Amendment of Law on the Central Body of Equal Distribution of Burdens (Recommendation, Purposes, Responsibilities and Other Related Issues) (141/1989) (hereinafter referred to as the “Law”).
Purpose of the amendment:
Reinforcement of the financing activities / resources of the Central Body, which assists the Greek-Cypriot refugees of the Turkish invasion on the island in 1974. Specifically, the Law aims to support the refugees who own immovable property in the northern part of Cyprus, but cannot have access to or exploit their property.
1) By virtue of section 4(b) of the Law, the Parliament imposed a 0.40 % levy on all sales of immovable property in the Republic Cyprus.
2) This provision covers and includes also cases of transfer of shares of any Company which owns real estate in the Republic of Cyprus. In this case, the calculation is based on the last assessment of the real estate by the Department of Lands and Surveys, provided that the Purchaser acquired the control of the said Company indeed.
3) The levy is payable by the Seller to the Cyprus Inland Revenue Department.
4) The collected funds from the imposition of the levy, will be managed by the Central Body for the Equal Distribution of Burdens, which is the competent Authority.
Effective Date of the amendment:
From the 22nd of February, 2021 all the Sellers of immovable properties in the Republic of Cyprus must calculate the effect of the above amendment when considering the entering into such transactions (i.e. sale of the asset directly or the Company’s shares which holds the asset), as they are obliged to attribute the particular tax and, thus, to deduct it from the sale consideration.
Although in section 4(e) the Law allows the issuance of relevant Regulations which may provide some clarity with respect to the above issues, in fact these are urgently necessary as there is ambiguity in respect of crucial issues, like penalties, taxing point, timeline of payment, basis of calculation of the levy, possible exceptions etc.
Our Team is at your avail to elaborate on the Law and guide you thoroughly on how these implications changed the norm of sales and shall affect your real estate transactions from now and onwards.