News/Tips

• Net profits of companies and international branches managed and controlled from within Cyprus are taxed at a flat rate of 12,5 %.
• Profits from the sale of shares and other financial instruments that carry a title such as bonds and debentures are exempt from taxation.
• International business branches which are managed and controlled from abroad and international business Partnerships are fully exempt from Corporation or Income Tax.
• Dividend income under certain conditions is fully exempt from tax.
• Tax relief available for new equity introduced in a company in the form of Notional Interest Deduction.
• Receivable interest not arising from the ordinary or closely related to the ordinary business activities of the company is fully exempt from taxation (subject to Special Contribution for Defence).
• No taxation on Capital Gains arising from the sale of property abroad (including shares, immovable property and excluding sale of immovable estate situated in Cyprus).
• Availability of tax deductions for physical persons for risk financing investments made in innovative small and medium enterprises.
• No withholding tax on dividend distribution and payments of interest and royalties.
• Special deductions for the development and exploitation of Intellectual Property (IP) rights.
• No tax on profits from the operation or management of a vessel registered under the flag of Republic of Cyprus.
• Ability to choose between tonnage tax and 4,25% Corporation Tax under certain conditions.
• Profit margin on back to back group financing loans can be as low as 0,125%.
• Tax losses can carried forward for up to 5 years.
• Tax relief for group of companies through utilisation of tax losses.
• Double tax treaties with a large number of countries.
• No exchange control restrictions (bank accounts in any currency and in any country).
• Confidentiality and anonymity on the beneficial owners

Cyprus to Join Schengen in 2026—A Game Changer for Real Estate Investors

Cyprus is on track to become a full member of the Schengen Area by 2026. The government is finalizing technical and legal preparations to meet EU requirements by end-2025.
Once accession is complete, border checks between Cyprus and other Schengen countries will be eliminated, simplifying travel and enhancing connectivity. This, coupled with modernized visa processes like ETIAS and digital border control through the Entry/Exit System, positions Cyprus as a more accessible and attractive hub for international investors and homebuyers.
For real estate stakeholders, this shift signals increased interest and demand, meaning more visibility, cross-border purchases, and investment in property across the island.

Cyprus’s residential property market gained momentum in Q1 2025, driven by continued strong demand and accelerated house price growth. According to the Central Bank of Cyprus’s Residential Property Price Index (RPPI), overall housing prices climbed 1.9% quarter-on-quarter, up notably from just 0.4% in Q4 2024. House prices themselves rose 1.8% QOQ, while apartment prices increased 1.4% QOQ.

On an annual basis, the RPPI rose 4.8%, compared to 4.5% in Q4 2024. Detached houses saw a stronger jump at 5.6% YoY, while apartment price growth slowed to 3.5% YoY—the first time since 2008 that house prices outpaced apartments.

Demand remains robust, with both domestic and foreign buyers fuelling an uptick in sales contracts across all districts. Meanwhile, building permits in 2024 edged up over 2023 levels, and construction sentiment stayed positive for a sixth consecutive quarter, according to the European Commission’s economic sentiment surveys.

District-level performance varied:

• Limassol: Overall prices accelerated to 5.7%, with detached houses soaring 9.1% from 5.1%. Apartment growth decelerated to 2.6%.

• Paphos: Still strong, overall growth slowed to 12.9%; house prices rose 12.7%, while apartment prices jumped 13.8%.

• Larnaca: Overall housing growth eased to 5.9%; houses up 6%, apartments up 7.1%.

• Famagusta: Overall increase was 7.3%; houses held steady at around 8%, apartments slowed to 7.2%.

• Nicosia: Overall remained modest at 0.7%; house prices actually fell by 1.2%, while apartment prices rose 3.1%