Leasing and Purchasing Commercial Property in Cyprus

The commercial real estate market in Cyprus is developing rapidly, and an increasing number of foreign entrepreneurs view the island as a reliable platform for doing business. When choosing premises for an office, shop, or café, it is essential to determine the ownership format in advance—leasing and purchasing involve different legal and tax implications. Understanding these differences and obtaining timely legal advice helps build a business on a solid legal foundation.

Leasing Commercial Property: Legal Aspects

Leasing business premises in Cyprus is regulated by the Rent Control Law and the Civil Code. To conclude a lease, the parties sign a written agreement specifying the term, rent, permitted use of the premises, and termination conditions. Commercial property in Cyprus requires strict compliance with the agreed use and designation of the property—this directly affects the legality of the business activity.

The minimum lease term usually ranges from 1 to 3 years. In business practice, extensions are common, with a fixed rate for the initial period and possible indexation after its expiration. For companies entering the market, leasing remains a safer option: it does not require large upfront investments and allows flexibility in choosing a location.

The tenant is responsible for using the premises strictly in accordance with the stated purpose. If the property is used for a restaurant, retail, or office activity, the appropriate permits must be obtained. Failure to comply may result in fines or court-ordered termination of the lease.

Purchasing Commercial Property as a Foreigner

Foreign investors and companies are entitled to acquire commercial property in Cyprus for business purposes—office buildings, retail units, warehouses, or income-generating assets. The purchase procedure largely mirrors that of residential property, but additional requirements apply to commercial assets. A non-resident buyer must obtain approval from the Council of Ministers of the Republic of Cyprus, confirming the legality of the transaction.

After selecting a property, the parties sign a sale and purchase agreement, which is deposited with the Land Registry. This provides legal protection to the buyer and prevents double sales. Full ownership is completed after payment of the Transfer Fee and registration of the new owner. Companies must also comply with AML/KYC requirements and confirm the lawful source of funds used for the acquisition.

Taxes and Costs of Property Ownership

When purchasing a commercial property, an entrepreneur incurs several mandatory payments:

• Transfer Fee — 3–8% of the property value, depending on the transaction price and property category;
• Property Tax — abolished in 2017, although municipal charges and utility taxes remain;
• Capital Gains Tax — 20% upon subsequent sale at a profit.

From 1 January 2026, Stamp Duty has been abolished and no longer applies to the registration of sale and purchase agreements.
For tenants, the tax burden consists of VAT at 19% for short-term leases, while long-term leases are subject to GSI, as well as annual municipal and utility charges. Expenses related to renovation, maintenance, and servicing of the property—provided they are properly documented—may be included as deductible costs when calculating corporate tax.

Legal Advice and Transaction Support

Any transaction involving commercial property requires prior verification of documents and the legal status of the asset. A lawyer conducts due diligence: reviewing the chain of title, checking for encumbrances, verifying compliance with planning and registration data, and confirming permitted use. For leases, key contractual terms are additionally assessed—duration, indexation, allocation of operating costs, repair obligations, early termination conditions—and the associated risks for the tenant. Professional legal advice ensures transaction security, compliance with legal requirements, and protection of the entrepreneur’s interests.