As one of the most strategically located countries in the Eastern Mediterranean, Cyprus continues to draw international attention not just for its natural beauty and lifestyle, but for its incredibly favorable investment climate—particularly in real estate. A key part of this attraction lies in the tax benefits the country offers to foreign and local investors alike.
If you’re considering adding international property to your portfolio, here’s why investing in Cyprus real estate could be a smart, tax-efficient move.
1. No Inheritance Tax
Cyprus does not impose any inheritance or estate tax, which is a significant draw for investors planning to pass on real estate assets to family members. This means property can be transferred to your heirs without a large tax burden—a rare benefit in many European jurisdictions.
2. Low Corporate Tax Rate
One of the lowest in the European Union, Cyprus offers a 12.5% corporate tax rate. For those investing through a corporate structure (like holding companies or investment vehicles), this low tax rate can lead to substantial savings on rental income or gains from property sales.
3. No Tax on Worldwide Dividends and Capital Gains for Non-Domiciled Individuals
Cyprus operates a non-domicile regime, meaning that individuals who become tax residents of Cyprus but are not “domiciled” there (i.e., not born or permanently settled in Cyprus) are exempt from taxes on dividends and interest income worldwide for 17 years.
Additionally, capital gains tax is only applicable on the sale of property located in Cyprus, and not on international assets.
4. Favorable Capital Gains Tax (CGT) Structure
Cyprus charges CGT at 20%, but only on gains derived from the sale of real estate located in Cyprus. Even better, there are various allowances and deductions available, such as inflation adjustments and exemptions for properties acquired before 1980.
And in certain cases (e.g., reorganization of companies or transfers between family members), capital gains tax may be fully exempt.
5. No Immovable Property Tax (IPT)
As of 2017, Cyprus abolished Immovable Property Tax altogether. This has significantly reduced the long-term holding costs for real estate investors and simplified annual tax compliance.
6. Double Tax Treaties
Cyprus has a broad network of double tax treaties with over 65 countries, including the UK, Russia, China, India, and most EU nations. These treaties help to eliminate or reduce double taxation, making international investments more efficient and attractive.
7. VAT Benefits for New Properties
Cyprus allows a reduced VAT rate of 5% (down from the standard 19%) on the first 200 square meters of a new property purchase intended for primary residence. While this is primarily for individuals residing in Cyprus, it’s worth noting for those looking to eventually relocate.
8. Residency and Citizenship Incentives
Although the Citizenship by Investment program has been suspended, Cyprus continues to offer permanent residency permits through real estate investment. For a minimum investment of €300,000 in residential property, non-EU nationals can secure a fast-track permanent residency, which comes with favorable tax and lifestyle advantages.
Final Thoughts
With its strategic location, business-friendly environment, and attractive tax framework, Cyprus remains one of the top destinations in Europe for real estate investment. Whether you’re looking to generate rental income, diversify your portfolio, or secure residency in an EU country, Cyprus offers a tax-smart pathway to meet those goals.
Before making any investment, it’s always recommended to consult with local tax advisors and legal professionals to tailor the best structure for your personal or corporate needs.
Interested in exploring property opportunities in Cyprus or need guidance on structuring your investment? Reach out to our expert team—we’re here to help you make the most of your real estate journey.
