A new contribution of 0.4% will be imposed on the sale of immovable property in Cyprus. The provisions of the Central Agency for Equal Distribution of Burdens (Creation, Objects, Responsibilities, and Other Related Matters) Law of 1989 (141/1989) as amended, sets a framework for this contribution, with the proceeds adding towards the support of refugees and owners of currently inaccessible immovable property, in an effort to partially offset their inability to make use of land in the occupied territories. The amendment was published in the Cyprus Government Gazette on 22 February 2021.
This charge, payable by the seller, is applicable on the sale proceeds from:
-Property situated in areas controlled by the Republic of Cyprus; and
-Shares in a firm that owns immovable property in the Republic of Cyprus, where the buyer ultimately takes control of the firm.
For the purposes of this contribution, share value equals to the most recent valuation of the property made by the Department of Land and Surveys.
The law does not however provide sufficient clarity on a number of issues such as:
-Sub-market value transactions between related persons;
-Specifics as to the timing, method and recipient of the charge;
-Potential exemptions which allow for a partial reduction or total exemption from the charge (e.g. reorganisations, debt for asset swaps and listed shares);
-The taxing point (i.e. date of agreement to sell the property, or any other), as there is no provision for interest charges and imposition of penalties;
-Basis of calculation of the levy (e.g. remuneration actually received or agreed disposal consideration);
-Application of the Law amendment to indirect disposal of shares.
Sellers of Cyprus immovable property may wish to take into consideration the effect of the above amendments when considering the sale of property falling within their scope.
Our dedicated team of Property lawyers at Fellas & Christou LLC and experienced real estate agents can assist you in finding a property that is suitable to you. Contact us at firstname.lastname@example.org