CYPRUS
There are many places in the world that might catch your attention, but Cyprus is a very special place. The island of love, where the traditions of Europe, Asia and Africa meet at a crossroad, fascinates everyone at first sight. With its beautiful beaches, warm sun, modern infrastructure and friendly locals it is ideal not only for relaxation but also as a great place for work, study and business. A place suitable for families, business individuals, retirees, tax planners, holiday seekers. A place where everything can be combined and coexist in perfect harmony. The most balanced package that includes safety, simplicity, joy for life, environmental quality, market potential, option for cosmopolitan as well as tranquil living, ongoing improvement in every industry and infrastructure, fast-growing business environment and all the benefits that a European country has to offer. Now your second home has a name; Cyprus!
Cyprus
If you want to earn from rentals, in a place where the holiday season lasts more than 9 months of the year, and the real estate market guarantees investors a stable passive rental income, Cyprus will be the best choice for you.
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BENEFITS
1
GENERAL BENEFITS
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Strategic location – easy access to Europe, Middle East, Africa, Asia
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Multicultural workforce and population
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Blue flag beaches & cleanest bathing waters
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One of the safest countries in the world
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Awarded resorts & high-quality facilities for tourists
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Two international airports
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Wide selection of private international schools & universities
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High quality lifestyle, living and healthcare standards
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Mediterranean climate & cuisine
2
FINANCIAL BENEFITS
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Corporate Tax 12,5%
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0% Capital Gains Tax
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0% Property Taxes
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5% VAT for First Property Purchase
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80% plus Service-Related Industry
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Non-Domicile Status
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Tax Residency in 60 Days
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No Inheritance Tax
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Solid and Stable Financial System
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Natural Gas Reserves
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Euro Currency
Southern Cyprus
South Cyprus is a friendly tourist destination where everything has been organized for maximum visitor comfort.
Traveling around the island is easy thanks to its infrastructure. After arriving in South Cyprus, everyone will understand why this place is called paradise. The sunshine, the tranquility, the beautiful views and the friendly attitude of the islanders make you want to stay here forever. Therefore, it is not surprising that real estate on the island is very popular among both tourists and investors. Southern Cyprus has an extremely favorable geographical location. However, this is not the only advantage of Cyprus.
10 reasons to buy property in South Cyprus:
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The fast-growing economy offers a wide range of investment opportunities.
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Favorable climate all year round.
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Guaranteed rental profitability of ..% to ..% per year
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The cost of houses and villas is much lower than in other European countries, while the standard of living and quality of construction is at the highest level.
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High quality medical services.
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A wide choice of activities: scuba diving, windsurfing, skiing, mountain climbing, yoga tours.
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Quick return on investment.
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Opportunities for winter activities at a ski resort in the Troodos mountains.
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Friendly people. The people of Cyprus are hospitable to foreigners.
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English education system
What you should know
about South Cyprus
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South Cyprus is home to about 800,000 people.
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The capital and largest city is Nicosia.
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More than 2.5 million tourists visit South Cyprus during a full calendar year.
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Proximity to the sea and sandy beaches, many of which have been awarded the Blue Flag of Europe for environmental friendliness and safety.
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Cyprus' geographic proximity to many Mediterranean countries allows for sea cruises to the island of Rhodes, as well as to Egypt, Israel and Jordan.
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Languages of communication: Greek, English.
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Currencies in circulation: euro.
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Time difference with Poland is +1 hour throughout the year
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Arrival in Southern Cyprus is possible by direct flight to Larnaca or Paphos airport.
Climate
South Cyprus has a long summer that lasts about 8 months, during which the water temperature does not fall below +23 degrees and the air heats up to 27-36 degrees.
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January 15°
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February 17°
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March 18°
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April 23°
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May 25°
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June 31°
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July 32°
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August 37°
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September 30°
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October 28°
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November 22°
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December 17°
TRANSPORTATION IN CYPRUS
Renting a car in Cyprus is an ideal solution, as a car adds freedom to move around and explore the corners of the island on your own. The cost of renting a car is about 20-40 euros per day. Gasoline costs 1.25 euros per liter. Note that driving in Cyprus is left-handed and may be difficult at first.
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Cab services.
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If you are not ready to take the risk of driving- the island has excellent bus services. It is easy to get from one end of town to the other during the day.
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There are three types of buses in South Cyprus: urban, rural and intercity.
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Intercity buses cost about €7.
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The average fare within the city is €1.5.
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The fare can be paid directly upon boarding.
Advantages of property in South Cyprus
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Education at the highest European level.
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No matter in which part of the island you buy an apartment-you can always reach the gentle, warm sea in a short time.
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The mild Mediterranean climate is good for everyone, from children to the elderly.
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A large number of historical and architectural monuments. Cyprus is called the cradle of civilization for a reason!
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Excellent tourist infrastructure. A property owner in South Cyprus will always find something for himself and his children. There are numerous water parks, museums, cafes and bars, restaurants, shopping centers and theaters. And in winter you can go skiing - the Troodos mountains offer a veritable ski resort with 5 different slopes.
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Large and multilateral real estate market.
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Quick issuance of residence permits.
TAX RESIDENCY
Cyprus in general has low tax rates but also offers a great tax residency-based system for foreign individuals. In an effort to make the system more competitive and even more attractive to foreign investors, the Cyprus Government introduced the ’60-day rule’ and the “non- domicile status”.
THE ’60 DAY RULE’
An individual who does not stay in any other country, for one or more periods exceeding in aggregate 183 days in the same tax year and is not tax resident in any other country for the same year, is deemed as a resident in Cyprus in that tax year following the below criteria:
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the individual stays in Cyprus for at least 60 days in the tax year;
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do not reside in any other single state for a period exceeding 183 days;
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is not a tax residence in any other country;
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exercises a business and/or is employed in Cyprus and/or holds an office with a Cyprus tax resident company at any time during the tax year;
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maintains (by owning or leasing) a permanent home in Cyprus.
NON-DOMICILE
With the introduction of “non-domicile” or “non-dom” rules, a Cyprus tax resident individual who is not domiciled in Cyprus will effectively not be subject to SDC in Cyprus on any interest, rents or dividends (whether actual or deemed) regardless of whether such income is derived.
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the tax payable by a Cyprus resident non-domiciled on dividend income is 0%;
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the tax payable by a Cyprus resident non-domiciled on interest income is 0%;
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the rental income will only be subject to income tax at the standard rates.
LEGAL SYSTEM
The modern legal system of Cyprus was formed during the period of British colonial rule. And although many legislative and judicial institutions are almost indistinguishable from English ones, the country has its own case law.
Thus, in accordance with the Cyprus Constitution, the equality of all people, without exception, regardless of their nationality and without any discrimination, is proclaimed.
The modern legal system of Cyprus was formed during the period of British colonial rule. And although many legislative and judicial institutions are almost indistinguishable from English ones, the country has its own case law.
There are no separate courts in Cyprus to deal with specific categories of criminal cases. Non-criminal violations are handled by the Labor Disputes Court, the Rent Control Court and the Family Court. Assize courts are subject to more serious offenses. Religious law dominates family matters and personal matters. District courts deal with civil cases and minor crimes. The highest appellate court in the country is the Supreme Court, consisting of 13 people appointed by the President of the Republic.
Despite the fact that Cyprus has a transparent judicial and legal system in all areas, the law on real estate transactions has a rather complex structure. To avoid undesirable consequences, it is necessary to have a good understanding of the features of regulation of operations. Especially when it comes to foreign investors.
Thus, in accordance with the Cyprus Constitution, the equality of all people, without exception, regardless of their nationality and without any discrimination, is proclaimed. Property rights are considered as one of the fundamental human rights. Foreign citizens owning property in Cyprus have the same rights as local residents.
Property transactions are governed by contract law. In accordance with the legislative procedure of the contract, relating to real estate, must be drawn up in writing, certified by seals and signatures and witnessed. Disputes arising from real estate transactions are dealt with in the courts of Cyprus and are governed by law. Under certain circumstances and by mutual agreement, the parties may use alternative jurisdiction or refer the matter to arbitration.
According to the current legislation, at the conclusion of a property sale transaction, you must pay stamp duty. It is calculated on the basis of the purchase price according to the following scheme:
for the first € 170,860 — € 1.5 per thousand or part thereof;
for the sum over € 170 860 — € 2 for each thousand or its part.
A contract without a stamp on the stamp duty in the courts and when registering the transfer of ownership in the land registry is not considered. However, the absence of a stamp cannot be considered a basis for invalidating the contract. Consideration of a contract for the conclusion of a transaction is possible only after a proper stamp has been stamped on the stamp duty and the payment of late payment interest.
This law covers all matters relating to the ownership, registration and valuation of real estate within the Cyprus Land Registry System. The land cadastre is a tool to protect transactions with property, since it traces the history of each land plot and clearly defines land rights.
The law on real estate states that the right of ownership or any other rights to real estate can be acquired only after registration in the Land Registry. Registration is done only by the owner of the property. The certificate of registration of real estate guarantees the right of ownership and is the basis for carrying out transactions with the property.
In order to prevent the unlawful transfer of real estate to another person or the imposition of a burden on it, the buyer of the property has the right to demand the enforcement of the obligation in kind by transferring a certified copy of the contract to the Land Registry. A copy must be transferred within six months from the date of the transaction. If the seller refuses to fulfill the obligations under the transaction, the law allows the buyer to go to court to forcibly transfer ownership of real estate in his favor.
Transactions involving persons who are not citizens of Cyprus are governed by general rules. However, for foreign persons there are special rules and restrictions that allow for the control of foreign investment.
The term «foreign person» includes:
non-resident citizens of Cyprus;
foreign wives of citizens of Cyprus;
EU citizens permanently residing in Cyprus or companies registered in EU countries with headquarters in Cyprus.
The law defines the term «purchase of real estate» if:
purchase or donation of a real estate lease agreement for a period exceeding 33 years;
purchase of shares of companies registered in the Republic or in the area of deployment of the UK Armed Forces (if the majority of the shares are owned by stateless persons in Cyprus, the company considers controlled by non-residents);
creation of a trust fund, which includes the leased property with a lease term of at least 33 years.
Those wishing to purchase real estate, but who are not citizens of Cyprus, are required to follow a standard procedure — to obtain permission from the Council of Ministers. The permit is issued to foreigners who have honest intentions to purchase an apartment, house or a plot of no more than three donums (approximately 4000 sq. M). EU citizens can enter into transactions without the permission of the Council of Ministers. Similar rules apply to legal entities registered in EU member states.
Family members of the buyer of real estate can also enter into transactions for the acquisition of property, but only in the case of evidence of complete financial independence. The issuance of a permit may be delayed for several months, however, buyers have the right to move into a dwelling immediately.
After obtaining permission, any restrictions on property management will cease to operate. The owner gets the opportunity to sell, transfer by will or enter into other transactions with the property. Legitimate heirs should not receive permission to register property in their name. Before entering into a contract for the purchase of real estate, a check is made through the Land Registry, which allows you to make sure that there are no encumbrances and debt obligations. The procedure for obtaining permission from the Council of Ministers for the majority of third-country nationals wishing to purchase property in Cyprus is very simple and affordable. Permission is granted in working order after filing the petition.
Property rights can only be transferred after obtaining a permit. Property transfer fees are calculated based on the purchase price or current market price and are paid by the buyer.
All persons, including those who are not citizens of Cyprus, have the right to receive credit for the purchase of real estate. The pledge for lending is the property itself.
Legislative norms regulate the procedure for pledging real estate and transferring property rights to pledged property. Contracts for these transactions must be registered with the Land Registry.
In the contract law prescribed rules governing the rental of real estate. The law provides for a number of restrictions to ensure the protection of tenants’ rights in certain circumstances. The provisions of this law apply only to citizens of Cyprus and the EU.
A lease agreement concluded for a period exceeding 15 years is registered in the Land Registry. This procedure provides the tenant with certain advantages (including the right to sell the lease). Registration is carried out within three months from the date of signing the lease agreement.
TAX SYSTEM
Cyprus is considered a very attractive destination in terms of taxation, and is attracting the interest of businessmen and entrepreneurs.
Already, large international companies, small and medium sized businesses are based in Cyprus to reap the benefits on income and expenses.
CORPORATE TAX
The corporate tax or income tax rate is 12.5%. For companies that are tax residents of Cyprus, the subject of taxation is income from sources located both within and outside the state. For non-residents, only income received in the Republic is taxed.
Corporate tax is paid in two advance payments on the basis of the preliminary assessment of profits. The advance must be at least 75% of the final tax amount. Recently, Cypriot companies have been able to include in the calculation of the taxable base income received in their permanent missions abroad.
Income exempted from corporate tax:
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income from the sale of securities;
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dividends and interest income;
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foreign exchange gains (forex);
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income from the activities of the company’s permanent representative offices abroad.
DEFENCE TAX
Defense tax is imposed on dividend income, «passive» interest income and rental income earned by Cyprus tax residents. The amount of contributions is calculated on the basis of approved tax rates. In some cases, tax exemption from paying contributions is applied to individuals and companies.
CAPITAL GAINS TAX
The tax rate is 20%. The tax is charged after adjustment for the indexation of income from the sale of real estate in Cyprus or a share in companies that own Cyprus real estate. At the same time at least 50% of the value of the shares sold must be derived from real estate located in Cyprus.
The law provides a number of exemptions for capital gains taxation. Real estate is not taxed in the following cases when:
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selling land acquired in the period from July 16, 2015 to December 31, 2016;
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transferring property in connection with the death of the owner;
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donating property to relatives up to the third degree of relationship;
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donating property to companies whose shareholders are members of the donor’s family;
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donating property on behalf of the company to its shareholders;
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donating property to charities or government organizations;
transferring property as a result of an exchange (provided that all the profits from the exchange are used to purchase other property).
The income of individuals received from the sale of an apartment or a private house (up to 85,430 euros) and agricultural land (up to 25,629 euros) is not subject to taxation.
VAT
Value Added Tax (VAT) is subject to the supply of goods and services to Cyprus. The import rate is 19%. The export tax rate is 0%. A separate group of goods and services are subject to reduced rates of 5% and 9%. For example, a 5% interest rate applies to the purchase, construction or renovation of housing, which will be used as the main place of residence.
Goods and services exempted from VAT:
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renting real estate;
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the transfer of real estate, including the transfer of land and used buildings (except for the transfer of a building before its first use);
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banking, financial and insurance services;
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medical and dental services;
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postal services provided by the national postal organization;
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holding cultural, educational and sports events;
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management services of investment funds.
The threshold for registration of annual VAT is 15,600 euros.
TAX ON INCOME AT SOURCE OF PAYMENT
Interest, dividends and royalties paid by non-residents of Cyprus are not subject to income tax at the source of payment. Exceptions are royalties received on Cyprus rights, and the rate for them is 10%. At the same rate, tax is levied on services provided by non-residents of a technical nature. The services provided by non-residents through permanent representative offices in Cyprus are not subject to taxation. For non-residents, a preferential rate of 5% is provided (exploitation of the continental shelf, use of pipelines and other installations).
OWNERSHIP TRANSFER
Commission rates for the sale of real estate:
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with an amount of up to 85,000 euros — 3% of the total value;
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with an amount in the range of 85,001 — 170,000 euros — 5%;
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with an amount of over 170,000 euros — 8%.
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When donating property from parents to children, the rate is 0%, when transferring between spouses and relatives — 0.1%, when transferring to a trust manager — € 50.
If the property is subject to VAT upon purchase, no transfer fee is charged.
CAPITAL TAX
Conditions for calculating capital tax when registering a company in Cyprus:
tax rate on authorized share capital — 0.6% + 105 euros;
for shares issued at their nominal value, the rate on the share capital is 0%;
for promotions issued at a premium rate of 20 euros.
For each additional issue of shares is charged a tax of 20 euros.
EMPLOYER CONTRIBUTIONS
The social insurance contribution rate is 7.8%. The fee is charged within the maximum remuneration, the rate applies to both the employer and the employee. In addition, the employer pays the following fees:
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2% to the social consent fund;
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1.2% to reserve fund;
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0.5% to the industrial training fund;
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8% in holiday fund.
BENEFITS OF THE CYPRUS TAX SYSTEM
Cyprus has low tax rates, but the government is paying special attention to the real estate sector. For example, the income from the sale of real estate tax is minimal or absent altogether.
The advantages of the tax system in real estate:
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real estate (property) tax — 0%;
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5% VAT rate for the first purchase of Cyprus property;
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tax on foreign pension incomes up to 3,420 euros — 0%;
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tax on dividend income — 0%;
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zero tax on pension widowhood;
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zero city tax;
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the lowest corporate tax rate in Europe — 12.5%.
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