A new contribution of 0.4% will be imposed on the sale of immovable property in Cyprus through recently announced legislation, as published in the Cyprus Government Gazette on the 22nd February 2021.
The amendment to the provisions of the Central Agency for Equal Distribution of Burdens (Creation, Objects, Responsibilities, and Other Related Matters) Law 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.
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 RoC, 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 newly announced law does not however provide sufficient clarity on a number of issues of importance:
- Sub-market value transactions between related persons;
- Specifics as to the timing, method and recipient of the charge;
- Applicable interest charges and penalties imposition of interest and penalties.
- Potential exemptions which allow for a partial reduction or total exemption from the charge;
A more comprehensive alert will be published following the issue of the relevant regulations, which should clarify the above, amongst other issues.
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