On 1 June 2016, the Cyprus Council of Ministers approved the reduction of immovable property tax rates by 50% from 1 per mille (that had been initially proposed) to 0.5 per mille.
The decision of the reduction of the immovable property tax rate came following the obligation by the EU to charge VAT (at the current rate of 19%) on transactions of properties which constitute a commercial transaction. This VAT will be imposed on commercial transactions and will thus mainly impact land developers. Individuals will only be taxed in cases of purely commercial activity.
The following amendments are included in the proposal:
- Reduction of immovable property tax rate to a flat rate of 0.5 per mille
- Immovable property taxes up to €25 will not be collected
- The existing 20% discount for individuals who repay the immovable property tax on time via the internet or credit institutions and the 17.5% discount for individuals who pay their immovable property tax on time at the tax department counters will be maintained
- Immovable property taxes collected by municipalities and communities will be abolished
- 50% reduction in land transfer fees. This was already applicable for transfers that took place between 16 July 2015 and 31 December 2016, but will now become a permanent reduction
- Imposition of VAT of 19% on trading of land for building
Our team at Eurofast Taxand is in the best position to advise and assist you concerning the matter and any further enquiries you may have.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.