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Immovable Property Tax slashed

Yesterday the Council of Ministers approved a 50 per cent reduction in the Immovable Property Tax rate and put an end to the property tax collected by municipalities and communities.

Immovable Property Tax slashedCYPRUS Council of Ministers approved on Wednesday the reduction of the Immovable Property Tax rate by 50% and abolished the Immovable Property Tax collected by municipalities and communities.

“Today we made another important step towards tax reform and reducing the tax burden for households and corporations,” the Minister of Finance Harris Georgiades said following a Council of Ministers meeting.

He said the government approved a reduction of the Immovable Property Tax (IPT) by 50% to 0.5 ‰ (per mille) offsetting the obligation by the EU to charge VAT rate of 19% on transactions of property in the context of commercial transactions of buildable land.

Georgiades said the estimated revenue from the 19 VAT is €24 million whereas the revenue loss from the reduction of Immovable Property Tax is estimated to be €45 million.

This reduces tax revenue from immovable tax from €103 million to €45 million, he said adding the tax break amounts to at least €58 million.

Furthermore, Georgiades said the Council of Ministers decided to maintain the 20% discount on citizens who timely repay their immovable tax via the internet or through credit institutions and the 17.5% discount for citizens who pay their Immovable Property Tax on time at the Tax Department counters.

Immovable tax up to €25 will not be collected, the Finance Minister said.

Georgiades also said the government reduced the transfer fees by 50% for all immovable property sales.

“With this proposal, that will be submitted to the parliament the soonest possible, I believe we are taking another step towards reducing those burdens that have been rendered necessary in the previous years,” Georgiades said.

The proposal’s total fiscal impact is estimated at 0.2% GDP, he added.

Georgiades explained the 19 VAT is imposed on plot sales by land developing companies and not on transactions by natural persons.

Source: Cyprus News Agency

Readers' comments

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  • Jan Freer says:

    Hello Nigel,

    I have contacted you before, I have applied for my Title Deeds under the new law and have paid all the necessary laws including my IPT including those for 2013/2014/2015 and those for 2016 even though I had not received a invoice, the Land Registry said all the years up to and including the present year had to be paid.

    Can you tell me am I due for a refund?

    My 45 days are up on 22nd June and have been told I can go in on 46th day and pay Transfer Fees, but then have to wait another 60 days, as my developer has not paid his taxes.

    (Ed: Back in 2014 when you first started to pay IPT directly to the Tax Department (formerly the Inland Revenue): “The Inland Revenue is opening a new file for each non-Title-Deed-holding IPT payer so that any discrepancies can be resolved between the vendor and the purchaser when the Title Deed is issued.”

    I can’t say how long this is going to take to resolve the discrepancies.)

  • John Clifton says:

    Further to your response to my post of Sunday 5th June, I have checked the Tax Department website and can find no reference to any retrospective action being imposed on the 2013/14/15 bills. Your reference to a ‘decent lawyer’ introduced a welcome bit of humour into the discussion and rather go down that demanding route at this stage, I did contact an old friend and very highly regarded accountant in Limassol to ask his advice. He not unexpectedly stated that he was unable to offer any such advice until the revised act was passed into law. Have we any indication when the proposal will be tabled in the House of Representatives?

    (Ed: The plenum of the house usually takes place on a Thursday. If the law is passed it is published in the Gazette shortly after. Unfortunately I do not have access to the Gazette, but the website cylaw lists the laws shortly after they’re published. If you use Google Chrome as your web browser, you can easily translate the website.

    Incidentally there are many decent lawyers in Cyprus, but from what you say I infer the one(s) that you have instructed would not be listed amongst their number)

  • Lee says:

    I bought a property in Episkopi Paphos last January, how do I find out my IPT on it? and where or how can I pay it? How can I find out if there is any outstanding IPT owed on the property? apologies for the questions but I am new to Cyprus and we only use the property in the Summer as we live and work elsewhere but intend to retire to Cyprus in a few years.

    many thanks for any help or advice you can offer.

    (Ed: You need to visit the Tax Department in Paphos and register with them as described in my article Paying Immovable Property Tax 2014.

    Please note that the form IR 163A has been replaced by Form TD2001 and you should complete that rather than the IR 163A referred to in the article. Tick the box ‘Immovable Property / Capital Gains Tax’ in section 2 – ‘Type of Registration’.

    When completing the TD2001 form enter your home address as you usual place of residence when completing section 7..

    If you have the Title Deed to the property you should take that to the Tax Department with you. If not you can give the Tax Department as much detail as you can about the property.

    You can register when you’re in Cyprus this summer.

    I’m not sure if ‘last January’ refers to Jan 2015 or Jan 2016. If it’s 2016 there will not be any IPT outstanding – but if it’s 2015 you may, depending on the taxable value of the property, have to pay the arrears and a fine.

    I’m surprised that you lawyer didn’t advise you of the need to register with the Tax Dept. when you purchased the property.)

  • John Clifton says:

    I agree that the couple in question should raise this issue with the manager of the Paphos Tax office. However, there would seem to be little point in doing so until the legality or otherwise of the retrospective revision of their 2013/14/15 IPT liability is established. As I wrote in my previous post….’I have seen no publicity of any kind indicating that such retrospective action was even contemplated’. Can anyone recommend an authoritative source which may clarify this issue.

    (Ed: I haven’t seen any publicity indicating that such retrospective action was even contemplated either. I suggest you ask a decent lawyer to confirm – or check the Cyprus Law website to see if there have been any changes in the law (I can find none.

    You can also check the Tax Department website, which gives details of IPT rates and announcements.)

  • John Clifton says:

    I have reread my post and can see one area where I could have provided a clearer explanation of events and for that I apologise. However, I regret to say that I am totally at a loss to understand how I gave the impression that the owners in question had not paid their 2013/14/15 IPT bills.

    To reiterate, the couple not only paid their 2013/14/15 bills but did so early, received the discounts and have the receipts to prove it. In May with a view to expediting the transfer of their property to their son they asked the Paphos Tax authorities if they could pay their 2016 bill in advance of the next due date. This was agreed and they were fully aware that the basis of the calculation would now be the revised 2013 property valuation. What they were not prepared for was being presented with their 2013/14/15 bills again in which the Jan 1980 valuation had been replaced by the very much higher 2013 version. To add insult to injury, they were then informed that that had to pay a fine of 8% for non-payment of the excess of which they had no knowledge whatsoever!

    I certainly have seen no publicity of any kind indicating that such retrospective action was even contemplated. This is the actual nub of my enquiry to you and I hope that I have clarified the situation.

    (Ed: I suggest this couple return go back to the tax office after making an appointment to see the manager and get this sorted out.)

  • Steve says:

    I vaguely remember that the increases in IPT were at the insistence of the Troika as part of the Cyprus bail out. I wonder if this is going to be squashed as were other attempts to bypass the bail out agreement.

  • John Clifton says:

    Alternative headings. ‘Only in Cyprus’ or ‘You can’t make it up’. Are you aware of the latest outrageous ploy by the Paphos Tax Authorities to fleece unsuspecting and law abiding IPT tax payers? (Largely expatriate one suspects but more of that later).

    Case study.

    Some property owners in Kamares Village recently decided to transfer ownership of their jointly owned villa to their son. To achieve this and to meet the usual and not unreasonable requirements to clear all outstanding and impending national and local taxes including IPT prior to the transfer they duly requested invoices from the various authorities. They requested their 2016 IPT bill in early May and, to their amazement, having duly paid their 2013, 2014, 2015 IPT bills early and obtained the receipts, they were informed that the rates current on that date in May 2016 were to be applied retrospectively to their 2013, 2014 & 2015 bills and as they had not paid these enlarged bills of which they had no knowledge whatsoever, a further 8% fine was to be imposed!

    Sadly but not unsurprisingly, they were ill served by the local lawyer whom was supposed to be safeguarding their interests and they had actually paid the bills before this matter came to my attention.

    Is there any chance of righting what is blindingly obviously a serious misapplication of the law yet again by the Paphos Tax Authorities?

    (Ed: Firstly the Immovable Property Tax rates for 2013, 2014 and 2015 are identical – so it isn’t surprising that they had to pay the same amount for each of the three years.

    Secondly the 8% fine (which should have been 10% on the tax owed plus a pro-rata 4.75 per cent annual interest rate) was imposed for late payment.

    I published an article in 2013 explaining the amendments to the Immovable Property Tax law and the actions residents and non-residents needed to take. (Announcements were also printed in the local press.)

    As far as I can see the Tax Department acted perfectly correctly.

    Do you know why these Kamares residents failed to pay the IPT when they were supposed to?)

  • LT says:

    When the voting will be happening?

    (Ed: Hopefully at the next plenum of the House of Representatives, which usually takes place on a Thursday.)

  • embapaphos says:

    Great…about time, mind boggling how many taxes there are …..need to dig up the now gone local community tax to see what it was, don’t think figure was great though, either way good news for home owners.

    PS hopefully tax office can give refunds to those of us running via the trapped buyers law that have been asked to pay up early, and ‘to make things easier’ as I was told a good idea if taxes IPT for 2016 are paid up beforehand…

    (Ed: The IPT reductions agreed by the Council of Ministers (aka the cabinet) have to passed into law by a majority of MPs voting in favour at a plenum of the House.)

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