TAXES ON IMMOVABLE

PROPERTIES ACQUIRED IN CYPRUS

CPV Audit Services Limited 21, 28th October Street • 1st Floor • Office 104 • Engomi 2414 • Nicosia - Cyprus Tel: +357 22028470

• Fax: +357 22028474 • info@cpvaudit.com www.cpvaudit.com

TAXES ON IMMOVABLE PROPERTIES ACQUIRED IN CYPRUS

Immovable properties acquired in Cyprus are subject to Immovable Property Tax and Transfer Fees. The Immovable Property Tax is administered by the Income Tax department and the Transfer Fees by the Land Registry Department. Immovable Property Tax The Immovable Property Tax is imposed on the market value as at 1 January 1980 and applies to immovable properties owned by the taxpayer on 1 January of each year. The tax is payable by 30th of September of each year and both legal and physical persons are liable to the immovable property tax. The House of Representatives recently voted a change in the immovable property tax rates that, as from 1st of January 2013 onwards, are as follows: Eur Rate 0 - 40.000 0,6% 40.001 - 120.000 0,8% 120.001 – 170.000 0,9% 170.001 – 300.000 1,10% 300.001 – 500.000 1,30% 500.001 – 800.000 1,50% 800.001 – 3.000.000 1,70% Over 3.000.001 1,90% (Minimum amount of Eur 75 is payable) For new acquisition of immovable property, the immovable property tax should have been paid by the seller (developer in most of the cases) until the year in which the title deed is issued by the Land Registry Department to the buyer. In the majority of the cases, the developers pay a higher amount of immovable property tax because they are owners of the whole property and not just a part of it acquired subsequently by the buyer. In such a case, the buyers are charged for the immovable property tax paid on behalf of them from the seller for the part acquired only and then they can submit a special application to the Income Tax department for refund of the excess amount (Form IR 314). The buyers should be careful not to be overcharged for immovable property tax from the sellers. The Form IR 314 is supported with the following documents:

a. Copy of the Title Deed issued by the Land Registry Department,

b. Receipt issued by the Land Registry Department for the initial deposit of the sale agreement of the acquisition of Immovable Property to the Land Registry Department.

c. Copy of the sale agreement for the acquisition of Immovable Property.

d. Receipt issued by the developer confirming the Immovable Property Tax paid.

The value on 1 January 1980 is assessed by the Valuations Desk at the Land Registry Department at the time the Title Deed is issued.

CPV Audit Services Limited 21, 28th October Street • 1st Floor • Office 104 • Engomi 2414 • Nicosia - Cyprus Tel: +357 22028470

• Fax: +357 22028474 • info@cpvaudit.com www.cpvaudit.com

Transfer Fees by the Land Registry Department The Transfer fees are payable at the time the ownership of the property acquired is transferred to the name of the buyer. This time is known as the “completion time” i.e. the time the transaction is fully completed. The title deed takes substantial time to be issued by the Land Registry department (from 4 up to 7 years, even more in certain cases). The fees are payable to the District Lands Office either by cash or cheque or visa. Once the payment is effected, the Title Deed is issued showing the buyer as the legal owner. The Transfer Fees are payable on the market value of the property at the date of its acquisition. The market value does not necessarily entail that it should be the same with the value stated in the sale agreement. The market value is assessed by the staff of the land registry department on the Valuations Desk in accordance with the location and type of the property. However, if the sale agreement is not deposited at the District Lands Office then the transfer fees will be calculated on the assessed value of the property on the day the transfer takes place. The table of the Transfer Fees is stated below: Eur Rate 0 - 85.430 3% 85.430 – 170.860 5% Over 170.861 8% If the sale agreement is in joint names (e.g. a husband and wife) then the title deed is issued in joint names and the transfer fees are calculated as both purchasers bought a property of half the value thus reducing the transfer fees. It should be noted that the Title Deed is issued provided that the Capital Gains Tax (or Corporation Tax for developers) has been paid to the Income Tax department prior issuance of the Title Deed from the Land Registry Department. The staff may request tax receipt for it. Please feel free to contact our office if you need any additional clarifications.

Antonis Chrysanthou FCCA Managing Director