to retires in Cyprus on a similar tax-free basis, and are index-linked by virtue of Reciprocal Agreement, compared to their 'frozen' status in other overseas destinations.

Residence Permit
By law, a non-Cypriot who owns property in Cyprus is entitled to a residence permit, but is not required to hold a permanent residence permit. However, permanent residence is easy to obtain, once certain requirements are fulfilled. The applicant needs to submit an application and provide proof that he and his family are self-supporting.

1. A copy of the sale/rental agreement
2. Copies of pension/retirement income
3. Any other document relevant to income
4. Three photos and passport The application for permanent residence may be submitted to the local immigration office in the area of residence.

Education
In addition to the public schools, private elementary and secondary schools for English, French, Russian and Italian speaking pupils are available. Tertiary education is provided at the University of Cyprus, as well as at a number of private English language colleges that offer accredited undergraduate courses in various fields, including business studies, marketing, economics, computer science, etc.

Employment
Under the Aliens and Immigration Law, non-Cypriots wishing to take up employment in Cyprus are required to have a work permit.

VAT
The current prevailing rate (Jan 2004) is 15%.

Household Pets
Pets may be brought into Cyprus provided a license has been obtained in advance from the Department of Veterinary Services in Nicosia. A house quarantine period of six months may be imposed.

Buying Property in Cyprus

N.B. When Cyprus joins the EU in May 2004 the restrictions on real estate purchases in Cyprus will be lifted in line with EU directives. This implies that property purchased by EU citizens will be free of some of the restrictions detailed below.

Compared to many countries, the logistics of property purchase in Cyprus by foreigners are relatively simple.
Non-Cypriots are permitted to buy a FREEHOLD ownership, for their personal use, either:

1. an apartment or a house or,
2. house on a building site not exceeding 3 donums (4,012.5 sq. metres) or
3. a piece of land not exceeding 3 donums for the purpose of erecting a house within a reasonable time

Permission to buy property
Permission to buy property must be sought from the Council of Ministers by written application, which must be submitted by the non-Cypriot purchaser after the agreement is signed. However, this permission is granted more or less as a matter of course to all bona fide purchasers. In the meantime, however, purchasers may take possession of the property without restriction.

The application to the Council of Ministers to acquire immovable property in Cyprus can be made within a reasonable time after signing the contract of sale.

Acquiring the title deed
Transfer of ownership from vendor to purchaser is accomplished by a simple procedure through the Cyprus Land Registry Office, either by the buyer in person or by appointed third party with a Power of Attorney.

In the case of a non-Cypriot, evidence of payment for the property with foreign exchange must be provided as a prerequisite for registration.

The contract of sale must be in writing, and it is advisable that such contracts be registered at the District Land Registry Office within sixty days from the contract date. This protects the buyer's rights to the property and provides additional safeguards.

When issued, the title deed will be register in the name of the buyer, and will be recorded in the Government archives. The Government archives are confidential and will not be published or made accessible under any circumstances.

At any time after the purchase, the buyer may sell or dispose of the property at will, provided that he/she has a valid contract.

Costs Associated with the Acquisition of Property

Common expenses
These are usually payable monthly or quarterly in advance. They vary from development to development and depend on the area and type of the property. They cover an owner's share of the cost of cleaning and maintaining common area and gardens, swimming pool expenses, electricity in common areas, management fees, rubbish collection, and repairs. The estimated total is in the region of CY£150-CY£300 per year.

Electricity and water supply & other municipal services
Charges for the utilities are payable to the respective authorities at regular intervals throughout the year. They are based strictly on the consumption of each unit. While the cost will vary for every unit, approximately CY£180 per unit per year can be considered as a rough guide. The local municipal or other authorities are responsible for the regular collection of rubbish. Depending upon the area of the property, the cost is in the range of CY£40-50 per year.

Taxes & fees
The transfer of title can be affected once the Council of Ministers' permission is obtained and the Central Bank of Cyprus confirms receipt of the foreign funds. Upon transfer of the property and registration in the purchaser's name, the District Land Registry Office will charge Transfer Fees, which are based on the market value of the property at the time of purchase, and are calculated as follows: Value up to - CY£ 50.000 3% CY£50.001 - CY£100.000 5% CY£100.001 - and over 8%

For example: If the purchase price is CY£ 70,000

1st CY£50,000 @3% = CY£ 1500

next CY£20,000 @ 5% = CY£1000

Total CY£ 2500

Should the purchase be made in joint names and provided the price is more than £50,000 then the value for calculation is halved.

For example: If the purchase price is CY£ 70,000

1st CY£ 35,000@3% = CY£ 1050

next CY£ 35,00 @3% = CY£ 1050

Total CY£ 2100

Stamp Duty
Stamp duty is due at the time of signing the contract. Stamp duty is levied at the rate of CY£1.50 per CY£1,000 up to CY£100,000, and thereafter at the rate of CY2 per CY£1,000. The purchase contract must be stamped within 30 days of its dated signature; otherwise a fine will be imposed.

Immovable property tax, service tax
The annual immovable property ownership tax imposed by the government is approximately CY£60-120 per year, depending on the value of the property. The Municipal authorities also levy an annual property tax at the rate of about CY£20-30 per year. Other authorities may also impose a sewage tax of CY£20-40, depending on the value of the property.

Capital gains tax
Should the purchaser decide to sell the property at a later date, Cyprus Law provides that the full amount paid for it in foreign exchange may be transferred abroad at the time of the re sale. The equivalent of the full purchase price and any increase in value of the property may be transferred immediately. Property sales in Cyprus are subject to Capital Gains Tax at the rate of 20% on the gain, however the first CY£10,000 are tax-exempt.

Inheritance tax
Inheritance tax is not imposed.

Legal safeguards for foreign investors
Contrary to the risks inherent in the purchase of property in some countries, Cyprus has never been involved in the nationalization of any sector of the economy, nor in the expropriation of property owned by foreigners. Indeed the Republic has often guaranteed foreign investments jointly and severally with local participants - consistent with its efforts to create a favorable climate for such investments.

Tax Privileges
Personal effects, household goods and furniture can be imported duty free by immigrant retirees, provided they are for personal use and have been used for a reasonable period of time - approximately one year. Also, there is no duty on a car, and retired couples enjoy the additional concession of two duty free cars.

Selling Your Property
You can sell your property at any time with no restriction in line with the following two circumstances:

1. If the property is sold to a non-Cypriot who is paying from external funds then the whole amount can be repatriated.
2. If the property is sold to a Cypriot who is paying in Cypriot pounds then the seller is entitled to repatriate what he paid plus any other costs involved with improvements or extensions to the property (evidence required), plus the transfer fees, plus inflation, plus CY£ 50,000 per person per year.