In February 2022 the House of Representatives amended the Central Agency for the Equitable Distribution of Burdens (Recommendation, Purposes, Responsibilities and Other Related Issues) Law of 1989 (Law 141/1989) (the “Law”), introducing a levy of 0.4% on the selling price of immovable property in Cyprus. The same levy is imposed on the sale of shares of a company, when the company owns immovable property, and such transfer will result in the purchaser acquiring the control of that company. The obligation to make the above contribution burdens the sellers of real estate.
Collection of the Levy
The House of Representatives is expected to vote on the further amendment of the Law, to introduce the mechanism which will facilitate the collection of the imposed levy.
More specifically, according to the proposed bill, the Tax Department will be entrusted with the collection of the 0.4% levy, calculated on the sale price of the real estate.
The Tax Department is to issue a Confirmation of Payment, which will be necessary to conclude the transfer of title to the real estate with the Land Registry Department.
Purpose of the Law
The imposition of this levy is intended to serve humanitarian purposes. Any proceeds generated will be channeled towards the support of Greek-Cypriot refugees who face financial hardships and individuals who cannot access or use immovable property they own, as a consequence of the Turkish invasion in Cyprus in 1974.
De Minimis Contribution
The introduction of the above levy has not yet affected, and is not expected to affect, the willingness of people to deal in real estate in Cyprus. The real estate market in Cyprus is experiencing great development in recent years. High demand for commercial and residential properties, both from locals and foreigners alike, has contributed to the expansion of the construction and land development industries, a trend which is not expected to change soon.
Although the contribution from the sale of immovable property is de minimis, collectively these contributions is expected to generate approximately €13-14 million per annum.
Consider purchasing real estate in Cyprus? Do not hesitate to contact us at info@paraschou.com.cy for more information.
