Understanding Land-for-Property Exchanges – Cyprus

Understanding Land-for-Property Exchanges (“Αντιπαροχή”) in Cyprus

In the Cypriot real estate world, the term “αντιπαροχή” (antiparochi) is one you’ll hear often. It’s a unique land-for-property exchange arrangement where landowners partner with developers to transform empty plots or land into valuable new apartments or offices or houses or villas—without any money changing hands in most of the cases. But even though it feels like a swap, Cyprus tax law treats it as a formal property disposal, which brings Capital Gains Tax (CGT) and other fiscal responsibilities into the picture.

Let’s break down what this arrangement involves, how it’s taxed, and what landowners and developers should know to avoid surprises.

What Exactly Is “Antiparochi”?

Think of antiparochi as a kind of joint venture. A landowner gives a plot of land to a developer, who then constructs a building—usually a residential block—and hands back a portion of the completed units to the landowner. No money is exchanged, but the landowner ends up with finished properties instead of a bare plot.

This differs from a simple property swap, where two parties trade existing properties directly. In antiparochi, the landowner gets future value through development, not an immediate asset.

What Laws Govern These Transactions?

Several laws regulate land-for-property exchanges in Cyprus, and they each have a role to play. Here are the key ones:

1. Capital Gains Tax Law of 1980 (Law No. 52/1980)

• Any disposal of immovable property in Cyprus is subject to CGT at 20%.
• Even though the landowner gets buildings instead of cash, the law treats this as a taxable disposal based on the fair market value (FMV) of the land at the time of transfer.
• The gain is calculated as:
  FMV of land at transfer date – Original purchase price (plus improvements, transfer fees, CPI adjustments).

2. VAT Law of 2000 (Law No. 95(I)/2000)

• If the landowner is considered to be engaging in an economic activity (e.g., repeating such deals or acting with a business purpose), they might need to charge 19% VAT on the land they transfer.
• The developer, in turn, charges 19% VAT on the units handed over to the landowner (minus the land’s proportional value).
• Directive 11/2021 clarifies that VAT liability typically arises when the land is officially transferred or made available.

3. Transfer and Mortgage Law of 1965 (Law No. 9/1965)

• Transfer fees are paid by the developer when the land is registered in their name.
• The landowner pays transfer fees only when their new units are registered.

4. Stamp Duty Law of 1963 (Law No. 19/1963)

• Stamp duty applies to the written agreement, based on its value.

5. Sale of Immovable Property (Specific Performance) Law (Cap. 232, as amended by Law No. 81(I)/2011)

• This allows contracts to be filed at the Land Registry, securing both parties’ rights before formal title transfer. This is especially useful when construction isn’t yet complete.

6. Equal Distribution of Burdens Law of 1989

• A 0.4% levy applies to all property disposals, including antiparochi, based on the FMV of the land.

When Do You Pay Capital Gains Tax?

CGT is due when the land is officially transferred—even if you haven’t yet received the apartments. In some cases, to ease cash flow, landowners delay transferring the title until the developer finishes construction. During this time, both parties can secure their rights through the Land Registry using the Specific Performance Law, which delays CGT liability until the actual transfer.

A Practical Example

Let’s say:

• A landowner bought a plot in 2010 for €500,000.
• In 2025, they agree to give the plot to a developer in exchange for 3 apartments worth €1,500,000.
• The gain is €1,000,000 (€1.5M – €500K).
• At 20%, CGT = €200,000.
• 0.4% refugee levy = €6,000.

If later, the landowner sells one of the apartments for €600,000, and its FMV when received was €500,000, they pay CGT on the €100,000 gain.

VAT Timing and “Economic Activity” Rules

If the landowner isn’t in the real estate business, they may be exempt from charging VAT. But if they regularly engage in such deals or do so with profit intent, the Tax Department may classify it as an economic activity, requiring VAT registration and the issuance of a VAT invoice.

Under Directive 11/2021, VAT becomes payable when the land is made available to the developer—usually when title is lodged at the Land Registry, or earlier if payment is made or an invoice is issued.

How to Stay Compliant and Plan Smart

• Keep every record: contracts, title deeds, improvement receipts, valuation reports.
• Ensure valuations are made by a licensed valuer, Chartered Surveyor member of ETEK—FMV is key to calculating both CGT and VAT.
• Consult tax professionals to evaluate whether your situation qualifies as an economic activity under VAT law.
• Consider structuring the deal to delay the title transfer until units are ready, helping you manage your tax outlay.

Summary: Why Antiparochi Is Popular—and What to Watch Out For

Land-for-property exchanges are a smart way to unlock the potential of idle land. Landowners get brand-new apartments or offices or houses without needing to build them themselves. But these deals carry real tax consequences, even without cash changing hands.

A well-drafted agreement, accurate valuations, and strategic timing of title transfer can make all the difference. That’s why it’s essential to approach these transactions with professional guidance—not just legal, but financial too.

Need Help with an Antiparochi Agreement?

Our firm specializes in structuring land-for-property exchanges that are legally secure, tax-efficient, and tailored to your goals. Whether you’re a landowner or a developer, we provide:

• Contract drafting and negotiation
• Capital Gains Tax and VAT planning
• Coordination with certified Valuers
• Phased transfer and SPV structuring

For clear, practical advice tailored to your situation, feel free to reach out to our office.

For more information contact us.

The information provided by Michalaki, Pitsillidou & Co LLC is intended solely for general informational purposes and should not be construed as professional or official legal advice. It is recommended that you do not take or refrain from taking any action based on the above information without first seeking legal or other professional guidance.