- Cyprus Property News Magazine - http://www.news.cyprus-property-buyers.com -

Guilty of tax evasion unless you prove otherwise

IN virtually all civilised countries, the burden of proof rests with the person or organisation that lays charges against you; in other words, you are considered to be innocent until you have been proven guilty.

However in Cyprus, the reverse is true when it comes to paying your Property Transfer Fees at the Land Registry.

Using its discretionary powers to reassess Property Transfer Fees, the Land Registry relies on historical data to assess the market value of a property – and it will use that data as the basis for calculating the transfer fees to be paid by the purchaser.

The reason for the Land Registry’s reassessment, we are told, is that vendors and purchasers often under-declare the price of a property in efforts to defraud the state of much-needed tax revenues; by under-declaring the price, vendors reduce the amount of Capital Gains Tax they pay, while purchasers reduce their Property Transfer Fees. Of course for this fraud to take place both the vendor and the purchaser have to collude to deceive the authorities.

If the Land Registry considers that a purchaser has under-declared the property’s sale price, it will demand that he pays Property Transfer Fees based on their valuation (which incidentally is always higher that the declared sale price on the contract). The Land Registry is not required to say how it arrived at its valuation; the burden of proof rests with the accused (the buyer) to prove his innocence by showing that the Land Registry’s valuation is incorrect.

Strangely, the Inland Revenue Department does not re-assess the vendor’s Capital Gains Tax liability even though he must have colluded with purchasers to defraud the state.

To British property buyers, and others who have contacted me, this practice is a state sponsored rip-off and is typical of what you might find in less civilised countries in which corruption and nepotism are rife. It merely adds to the dissolution and anger felt by many who have purchased property in Cyprus and who have suffered at the hands of unscrupulous lawyers, developers and banks.

Have your say survey

IN an effort to assess the extent of the problem we are conducting a survey. If you are not Cypriot and have recently paid your Property Transfer Fees, we would like to know if you have been overcharged by the Land Registry and if so, by how much.

Please tick the appropriate button on the right under the ‘Have your say’ heading.

We shall be running this survey until the end of July. If any of your friends, relatives, acquaintances or colleagues have recently received their Title Deeds, please encourage them to take part in the survey.