What is a Free Trade Zone (FTZ) Company in Northern Cyprus?

A Free Trade Zone (FTZ) Company in Northern Cyprus is a business entity established within designated free trade areas, benefiting from tax exemptions and other incentives. FTZ companies engaged in international trade are exempt from corporate tax, VAT, and customs duties. However, if they conduct business within the Turkish Republic of Northern Cyprus (TRNC), they are subject to a 10% corporate tax and a 15% income tax on remaining profits.

What are the costs involved in establishing a Free Trade Zone (FTZ) Company in Northern Cyprus?

The costs of setting up an FTZ company in Northern Cyprus include an initial application fee of $1,500 – $2,500, notarization and translation fees of $200 – $500, and consultancy fees ranging from $2,000 – $3,000. The required minimum capital deposit is €25,000. Additional expenses include monthly accounting fees of $200 – $500, an annual license renewal fee of around $500, office rental, and staff costs.

What are the steps to establish a Free Trade Zone (FTZ) Company in Northern Cyprus?

The process involves several steps: (1) Registering and approving the company name, (2) Preparing and notarizing the Articles of Association, (3) Depositing the required capital in a TRNC bank, (4) Completing company registration and obtaining the Free Trade Zone operational license, and (5) Ensuring annual compliance with tax submissions and renewals.

How long does it take to set up an FTZ company in Northern Cyprus?

The timeline for establishing a Free Trade Zone (FTZ) Company in Northern Cyprus typically ranges from 3 to 4 weeks, depending on the efficiency of document submission, approval processes, and regulatory requirements.

What are the tax benefits of an FTZ company in Northern Cyprus?

FTZ companies in Northern Cyprus enjoy significant tax benefits, including full exemption from corporate tax for international operations, exemption from VAT on transactions, and no customs duties on imports. If an FTZ company conducts business within the TRNC, it is subject to a 10% corporate tax and a 15% income tax on remaining profits after corporate tax deduction.

What are the employee-related obligations for an FTZ company in Northern Cyprus?

FTZ companies must comply with employee-related tax obligations, including withholding income tax from wages and contributing to employees' social insurance and provident fund premiums.

What are the main advantages and disadvantages of setting up an FTZ company in Northern Cyprus?

Advantages of an FTZ company include full tax exemption on international operations, free international fund transfers, and access to business incentives. However, disadvantages include limited international recognition of TRNC, potential bureaucratic delays, and a smaller local market compared to larger economies.

New Rules for Foreign Property Buyers in Northern Cyprus (2025 Update)

🏠 New Rules for Foreign Property Buyers in Northern Cyprus (2025 Update)

The property acquisition process for foreigners in Northern Cyprus has been updated under the new law Yasa Gücünde Kararname No. 19/2025. This regulation simplifies investment requirements, redefines land ownership limits, and introduces clearer compliance measures.

🔑 Key Updates

Foreign investment threshold lowered from €20 million to €10 million
Ownership limit of 1.338 m² of land with no structure built on it is unchanged
3.300 m² if there is any property (villa or apartment) already built on it also remains the same
FOREIGN CITIZENS CAN NOW OWN UP TO 3 APARTMENT UNITS
TURKISH CITIZENS (TC) CAN NOW OWN UP TO 6 APARTMENT UNITS
On housing complex projects, FOREIGN CITIZENS MAY PURCHASE UP TO 2 DETACHED VILLAS
TURKISH CITIZENS (TC) MAY PURCHASE UP TO 3 DETACHED VILLAS

Property transfers must be completed within 1 year of receiving Council of Ministers’ approval—or the permit is revoked. If payments are made in installments, the one-year period starts from the final payment date.

📅 Deadlines & Compliance

Sales taxes must be paid within 75 business days after permit issuance (previously 60 days)
Without tax payment, utilities (municipality, electricity) will not be provided
Permits for ongoing projects must be approved within 2 years (planning permission and building license)

🏗 Joint Ventures & Foreign Developers

Persons of Turkish origin can form a company with 51% TRNC citizen ownership and 49% Turkish citizen (TC) ownership for real estate development. A valid contractor certificate and ministerial approval are required.

If a foreign buyer exceeds the legal acquisition limit, a 10-year rental deed will be issued under new legal provisions.

💰 Taxes

Foreigners: 9%
Turkish citizens: 6%, 8%, 9%, 9%, 9% (depending on property type and region)

📜 Legal Definitions

Foreign Legal Entity: Companies owned or controlled by foreigners
Investment: At least €10M in approved sectors such as tourism, health, education, or tech

🧱 Construction & Title Transfer

Land acquisition by foreigners requires zoning and construction approval within 2 years
If no separate title exists, approvals must be completed before the sale
Contracts signed before the law must be registered within 36 months
If delay is due to a valid reason, it must be declared before month 34

📑 Penalties & Invalid Contracts

Over-acquisition results in a 1% tax; non-disclosure leads to a 3% penalty
Unregistered trustee contracts (using locals to hold property for foreigners) are now invalid unless formalized and recorded

The new property acquisition law officially came into effect upon its publication in the Official Gazette and overrides prior legislation, including Laws 52/2008 and 39/2024.

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💬 Our Perspective: Why These Laws Changed and What It Means for the Market

The updated property law reflects the government's clear intention to streamline and formalize foreign real estate investment in Northern Cyprus. Lowering the investment threshold from €20 million to €10 million opens the door to a broader base of international investors, while stricter controls on permits, planning, and taxation aim to build long-term stability.

In our opinion, these changes were introduced to:

✅ Attract mid-sized international investors with a more accessible entry point
✅ Prevent uncontrolled over-acquisition and ensure orderly development
✅ Protect local housing availability while encouraging quality projects
✅ Improve transparency through clearer tax, contract, and title transfer procedures

We expect these regulations to result in:

📈 Price increases for approved and well-located projects, especially with sea views or city proximity
🛡️ Greater legal security for foreign buyers, making the market more attractive to long-term investors
💼 Professionalization of the construction and sales process, with fewer loopholes and grey areas

The Northern Cyprus property market is evolving. With clearer rules, higher standards, and increased investor protections, we believe this is the beginning of a more stable, transparent, and premium-driven era in real estate.