Levy imposed on disposals involving Cyprus real estate – Amendment of the law on imposition and collection
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On 22 February 2021, certain provisions relating to the Central Agency for Equal Distribution of Burdens (Creation, Objects, Responsibilities, and Other Related Matters) Law of 1989 (as amended) (No. 2) (the Law) were amended resulting in the imposition of a levy amounting to 0,40% of the sale proceeds arising from all immovable property disposals in the Republic of Cyprus (the Levy).
This further extended to the disposal of shares of a company owning immovable property in the Republic of Cyprus, whereby the Levy is calculated on the amount of the most recent general valuation conducted by the Department of Lands and Surveys, provided that the buyer of such shares simultaneously assumed control of the company.
On 27 October 2022, the House of Representatives shed light on the aforementioned amended provisions and passed a new amendment to the Law, effective as of 18 November 2022, by virtue of which the Tax Commissioner was made the competent authority for the imposition and collection of the Levy in favour of the refugee fund. Specifically, Law 172(I)/2022 provides that:
Prior to the transfer of immovable property or company shares during disposals falling under the remit of the Law, sellers are obliged to pay the Levy to the Tax Commissioner, who shall, upon payment, issue a relevant payment certificate.
The Levy is also applicable retrospectively, i.e. for any disposals completed between 22 February 2021 and the amendment’s effective date, namely 18 November 2022.
Finally, on 18 November 2022 the House of Representatives correspondingly amended article 18 of the Transfer and Mortgage of Property Law 9/1965, so as the issuance of a certificate by the Tax Commissioner with respect to the Levy is a prerequisite for the submission of Form N. 270 (Declaration of Transfer of Immovable Property) and the subsequent disposal of any immovable property in the Republic of Cyprus.
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