Cyprus Property Investment: Tax, Structure, Residency, and Fees Explained

(real client enquiry)

Dear Client,

Nice to e-meet you and thank you for your email.

We can definitely assist you with the company establishment & the relevant mandatory registrations, as well as with the on-going accounting-audit-tax services and the relocation to Cyprus (based on your needs). Advisory will be provided as well regarding the requirements you must fulfill for the tax residence and the relocation (residence permits, days spent in and outside Cyprus etc).

I suggest we have a video call in order to discuss the details so that we can prepare a package offer for you! Please let me know your availability for next week so that we will schedule it.

Prior to our meeting, I suggest you share some details with regards to your income generation (especially for the real estate).

*In case you prefer a reply in writing please let me know.

Thank you in advance,

Kind regards,

Dear CYAUSE,

We can make video call Tuesday afternoon, is it possible?

And here is brief introductions.

Personal & Residency

1. My entire family are Latvian citizens and residents. I am 43, my wife is 44, our eldest daughter is 22 and lives with us while studying remotely in London. Our son is 18 and lives with us while studying remotely in Latvia, our youngest daughter is 12 and lives with us while studying remotely in Latvia.

2. We currently live in Greece and would like to stay here, but if it is not possible to agree on the length of stay regarding residency, we could also move to Cyprus. For now, we are considering Non-Dom residency.

3. At the moment, none of us have plans to work in Cyprus.

Business & Structure

1. Since 2019, I and my wife have had a joint account in Singapore, where we buy, sell, and store gold and silver.

2. I own and manage a construction company in Sweden. The Swedish company is currently inactive because there are no orders. If the situation does not improve this year, I plan to close the company.

3. My wife owns a construction company in Latvia, which I manage. The company is moderately active.

4. We plan to establish a company in Cyprus that would purchase either land or an old property and build/renovate it into a small (approx. 10 apartments) apartment hotel, which would be the company's source of income. At the moment, we have not yet decided whether to buy in Thessaloniki or Cyprus. The owner of this company would be either my wife or both of us together, and I would be the director. It is important to understand how the best way to protect the capital and, if necessary, make it easy to sell or inheritance the company with minimal expenses and taxes.

5. I don't think we need a physical office.

6. The planned investment in this project would be around €3 million, which would generate €300-500K in annual revenue. The investments would come from various sources. First, there would be a shareholder loan in the form of physical gold, which the company could then sell and invest the proceeds, but the debt must be repaid in a specified number of grams and purity. Second, there could be a loan from Latvia or Swedish companies. Thirdly, I am not aware of this, but perhaps there could also be additional financing from a local bank.

7. With regard to trading in precious metals and other commodities, I do not know whether a separate company is needed for this, or whether it can be done individually, as has been the case so far. It all depends on what is most effective and advantageous from an administrative and tax point of view.

Source of Funds

1. As for the source of financing, if the loans come from Latvian and/or Swedish companies, then these funds are company profits that have not been distributed as dividends.

2. As for loans from shareholders in gold and/or silver, these are purchased with private funds obtained from dividends, property sales, and loans that were invested in precious metals. These precious metals would either be physically brought to Cyprus or transferred to the newly established company for storage in a vault located in Singapore.

Questions:

Questions about business:

1. What form of business would be most favorable for the planned type of business?

2. What is the minimum share capital required by law?

3. How much is the corporate income tax and does it have to be paid if no dividends are taken out?

4. How much is the dividend tax?

5. How much is the capital gains tax if I decide to sell this company?

6. How much does it cost to set up such a company?

7. How long does it take to set up such a company?

8. Is there a minimum salary for a member of the company's board of directors (CEO) stipulated by law, or can a board member work without salary?

9. What would be the running main costs of maintaining such a company – accounting costs, any state fees/taxes, rental of a legal address and post office box?

10. Is a board member (CEO) liable with their own assets in the event of the company's bankruptcy?

11. How high is the real estate tax in Cyprus and is it differentiated by region and type of property, or is it the same for everyone?

12. How much VAT is payable when renting out property on a short-term and long-term basis?

13. Is VAT payable when selling property?

Questions about residency:

1. Can I live in Greece but be a tax resident in Cyprus?

2. If I am a Cyprus tax resident, how much tax is levied on capital gains earned abroad?

3. If I become a tax resident, when do I start calculating capital gains from abroad investments? Particularly I mean investments in precious metals in Singapore.

4. How much does it cost to obtain a permanent residence permit in Cyprus?

5. How long does it take to obtain a permanent residence permit?

6. What documents do I need to obtain a permanent residence card for myself and my family?

7. What are the requirements of Cyprus banks for proving the origin of funds regarding my case?

Best regards

Dear Client,

Thank you very much for the shared details. We will go through your questions during our call.

Please let me know your availability for the rest of the week as well for both morning and afternoon hours.

Thank you in advance,

Kind regards,

CYAUSE had a call with the Client.

Dear Client, 

It was a pleasure meeting you earlier today!

As per our discussion, below you will find our offer and some important points for your consideration: 

Once-off fees:

1.Incorporation of a Cypriot legal entity: EUR 750 + VAT + Disbursements paid to the Cyprus Registrar of Companies  (approx EUR 600) 

2.Once-off mandatory registrations (company tax registration, e-filing access, Gov.CY profile and UBO declaration): EUR 550 + VAT 

3. Opening of a Cypriot bank account: EUR 1,000 + VAT 

4.Registration of the company with the VAT: EUR 225 + VAT 

5.Tax Registration of individual: EUR 200 + VAT per application 

6 Issuance of yellow slip (residence permit for EU nationals) EUR 600 + VAT + Disbursements 20 euros per application (discount will be given for application of minors in cases needed).

7.Non-domiciled application: EUR 800 + VAT per application 

8. Issuance of tax residence certificate: EUR 600 + VAT + Disbursements 80 euros (upon request) 

*All the above include the communication with the governmental authorities and the creation of profiles with the various governmental platforms. 

Recurring fees:

The estimated total annual fees for minimum transactions (no VAT, no employees), which will be applicable for the first 1-2 years I suppose. is approximately EUR 1,875+ VAT per annum and it includes: 

• Bookkeeping (accounting) 

• Audit (preparation of audited financial statements) 

• Preparation and submission of the company's tax declaration (IR4) 

• Preparation and submission of your personal tax return (IR1)

• Submission of the annual report HE32 to the Cyprus Registrar of Companies *disbursments apply depending on the submission date (max 190 euros)

• UBO annual confirmation

*Once the company becomes operational the above mentioned cost will increase depending on the volume and the needs of the company (the company will be VAT registered etc). 

Useful info:

• Here is the website with regards to the sale/acquisition/rent of real estate (you have to select the category and set the filters as per your preferences; cost, sq meters, region etc) 

• Corporation tax 15% 

• Dividend tax: Only 2,65% for the NHS (Gesy) only for the years you are considered Cyprus taxed 

• VAT on property acquisition: 0%, 5% or 19%, depending on the case. Below you will find some generic rules. As discussed, each transaction depends on the case conditions. 

• VAT between contractors and subcontractors is zero based on the Article 11B (there are some exceptions such as for architects, for the purchase of goods etc) 

if the buyer is an individual:

• 0% for re-sales properties ( properties that have already been used and are not the first supply). However in most cases transfer fees apply.  

• 5% (reduced) if the total in house square meters is < 190 (5% VAT on the first 130 square meters). It also has to be the primary and permanent residence for 10 years and cost < EUR 475k (also the 5% applies on the first EUR 350k)

• 19%  applies on the first supply of new property

if the buyer is a legal entity:

• VAT 19%  the first supply of new property (if the company is VAT registered it can claim the VAT paid back) 

• VAT 0% for re-saled properties ( properties that have already been used and are not the first supply). However in most cases transfer fees apply.  

Let me know if you have any questions etc 

At your disposal, 

Kind regards,