According to this law, foreigners purchasing immovable property in Cyprus, apart from following the general rules which regulate such transactions, are also obliged to adhere to special formalities and are faced with certain restrictions, which are aimed at the proper control of foreign investments, the protection of foreign investors, the implementation of the Exchange Control Restriction Law etc.
By law the term "foreigner" (alien) is defined as any person not being a citizen of the Republic and includes a local company controlled by non-residents (offshore), a foreign company and a trust in favour of a foreign person. It does not include:
(a) non-resident Cypriots, or
(b) foreigner wives of citizens of the Republic not living apart from their husbands under a decree of a competent Court.
"Trust in favour of a foreigner" means any kind of trust of which the beneficiary or one of the existing beneficiaries is a foreigner and includes any expressed or implied contract or agreement, written or oral, under which a foreigner will not be the absolute owner but will have ownership for the benefits of another or where ownership will be held for his benefit.
The term "acquisition of immovable property" includes:
(a) A lease of immovable property for a period exceeding 33 years.
(b) The acquisition of shares in a company which is duly registered as a legal entity in the Republic or in the Sovereign Base Areas and which (in either case) has acquired immovable property in the Republic or the Sovereign Base Areas, taking into account that if any shares in the company belong mainly to foreigners, the company is considered as "controlled by non-residents".
(c) The formation of a trust in favour of a foreigner which involves, wholly or partly, the leasing of immovable property falling within the provisions of paragraph (a) above or a shareholding in a company falling within the provisions of paragraph (b) above.
Under the Acquisition of Immovable Property (Aliens) Law, no foreigner can acquire immovable property without the prior permission of the Council of Ministers. Normally permission is granted to bona fide foreigners to acquire a flat or a house or a piece of land not exceeding three donums (about 4000 mì) for the erection of only one house for use as a residence only by the purchaser and his family.
Members of the family of an original purchaser may also acquire their own property, provided that they are completely independent of the purchaser, both financially and residentially, such as married children having their own family and business. Permission is granted for personal use, not for letting or commercial use. This rule is relaxed for offshore companies which are permitted to acquire business premises, as well as houses or flats as residences for their members or directors.
British subjects classified as "British Residents" according to Annex "T" to the Treaty of the Establishment of the Republic of Cyprus, may freely trade in land in Cyprus without the permit of the Council of Ministers. This privilege was granted to some British subjects who were residents at the time of the establishment of the Republic of Cyprus, it is recorded in their passports and it is extended to their spouses and descendants.
Although it may take up to 12 months for the Council of Ministers' permit to be obtained, purchasers are in the meantime entitled to take occupation of their premises.
After the permit has been granted and the property is registered in the name of the foreigner, no further restriction is imposed on him and he may sell or dispose of it by will or other instrument. Moreover, the legal heir is not required to obtain a permit in order to have the property registered in his name. Once the Council of Ministers' approval has been obtained, an application should be submitted to the Exchange Officer of the Central Bank of Cyprus who will furnish a certificate verifying that the purchase consideration was paid in hard currency.
It should be noted that this certificate is required in the event of a subsequent sale if permission is sought to extract the proceeds of sale from Cyprus.
A prospective purchaser should always, before entering into a contract for the purchase of immovable property, conduct a search at the Land Registry to make sure that the property to be purchased is free from any encumbrances, charges or burdens. It should be noted that no such burdens may affect the right of specific performance after the contract has been deposited with the Land Registry Office.
The transfer of immovable property can be effected once permission to acquire has been granted and the Central Bank has certified the import of foreign funds. Transfer fees are payable by the purchaser on the sale price or under certain circumstances, on the current market value as follows:
CURRENT MARKET VALUE IN CY£ TRANSFER FEES
Value from Value to
- 10.000 5%
10.001 20.000 6%
20.001 35.000 6.5%
35.001 50.000 7%
50.001 75.000 7.5%
75.001 over 8%
Foreigners are now also entitled to borrow money for the purchase of immovable property upon mortgaging such property to the Bank from which they borrow the money.
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