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Commission refers Cyprus to EU Court of Justice

European Court of Justice

THE European Commission has referred Cyprus to the EU Court of Justice today for non-compliance with EU Treaty rules on the free movement of capital.

These rules give EU nationals, as well as nationals of Iceland, Norway and Liechtenstein, the unrestricted right to buy a second home in Cyprus. Since the accession of Cyprus to the EU in 2004, transitional measures were in force that could restrict such acquisitions but these measures expired on 30 April 2009.

As Cyprus has not yet repealed these measures, the Commission has decided to refer the case to the EU Court of Justice.

According to the 2003 Accession Treaty, Cyprus was allowed to maintain transitional measures which imposed restrictions on buying second homes for EU/EEA nationals.

These measures applied for five years after the Accession Treaty entered into force and expired on 1 May 2009. By that date, the Cypriot authorities were obliged to repeal the transitional measures. However, this has not been the case.

Following a reasoned opinion sent by the Commission on 6 April 2011 (see IP/11/416), the authorities requested and were granted an extension to the two-month period initially set for the Government’s reply. This extension aimed at allowing Cyprus to undertake all the procedural steps needed for the adoption of the necessary amendment.

However, after the expiry of the requested prolongation, the authorities only submitted a proposal for draft amendments without indicating any concrete time table for its adoption. As Cyprus continues to infringe its obligations under the EU Treaty rules on the free movement of capital, the Commission has now decided to refer the case to the Court of Justice of the European Union.

In this context, the Commission underlines again that any incompatibility of national rules with Treaty provisions can only be redressed by adopting other binding domestic provisions, having the same legal force as those which require to be amended, and providing for sufficient legal certainty (see Case C-151/94, Commission versus Luxembourg).

Brussels, 24 November 2011

Further reading

Commission refers Cyprus to the Court of Justice to ensure unrestricted access to buy a second home in Cyprus

9 COMMENTS

  1. Many Brit buyers were sold more than one property on the same developments off plan (at the same time) and assured by the developers and agents back then that although it wasn’t ‘allowed’, when Cyprus had been in the EU for 5yrs they would have to allow it. And, as they were unlikely to get Title Deeds before then, it would not come to light, so no problemo!

    A common persuading reason was ‘you can live in one and let the other(s) out to give you an income’ or ‘sell the other(s) as soon as they are built and they will be worth so much more by then, it will pay for the one you keep!

    For most, buying more than one when they were not supposed to turned out to be the least of their problems. Turned out that the other problems they did not know they were going to run into were multiplied by the number of properties they had bought.

  2. @jon – I don’t know why the Supreme Court has to decide – the EU Directive on Unfair Commercial Practices was transposed in Cyprus law in 2007 (Law 103(ÃŽâ„¢) 2007)

  3. On the topic of Cyprus’s compliance (or otherwise) with EU Rules and Directives, I refer you to the article in today’s Cyprus Mail, “Anti-competitive sales law allowed to hold sway in a bid to keep votes”.

    This article is about the current Cyprus sales law being in violation of the EU Directive on Unfair Commercial Practices.

    Towards the end of the report, there is a telling line: “So we now have to wait for the Supreme Court to decide whether an EU Directive overrides local law or not”.

    Handy if the Supreme Court may be able to overturn EU directives which are a bit inconvenient!

  4. We bought two properties in 2004 off plan. From the above comments it would appear that our agent and solicitor were ignorant of ‘one only’ or just greedy for their fees.

    It would seem that we were the fooled ones thinking that Cypriot solicitors were supposed to represent our interest as clients. Our wooing meal from the agent turned out a very expensive one, want a cheap apartment anyone or maybe a town house !!!!!!!!!!!!!!!!

    Will the accused be allowed to sit on the bench next year, what justice.

  5. At last someone has taken note. As Jim states however the wisdom of buying a second after the experience of buying a first is probably suspect and indicative of a suitable case for treatment.

    I wonder if the same referral to the ECJ will be made in respect of the continuation of charging duty on vehicles imported from other EU states in spite of transitional opt out arrangements having also expired in 2009. Perhaps not until the fines for non compliance exceed the levels of revenue generated I suspect.

    It must be wonderful to live in a bubble and operate without any regard or respect for laws, regulations and approved codes of conduct and practice which are found to be an inconvenience notwithstanding the effect on the citizens or nations well-being. Does it come under the generic heading of Utopia or is it La La Land? Banana’s seem to spring to mind.

  6. Not being allowed to buy a second property in Cyprus is a blessing. The buying bit is so simple, they promise the earth and wine and dine you, in order to take your money.

    Property ownership is a completely different matter. Title Deeds Anyone?

  7. Some might say that to be buy one property in Cyprus is madness. To buy two must be absolute insanity.
    Returning to reality, I always thought it was legal for an EU citizen, resident in Cyprus to buy as much land or property as they wished, or is the devil in the word ‘resident’?

  8. Perhaps the EC could also insist that Cyprus must allow EU Nationals to ‘legally own’ a second home after they have purchased it, and not have to suffer years of ducking and diving by the usual clan of brethren trying to prevent another little piece of Cyprus being lost to ‘foreigners’.

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