A mandatory contribution on Cyprus immovable property disposals was introduced through recently announced legislation, published in the Cyprus Government Gazette on the 22nd February 2021.
Under the amendment, a levy of 0.4% will be imposed on the sale of real estate in the Republic. The proceeds adding towards adding towards the support of refugees and owners of currently inaccessible immovable property situated in the occupied territories.
Who has to pay?
This contribution, payable by the seller of the property, is applicable on the sale proceeds from the disposal:
- of properties located in the territories controlled by the Republic of Cyprus;
- of shares in a company that owns immovable property in Cyprus, provided that the buyer takes control of the company (>50% shares).
How to calculate the contribution in case of sale of shares?
In order to calculate the payable amount, share value equals to the most recent property valuation prepared by the Department of Lands and Surveys.
What needs to be clarified?
Relevant Regulations are expected to provide detailed clarity on a number of issues of importance:
- Possible exemptions from the levy (i.e., Debt For Asset Swaps, reorganisations, foreclosures, donations);
- Transactions between related parties below the current market value;
- Deadlines, available payment methods, the recipient;
- Imposition of interest and penalties.
