Cyprus Amends Property Taxes and Fees
There have been some recent changes to property tax and fees and Eurofast Taxand Cyprus explain them to us
Despite global market challenges, the Cyprus real estate market has remained attractive to foreign investors. A number of legislative changes were introduced during 2015 and 2016, further adding to this attraction, including the reduction -and in some cases the abolition- of transfer fees as well as reduction of immovable property taxes which are described below.
Immovable Property Tax
Every owner is liable for the payment of immovable property tax for all immovable properties situated in Cyprus and registered in the owner’s name on 1 January of each year. The value of the immovable property is deemed to be the price based on the valuation on 1 January 1980.
On 14 July 2016, the Cyprus Parliament agreed that immovable property tax for 2016 will be based on 1980 values but reduced by 75% of the amount paid last year (2015). Further, it was decided that the immovable property tax will be abolished in 2017.
The immovable property tax for 2016 will be calculated at 25% of the price of the property based on the valuations of 1980. The deadline for payment of the 2016 tax has been set at 31 October 2016. Late payments made between 1 November and 31 December 2016 will be calculated using an increased value of 27.5% of the 1980 valuations.
Taxpayers who fail to pay before 31 December 2016 will be subject to an additional 10% monetary penalty on the unpaid tax calculated on 31 December 2016.
The property tax rates to be used for calculating the 2016 immovable property tax are as follows:
Value of Property - as of 1/1/1980
€1 to €40,000 - would be charged at 6%
€40,001 to €120,000 - would be charged at 8%
€120,001 to €170,000 - would be charged at 9%
€170,001 to €300,000 - would be charged at 11%
€300,001 to €500,000 - would be charged at 13%
€500,001 to €800,000 - would be charged at 15%
€800,001 to €3,000,000 - would be charged at 17%
Over €3,000,000 - would be charged at 19%
Land Transfer Fees
Land transfer fees are charged on the transfer of immovable property from one person or company to another individual or company. The fees are paid to the Department of Lands and Surveys.
In cases where an agreement is made under the Immovable Property Tax Law between 2 December 2011 and 31 December 2016 and is thus subject to VAT, land transfer fees will not be applicable. Properties not subject to VAT will be eligible for a 50% reduction of land transfer fees.
Exemptions from Land Transfer Fees
No land transfer fees are payable in the following situations:
Immovable property transferred from a company to another company under a reorganisation scheme
Sale, transfer and registration of property in the name of a purchaser when the total sale proceeds do not exceed €350,000 in bankruptcy procedures under the bankruptcy law
On a transfer and registration of immovable property in the name of lender under a restructuring scheme.
Rates used to calculate the land transfer fees are as follows:
Up to €85,000 would be charged at 3%
€85,001 to €170,000 would be charged at 5%
Over €170,000 would be charged at 8%
As mentioned above, the changes have added to the attractiveness of Cyprus to potential investors as they will lead to a reduction of costs. Additionally, an added benefit is available for groups considering restructuring as they will benefit from the exemption of land transfer fees. It is worth reminding potential investors of the decreasing trend in housing loans’ interest rates as well as of the legislation passed in 2015 which provides protection for buyers in Cyprus by allowing owners to apply for their own title deeds.
Zoe Kokoni, Director (firstname.lastname@example.org)
Eleni Christou, Senior Tax Advisor (email@example.com)
Eurofast Taxand Cyprus
Reproduced with the kind permission of Eurofast Taxand Cyprus
Original article - click HERE