Doing Business In And Through North Cyprus
The island has one of the most attractive tax systems in the world. Investors can take advantage of a relatively low level of taxation.

North Cyprus At A Glance
* Capital: Nicosia
* Establishment: 1983
* Official language: Turkish
* Surface Area: 3.355 km2
* Population: 350
* Monetary unit: Turkish Lira (TRY)
* Traffic Flow: Left side
* Time zone: GMT +2
* Legal System: Common Law (UK)

Choosing North Cyprus* Geostrategic position /access to Europe, Asia and Africa
* There is no tax on dividends on companies such as International Business aka Offshore Companies or Free Zone
* International Business
* Excellent epidemiological results in response to Covid19
* Low costs
* Credible banks
* Modern and transparent legal, financial and regulatory framework
* Developed educational system
* Highly skilled Workforce

1. Main Taxes on the purchase of a real estate by foreigners in TRNC:

  • Stamp duty– the tax, which is paid while registering the contact of sale to the Tax Office. The tax should be paid, and the contract should be registered within 21 days from the date of signing of the contact of sale. The fee is 0.5% from the sale price stated in the contact of sale.
  • VAT– The amount payable to the Vendor is 5% of the value of the purchased property, stated in the contact of sale.
  • Transformer charge– the amount depends on the purchased object. It includes the provision of electricity and water communications.
  • Annual property tax – It is calculated, basing on the rate of 1.25 Turkish Lira per 1 sqm. of covered area of the property. It is payable to municipality.

2. Costs and Taxes payable during Transfer of Title Deeds

3 main taxes involved in any property sale transaction (different taxes apply to gifts of property). These taxes are:

  • – The transfer fee which is payable to Land Registry Office
  • – The capital gains tax which is payable to the Tax Office
  • – The VAT which is payable to the Tax Office

The Capital Gains is usually payable by the vendor and the transfer fee is usually payable by the purchaser (although this can be varied by the parties in the Contract of Sale). VAT, however, is subject to the terms of the Contract of Sale agreed between the parties (i.e. whether or not the sale price includes or excludes VAT).

The amount of tax levied depends on whether or not the vendor is a ‘professional vendor’ (i.e. whether the transaction is of a commercial nature or for profit). The table below indicates the percentages levied accordingly. The percentages for all three types of tax are percentages of assessed value of the property which is carried out just before transfer of title takes place. The valuation assesses the property in the state it is in at the date of the valuation i.e. if there is a new construction on the property, this will be included in the assessment of the value of the property.


Vendor’s Band:

Transfer Fee:

Capital Gains:


Private Individual


3% (with option right)

0% on first sales




3% (with option right)





The transfer fee payable is 6% upon Land Registry’s valuation of the property purchased with the option to pay 3%. Once this option right is used, the fee payable is 6% for future transfers.

3. Inheritance Tax

In order to determine Inheritance tax a complicated calculation must be made. Every case should be considered on its own merit.

We are in a position to provide summary information of inheritance tax:

  • Allowance (tax free amount) is 20 times monthly minimum wage times 12. Minimum wage is currently 3,820 TL per month.
  • Inheritance tax exempt movable or immovable properties:
  1. a) Properties and income attached to those properties that transferred to trust.
  2. b) Bank deposits (savings or current accounts) only if joint accounts where each one has authority to withdraw separately.
  3. c) Wages, salaries if will be inherited
  4. d) Private goods like jewelries
  • Land and building valuations are obtained from Land registry Office
  • Bank Loans, creditors and other liabilities can be deducted from assets if proved by official evidence
  • Tax is %1 on net assets (assets less proven liabilities)

4.Foreign Investors


  • Personal Income Tax and Corporation Tax

All companies and other corporate bodies (except cooperative societies) are chargeable with Corporation Tax. Corporations which are registered in the state as «Local Companies» are chargeable with 10% tax on chargeable income.

Corporations which are «Foreign Companies» are also chargeable at the rate 10% on chargeable income only derived from trade or other income in TRNC.

A corporation is «Locally Registered Company», where the central management and control of its business is in TRNC. For tax purposes, all profits of such companies, including profits from other countries are liable to Corporation Tax. For the avoidance of double taxation, a set off for similar tax paid abroad is allowed. Corporation tax is paid in installments – May and October of each year.

The corporations which are specified under the Corporation Tax Law have to withhold income tax at source at a standard rate of 15% on the net chargeable income after corporation tax is deducted. Companies (registered in the State) engaged in education and health facilities and engaged in industrial activities in the regions approved by the council of Ministers, withhold income tax according to the Undistributed Profit/ Paid Up Capital ratio. ( The ratio must not exceed the standard rate).

Foreigners operating in the field of transportation, including corporations, shall not be subject to withholding tax on taxable income to be ascertained under the provisions of the Corporation Tax Law and the Income Tax Law.

The net amount of earnings and revenues obtained from all sources within the borders of the TRNC in a calendar year depends on the Income Tax.

For permanent residents income arising within or outside the TRNC is subject to income tax, but for the avoidance of double taxation a set off for income tax paid abroad is allowed.

Before income tax is charged, allowances granted to individuals under Income Tax Law are as follows;

  • Contributions to Social Security Funds
  • Personal Allowance
  • Private Allowance
  • Wife Allowance
  • Child Allowance
  • Having more than 3 Children Allowance
  • Disability Allowance

Individuals are liable to income tax under a progressive tax system. The personal income tax is levied at the statutory rates ranging from 10% to 37%.

Value Added Tax

Value Added Tax was introduced in 1996 as a Consumption Tax. Five VAT rates are applied in accordance with VAT rates regulation. Applied VAT rates are: 0%, 5%, 10%, 16% and 20%.

5. IBC Companies Incorporation

  • The IBC Company is liable to corporate tax only at the rate of 1% of the net profit after deducting depreciation and expenditures.
  • It is exempt from all kinds of direct tax such as VAT, stoppage tax, immovable property tax.
  • No inheritance or income tax that can result from transferring shareholding in the IBC. 
  • There is no tax on distribution of dividends. Furthermore, there are no exchange control restrictions on such distributions, subject to such distributions, being affected through official bank channels.

Free Zone Companies

All income derived from activities and operations undertaken by producers in the Free Port and Zone are exempt from Corporate and Income Taxes (including all kinds of trade, production and service).

All kinds of operations including sale of goods to foreign countries and Free Port and Zone in North Cyprus as well as buying of goods are exempt from custom duties, VAT and indirect taxes. All income derived from activities and operations undertaken by investors other than producers are exempt from Corporate and Income Taxes when the goods and services are not directed to the Turkish Republic of Northern Cyprus.

  • North Cyprus Free Trade Zone company is not subject to any Value Added Tax,
  • 0% Tax on Corporate Profits,
  • No withholding tax on Dividends paid from the company,
  • No Income tax for no resident shareholders (Residing in TRNC less than 183 days in calendar year).