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No decision on proposals to hike property tax

Although President Christofias has won support to impose a tax of €1,000 a year on profitable companies, no decision has been reached on plans to increase the tax on property.

GOVERNMENT plans to introduce a €1,000/annum tax on profitable companies for two years have been received positively by the Chamber of Commerce and Industry (KEVE).

The government estimates that if around 100,000 of the companies registered in Cyprus pay this tax it will result in an inflow of some €100 million/annum into the state’s coffers.

There are approximately 170,000 companies registered in Cyprus; 70% of these are foreign and 30% are Cypriot. But the tax will only be levied on those companies that have returned a profit in the last three years.

Plans to increase property taxes were also discussed, but no decision was reached. Chairman of the employers’ federation Filios Zahariades said that “There was a preliminary discussion, which we will continue to see how the immovable property tax will become better and fairer, and we will revisit the matter.”

At present:

  • Those who own property up to a value of €171 thousand do not pay Immovable Property Tax.
  • Those with properties valued between €171 thousand and €427 thousand pay 2.5‰
  • Those with properties valued between €427 and €854 thousand pay 3.5‰ and
  • Those with properties valued at €854 thousand and above pay 4‰.

Immovable Property Tax is calculated on the market value of the property as at 1st January 1980 and is paid annually to the Inland Revenue Department.

Last year, parliament rejected government proposals to raise an additional €80 to €100 million by increasing the Immovable Property Tax paid by some 1,800 of the Island’s largest land-owners.

Readers' comments

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  • @Shirley – Thank you for your comments.

    Regarding Immovable Property Tax, I expect you are aware that the Cyprus Property Action Group has done a lot of work in this area and provided advice to buyers.

    (Not all developers demand that their customers contribute towards paying the company’s IPT liability – and the issue can be avoided completely if appropriate clauses are incorporated into their contract of sale.)

    Before paying any Immovable Property Tax demanded by a developer, buyers must ask the developer to provide them with written evidence of the amount of Immovable Property Tax that has been paid to the Inland Revenue for the land on which the development has been constructed and the buyers share of that land. (E.g. If the development has been constructed on 10,000 m2 of land, and the buyer’s plot measures 500 m2, then the buyer should only pay 1/20 or 5% of the tax bill).

    As for the interest added to the bill that buyers receive, this is a penalty that the Inland Revenue Department has charged the developer because he either failed to file his IPT tax return as prescribed by the law or delayed payment. Those people who are asked to pay these penalties must refuse!

    There are many articles in this magazine covering the various Immovable Property Tax issues and how to deal with them. Use the search box at the top of the page to find them.

    Also, refer to my Immovable Property Tax page at http://www.cyprus-property-buyers.com/law/tax.htm , which gives a summary of the situation, what you should pay, what information the developer should provide you, and how to reclaim any overpayments.

  • Shirley says:

    Nigel I would also like to thank you for the brilliant work that you are doing in keeping everyone informed of any new developments.

    We have been reading your magazine articles and comments with great interest ever since CPAG was closed down and Denis gave me your details. Glad to see that he is back by the way and continuing his wonderful campaign for justice re. all the scams e.g.Title Deeds, Developer’s Mortgages etc. Where would we go for advice and help without him and all his supporters!

    With regard to this particular article I do have one thing to add as unfortunately the present situation is often misunderstood by buyers as the first bullet point is not true everyone pays IPT whatever the property is valued at, if your property is part of a development. The Developer pays for all of his sites and passes the Bill onto to the unsuspecting purchaser who is forced to pay at an inflated rate with 10% interest for each year since the property was built/sold and often it was something that the purchaser did not expect to pay but if you don’t pay up you will not get your Deeds. Also when you try to claim a refund it is a completely different figure to the one you are billed for, (much lower) so I for one wish that they would stop saying that you do not pay IPT if it is under 171 thousand Euros! At least they should add a caveat which explains this more fully!

  • Denton Mackrell says:

    Regarding the Euro1,000 tax on companies in profit, this seems a scandalous and almost suicidal proposal. Consider typical examples of what this could mean:

    The owners of peripteros, tavernas, restaurants and small shops who, while they may be in profit (just), are not exactly rolling in money in the current economic climate. For many, that extra 1,000 tax could push them close to or into the red.

    As it is a corporate tax and no mention has been made of turnover/size/numbers of employees, small companies with less than 5 employees and a turnover of less than, say, €100,000 per annum and a pre-tax profit of, say, €10,000 would pay the same tax as much larger outfits where turnover and profit are in the millions or tens of millions.

    All in all, a recipe for increased unemployment and closure of small enterprises. I would close mine just to spite them.

    Instead, why not place a similar tax on every civil and public servant as they enjoy such a grossly privileged remuneration and perks at the taxpayers’ expense? To be fair, the tax could be graded according to salary. At a rough guess, that would raise E100m in new tax. Oh I forgot, we live in a communist state where all these apparatchiks and their political sponsors have that time-worn communist mantra: what’s yours is mine and what’s mine is my own.

  • @Kwacka – thanks for your comments and for spotting my mistake. I should have used ‰ rather than %, which I have now corrected.

    Immovable Property Tax is still calculated on the market value of the property as at 1st January 1980. (There have been some discussions on revaluing property, but this would take several years to undertake).

    If the property is in joint ownership, you should each pay your share.

    (Note that it is extremely unlikely that you will be liable for this tax unless you own a number of properties).

  • Kwacka says:

    Hi Nigel,

    many thanks for your excellent site, and for all your efforts.

    Could you clarify the figures for me please?

    You state here that IPT is at (depending on value of property) 2.5%, 3.5% and 4%.

    However http://www.cyprus-property-buyers.com/law/tax.htm you state 0.25%, 0.35% 0.4%.

    Also, what is the situation with joint-ownership? Does each individual pay the full amount, or is it half-each?

    Finally, is the 1980 valuation still in operation or has it been updated?

    Many thanks again.

  • Dee says:

    Oh I see, so this delay is for the benefit of ‘some of the island’s largest land owners’. Now, I wonder who that might include!

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