Cyprus Immovable Property Tax Reduction of Over 70% in 2016
The legislation also provides the abolition of the tax from January 1st 2017 onward.
The plenary of the House of Representatives voted on July 14 to reduce immovable property tax between 72.5% and 75% for 2016 and to abolish it from 2017 onward, Cyprus News Agency reports. The legislation passed by a majority vote of 29 for, 18 against and 5 abstentions.
In particular MPs voted for a legislative proposal jointly submitted by ruling part DISY and opposition parties DIKO, social democratic EDEK and the Solidarity Movement which stipulates that the payable immovable property tax from 2016 will be at 25% of the amount calculated with the existing provisions in place, that is to say its value on January 1st, 1980 provided that it is paid until October 31st 2016.
The new legislation also provides that in case the tax is fully paid between November 1st and December 31st the tax, which has to be paid, will be at 27.5% of the taxable amount on the basis of existing provisions in place.
It further includes the imposition of a penalty of 10% on the 27.5% of the taxable amount if it is not settled by December 31st 2016. The legislation also provides the abolition of the tax from January 1st 2017 onward.
Capital Gains Tax:
Capital Gains Tax is imposed (when the disposal is not subject to income tax) at the rate of 20% on gains from the disposal of immovable property situated in Cyprus including gains from the disposal of shares in companies which own such immovable property, excluding shares listed on any recognised stock exchange.
The following disposals of immovable property are not subject to Capital Gains Tax:
- Transfers arising on death
- Gifts made from parent to child or between husband and wife or between up to third degree relatives
- Gifts to a company where the company’s shareholders are members of the donor’s family
- Gifts by a family company to its shareholders
- Gifts to charities and the Government
- Exchange of properties
Liability is confined to gains accruing since 1 January 1980. The costs that are deducted from gross proceeds on the disposal of immovable property are its market value at 1 January 1980, or the costs of acquisition and improvements of the property, if made after 1 January 1980, as adjusted for inflation up to the date of disposal on the basis of the consumer price index in Cyprus. Expenses that are related to the acquisition and disposal of immovable property are also deducted, subject to certain conditions e.g. transfer fees, legal expenses etc.
Individuals can deduct from the capital gain the following:
- Disposal of private residence (subject to certain conditions) 85.430
- Disposal of agricultural land by a farmer 25.629
- Any other disposal 17.086
The above exemptions are lifetime exemptions subject to an overall lifetime maximum of €85.430
Stamp Duty:
Based on the new modified law for stamp duties 173 (1) 2013 which is in force as from 1st March 2013, stamp duty payable on the Contracts of Sale will be as follows:
The first 5,000 NIL
5,001-170,000 1,50 ‰ on the value or part thereof
Over 170,001 2,00 ‰ on the value or part thereof with a MAXIMUM LIMIT of €20,000
Example Contract of Sale value €250,000
| First €5,000 |
NIL |
| For next €165,000 will be paid €1,50 ‰ i.e. |
€ 247,50 |
| For remaining €80,000 will be paid €2,00 ‰ i.e. |
€160,00 |
| |
€407,50 |
There is a maximum limit of stamp duty to be paid for one Contract of Sale/ agreement which is €20,000.
Estate Duty
Estate Duty has been abolished since 1 January 2000. The executor/ administrator of the estate of the deceased, is required by the Deceased Persons Estate Law, to submit to the tax authorities a statement of assets and liabilities of the deceased within six months from the date of death.
Disclaimer
The information contained in these pages are considered accurate and reliable at the time of release without guaranteeing absolute accuracy and completeness at any time.
