News

Immovable property tax reform

Charlotte Moore 04 Jul 2016

On 1 June, the Cyprus Council of Ministers approved the reduction of immovable property tax rates by 50% from 1 per mile (that had been initially propsed) to 0.5 per mile. Taxand Cyprus investigates this update further.

The decision of the reduction of the immovable property tax rate came following the oblgation by the EU to charge VAT (at the current rate of 19%) on transactions of propoerties which constitute a commercial transaction. This VAT will be imposed in commerciial transactions and will thus mainly impact land developers. Individuals will only be taxed in cases of purely commercial activity.

The following amendements are included in the proposal:

• Reduction of immovable property tax rate to a flat rate of 0.5 per mile.
• Immovable property taxes up to €25 will not be collected
• The existing 20% discount for individuals who repay the immovable property tax on time via the internet or credit institutions and the 17.5% dscount for individuls who pay their immovable property tax on time at the tax department counters will be maintained
• Immovable property taxes collected by municipalitities and communities will be abolished
• 50% reductuion in lnd transfer fees. This was aleady applicable for transfers that took place between 16 July 2015 and 31 December 2016, but will now become a permanent reduction
• Imposition of VAT of 19% on sale of land which is intended for construction

Taxand's Take

Taxpayers in Cyprus should take note of these updates to ensure they remain compliant.

Article tags

Cyprus | Real Estate Tax