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

Over 306,000 to pay Immovable Property Tax

Immovable Property TaxMORE than 306,000 taxpayers will be called on to pay Immovable Property Tax worth €65.3 million, if the new 0.05% property tax rate is passed by the House of Representatives.

The government expects to collect only €44.4 million of the €65.3 million due, however, due to a promised discount to those who pay their taxes on time, and the fact that only 85% of taxpayers paid their taxes during the past two years.

According to data submitted by the Ministry of Finance to the House Finance Committee, the 306,000 taxpayers correspond to 82.5% of the total, who would pay according to the new tax rate and at 2013 valuations. The value of immovable property on the basis of the 2013 valuations is estimated at €130.6 billion.

In addition, 65,000 tax payers, or 17.5% of the total, with immovable property valued up to €50,000 in 2013 prices, would be exempt from paying taxes on their property. The value of immovable property that is exempt from the immovable property law is close to €1.1 billion, said the Ministry of Finance.

Under the current tax law, immovable property is taxed progressively at 1980 prices. There are nine tax rates, spanning €6 per thousand to €19 per thousand. Immovable property valued up to €12,500 is exempt from taxation.

In 2015, 273,052 citizens and companies were taxed. Out of a total €127.5 million owed, the government collected €85.7 million out of 239,000 tax payers.

Big owners owe the most

Data show that large property owners still owe the largest amount in taxes. 376 owners of immovable property valued above €800,000 owe €12 million in tax out of a total of €21.8 million. In addition, 184 taxpayers with immovable property values up to €3 million owe €5.1 million, and 24 taxpayers with property of above €3 million owe €5.5 million.

In total, between 2013 and 2015 to government collected €284 million in Immovable Property Tax: €106 million in 2013, €92 million in 2014 and €86 million in 2015.

The government also collected €174 million from transfer fees: €53 million in 2013, €65 million in 2014 and €56 million in 2015. The government has suggested a permanent reduction of transfer fees by 50%.

The government is also proposing to abolish municipal and community taxes on immovable property. Between 2013 and 2015 local authorities collected €45 million: €14.7 million in 2013, €15 million in 2014 and €15 million in 2015.

Meanwhile, in a letter to the Minister of Finance, Harris Georgiades, and the president of the House Finance Committee, Averof Neophytou, the Cyprus Chamber of Commerce and Industry (KEVE) touches on a series of issues that are related to the Immovable Property Tax bills under discussion. The letter, signed by the General Secretary of KEVE, Marios Tsiakkis, states that the Chamber is in agreement with adopting a single tax rate of 0.05%.

However, regarding the way in which the value of the property is estimated, the Chamber finds mistakes, and suggests a number of changes, such as allowing taxpayers to submit an objection without any time restrictions. Objecting taxpayers would be called to pay their tax until the objection is settled and the difference paid.

Government warns of EU fine

Meanwhile, Cyprus is in danger of paying a €10 million fine for not complying with European regulations and putting in place a 19% VAT on the sales of plots of land for commercial activities.

According correspondence between Cyprus and the EU, the directive on VAT should have been implemented by the end of 2007, but the government has been requesting extensions since then.

In addition, according to the documents sent by the government to the House, the government will pay an additional €3.6 million fine for every six months that it does not comply with the EU directive.

Still, political parties express reservations over adopting the government’s tax bill, and requested more time until September to discuss the issue.