Following the UK’s recent move with their High Value Council Tax Surcharge, often dubbed the “mansion tax,” Cyprus is now examining a similar approach for its luxury property market. In the UK, this new tax targets residential properties valued over £2 million, adding an annual charge aimed at addressing wealth disparities within the property tax system starting from April 2028.
In Cyprus, discussions are underway about implementing a mansion tax on immovable properties valued at €3 million or more. This proposal is anticipated to surface following the completion of the broader tax reform package, with parliamentary debates expected early in the new year.
The initiative was put forward by AKEL MP Stefanos Stefanou, who proposed a yearly levy of 1‰ (one per thousand) on properties valued at €3 million and above.
This tax aims to modernize and balance the Cypriot tax system by generating revenue from high-value properties. The funds raised are intended to support vulnerable segments of the population and foster the growth of small to medium enterprises, thereby enhancing social cohesion and promoting sustainable development.
The bill details an electronic payment system for this new tax. Early payments—at least 30 days ahead of the deadline—would benefit from a 10% discount, encouraging timely compliance. Conversely, late payments would incur a 10% surcharge. Notably, if the amount due is €10 or less, collection would not be enforced.
Interestingly, a very similar recommendation was made previously by the Economics Research Centre, which wasn’t adopted by the government at the time. If this mansion tax is approved, it would essentially replace the Immovable Property Tax (IPT) that was abolished in 2017.
For those purchasing property, the memory of IPT controversies still lingers. Previously, developers sometimes failed to pay IPT on time, subsequently demanding buyers cover unpaid taxes plus interest and fines upon issuing title deeds. This issue created significant complications and additional costs for buyers.
Reforms influenced by the Troika shifted responsibility for IPT payments to buyers at possession, mitigating some past problems. Hopefully, any new legislation on mansion tax will incorporate safeguards to avoid repeating these difficulties.
For potential investors and residents interested in exploring a range of property options, from affordable to luxury, exploring Cheap Apartments for Sale Cyprus or even unique Auction Properties in Cyprus can present appealing opportunities ahead of any new tax regulations.
As Cyprus contemplates this potential mansion tax, the focus remains on creating a fairer tax environment while supporting social welfare and economic growth. Buyers, sellers, and investors should stay informed as further developments emerge in 2025 and beyond.
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