Inheritance Tax In Cyprus: A Detailed Guide

Between the year-round sunshine, golden beaches, and rich culture, Cyprus is a dream destination for many. But before you move, you need to know how their tax system works. 

Understanding a country’s tax regulations ensures you can manage your finances with ease from day one. For those moving to Cyprus for retirement, one of the most important tax laws to be aware of is the Cyprus inheritance tax. 

So, does Cyprus have an inheritance tax? And if it doesn’t, what’s the replacement tax law? We’ll answer those questions and more right here in this blog.

Does Cyprus Have Inheritance Tax?

No, Cyprus doesn’t have an inheritance tax or any other form of death duty to be paid on items inherited after a relative’s passing. 

Cyprus used to have an inheritance tax, but it was abolished on January 1, 2000, by the local government to encourage foreign investment, particularly from high-net-worth individuals. The change exempts both residents and non-residents of Cyprus from paying inheritance tax. 

However, that doesn’t mean you’re completely exempt from fees when receiving an inheritance in Cyprus, as there are still other taxes due on the transfer of assets. 

How Does Inheritance Tax Work in Cyprus?

While there isn’t an inheritance tax in Cyprus, there are other taxes chargeable on asset transfers in a will. 

You may be liable for a fee known as a transfer tax. Payable to the Land Registry Office in Cyprus, transfer tax is a one-off charge for the transfer of property from one named owner to another. Houses, apartments, commercial buildings, and land are all included in the fee. 

When you register as the owner of the property, putting your name on the title deeds, you’ll then be expected to pay the fee to complete the transfer of land ownership. 

Is Transfer Tax Different to Inheritance Tax?

Yes, while they may seem similar as transfer tax is charged on inherited properties, inheritance tax and transfer tax are different. 

Transfer tax is only charged on the transfer of property or land in Cyprus. As a result, you won’t be charged the tax on all items or assets left to you in a will; you’ll only be charged when the asset is property or land. 

Plus, transfer tax isn’t exclusively charged on properties inherited in a will, as it’s also charged to buyers purchasing a new property from a seller. 

Do I Have to Pay Inheritance Tax on Foreign Properties?

Yes, if you’re left assets by a relative in a country that has inheritance tax laws, then you will need to pay in accordance with the regulations. 

How much you’ll need to pay depends on the rates charged by the country. For example, in the UK, there is 40% rate on assets sold above the tax-free threshold of £325,000. However, certain assets may be exempt from inheritance tax. 

Even if you live in Cyprus as a permanent resident, assets left to you are liable for taxes based on the country they’re in, not the country you live in. Always be sure to check local regulations. 

What Are the Transfer Tax Rates in Cyprus?

Transfer tax rates are charged based on your relationship to the deceased person – spouse or third-degree relative. 

A third-degree relative includes relations such as cousins, great-grandparents, great-grandchildren, or half aunts and uncles. Property left by a third-degree relative can be subject to the highest amount of transfer tax. 

Use our handy table below to see the transfer tax rates in Cyprus according to the relationship to the deceased. 

But what does this look like in actual costs you’ll have to pay? Well, for a property worth €300,00, you’ll have to pay the following depending on your relation to the deceased. 

For a spouse, there’s a 0.1% flat rate, meaning the total cost of transfer tax you’d be expected to pay is €300. 

For a cousin, the rate is 8%. As such, the total transfer tax you’d have to pay would double, jumping to €24,000. 

You can use the Cypriot government transfer tax fee calculator to work out exactly how much you may be liable to pay. 

Are There Any Transfer Tax Exemptions? 

Yes, there are a few transfer tax exemptions to be aware of, typically to do with your relation to the deceased or the type of property being left to you. 

• Exemption #1: New Properties – Land Registry fees aren’t charged on new build properties bought from the developer, meaning you won’t need to pay any transfer tax in this instance. 
• Exemption #2: Resale Properties – Resale properties are typically exempt from VAT. As such, you can benefit from a 50% reduction on the standard transfer tax band you fall into. 
• Exemption #3: Transfer to a Spouse – When transferring property to a spouse, there is a small 0.1% admin fee to be paid. However, properties are typically exempt from a specific transfer tax charge. 
• Exemption #4: Transfer to a Child – When you leave property to a child as a parent in your will, the property is charged a 0% fee, making it completely exempt from the transfer tax. 

While transferring to a trustee isn’t completely exempt from transfer tax, there is only a flat rate fee of €50 to be paid on properties left to you in a will. 

We Offer Luxury Development Properties Ideal For Investors

Here at DNP Properties, we have over 30 years of experience in property development and sales in Cyprus. 

We specialise in property development, creating opportunities for property investors looking for assets to pass to children in the future. With no inheritance tax in Cyprus, your child can benefit from the full value of your investment. 

Get in touch with us today to discuss our investment property opportunities. You can reach us via phone on + 357 7000 8188 or click the ‘contact us’ button at the top of this page to be taken to our contact form.