YET ANOTHER Immovable Property Tax (IPT) scam in Cyprus has come to light. A magazine produced by a well-known Paphos-based property developer includes the following information on IPT for potential buyers in its advertising literature:
There is also an annual taxation, Immovable Property Tax, which the registered owner is required to pay based on the value of the property. The rates for these are as follows:
This information which, needless to say is totally inaccurate, has resulted in some people paying as much as 15 times the amount of Immovable Property Tax they should have been paying to this particular developer.
How much of this overpayment has ended up in the developer’s pocket and how much has been paid to the Inland Revenue Department, we will leave you to guess!!
Here is what the magazine article should have said:
There is also an annual taxation, Immovable Property Tax, which the registered owner is required to pay based on the assessed value of the property as of 1st January 1980. The rates for these are as follows:
As you can see, there is a significant difference!!
How should Immovable Property Tax calculated?
IMMOVABLE Property Tax in Cyprus is a bit like the old rating system in the UK, which was also based on assessed 1980 property values.
- All property has an assessed 1980 value (which is calculated by the Land Registry) which entered on its Title Deed. And so a plot on which a property is built will have a Title Deed containing its 1980 value. (Where a plot has to be subdivided into smaller plots, so that a Title Deed can be issued for each of the properties built on the plot, the Land Registry will apportion the 1980 value of the undivided plot across the Title Deeds of the smaller plots.)
- As developers build on the land, they declare how much input they have put into the land (i.e. the value of materials and work undertaken in building the properties) to the Inland Revenue Department every year. The Inland Revenue assesses the 1980 value of that input, adds it to the 1980 value of the land and presents the developer with a tax demand.
- Once the bill has been paid, it is a very straightforward task for the developer to apportion it fairly between buyers who have yet to receive their Title Deeds.
Note that a developer’s total Immovable Property Tax liability isn’t calculated on a property by property basis; it is calculated on his total property portfolio. Similarly, if someone were to own two houses, their Immovable Property Tax liability would be calculated on the total value of both properties, not the sum of the Immovable Property Tax on each of them.
Reclaiming legitimate Immovable Property Tax overpayments
Once a Title Deed has been issued for each of the properties and ownership has been transferred to their buyers (i.e when a buyer has paid the Property Transfer Fees and the Land Registry has issued a Title Deed bearing their name as the property’s registered owner) buyers may claim a refund from the Inland Revenue Department for any overpayment they may have made to their developer.
However, the Inland Revenue will only refund legitimate overpayments; it will not refund illegal amounts charged by property developers as shown in the example above.
Anyone who has been charged illegal amounts of Immovable Property Tax should report the matter to the Cyprus CID; fraud is a criminal offence!
Those wishing to reclaim legitimate overpayments of Immovable Property Tax should read this letter from the Ministry of Interior.
I reported an occurrence of fraud to Cyprus CID, through the British Police department in September 2009.
I HAVE NOT HAD ANY RESPONSE TO DATE.
@Stuart M – the information Denis has is in the public domain. But this did not stop his accusers taking him to court.
If you are merely quoting from a developer’s mag. which is already in the public domain, why are you reluctant to name it?
Surely you cannot be sued for libel when you are merely pointing out the ‘error’ (don’t say ‘scam’) in this developer’s literature.
Until these developers are exposed by legitimate publications such as your CYPRUS PROPERTY NEWS, we will only continue to read the horror stories coming out of Cyprus.
Once again another scam emerges and once again we realise the greedy developers are profiting at the hands of the home owner who I am able to speak first hand on this subject.
Unfortunately we do NOT have a leg to stand on when we dare tackle then in return for their greed and robbery as they always have an answer and we are always unfortunately in a difficult situation where the more you shout, the more difficult they make your life and selling eventually becomes an impossibility as they close all avenues around you.
When I raised my particular case on my property in excess of 1.5 million Euro, where title deeds had already been issued but had not yet been transferred in to my name, for reason of making additional property purchases on the island, this being the requirement at that time, I was told the EXTORTIONATE I.P.T charges levied by the developer differed greatly from what was actually being paid over to the Government due to the fact that it was classed as ADMINISTRATION CHARGES levied by the developer for handling the payments on behalf of the Government.
I was told that all payments were handled centrally by the developer which saved the Government a huge cost annually, however the workload of the developer had increased due to this additional activity. When I told them this was criminal what they were charging and that a local VAT or TAX inspection would certainly reveal anomalies in documenting such receipts, once again I was merely fobbed off with the fact that the developer could charge whatever they liked for what they deemed reasonable administrative costs and that is exactly what these overpayments were being recorded as.
How can you possible argue your case when you meet objections all the time and when all you want is a quiet and easy life and the lowest possible living expense. I have documented before and I will say it again, family run developers that have grown too quickly have a mountain of administrative time bombs waiting to go off. There needs to be on the spot, unannounced audits by external auditors completely unconnected with the companies concerned. I can highlight a dozen money making scams where developers are profiting from unsuspecting clients and staff alike.
Clients we know the stories all too well, but I include staff because once again I have first hand experiences of monies not being paid to staff for sales of properties being made when they have clearly been owed those commissions, V.A.T being charge to staff and agents for commissions made on sales, but NEVER any V.A.T invoices to accompany those deduction (where does all that V.A.T go, because if there is NO documentation to prove it has been deducted at source then for sure there will be NO incentive to pay it over.
Million upon million of Euros sitting in developers accounts from funds that have been wrongly appointed to client files and never ever resolved, the list is endless and the whole industry needs to get it’s act cleaned up and it is about time the Government realised that whilst some of these developers may be supporting local causes, they are fleecing them left right and centre in other areas, so they are just robbing Peter to pay Paul.
The industry is awash with sharks and we all know this and yet we are all afraid to speak our minds because we are frightened of the outcome it will bring us in return. It makes me angry to see these people moonlighting as local citizens who are supposed to be doing for the good of the country, when in actual fact what they have done over the past few years is destroy its wonderful image and give it a bad name through bad building practise which is now paramount to that we are seeing in Spain.
Some two years ago the Cyprus CID were contacted regarding these frauds – they declined to take any action. Any policeman in Cyprus taking this up would be out on his neck immediately.
As as been stated many times before if you have firm evidence then Interpol is the place to go.
Can the aforesaid magazine be passed to the Ministry of the Interior with an open letter asking for their comments?
@Cyprus Geoff – As you may know, Denis O’Hare’s Cyprus Property Action Group website was forced closed as a result of it naming names. I have no doubt that this magazine would suffer a similar fate if it named names.
@Costas Apacket – The Government is well aware of the various frauds that go on here; they were detailed in the CPAG report that was commissioned by the former Finance Minister.
@Clive Fletcher – As well as Interpol, those who have been defrauded must write to their MEPs seeking the European Union’s help.
“YET ANOTHER Immovable Property Tax (IPT) scam in Cyprus has come to light. A magazine produced by a well-known Paphos-based property developer includes the following information on IPT for potential buyers in its advertising literature:”
Come on, don’t be shy, name these crooks and lets have it out in the open who the robbers, cheats and liars are.
Who is the well-known PFO property developer? Why don’t sites like yours ”name to shame” these obvious cheats? If you are scared of the natural Cyprus reaction, the 04h00 pipe-bomb, some-one should arrange an anonymous dump site to put all this detail on.
So many crooks around that buyers should be frightened off completely, yet there are credible developers around, I guess.