Tax on immovable property in Cyprus will be abolished from January 2017.
IMMOVABLE PROPERTY TAX UPDATE
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Category Archives: Cyprus
PROPERTY TRANSFER FEES REDUCTION
In June of 2015 the Cyprus House of Representatives approved a 50% reduction in property transfer fees until the end of December 2016.
There is presently a suggestion by the government that the legislating body approve a permanent 50% reduction in transfer fees and there are good chances that it will pass.
No transfer fees are due when a property is donated from parents to children, between spouses or between siblings. However, there is a small processing fee of between ten and fifty Euros payable to the Lands Office at the time of transfer.
AFTER BREXIT – WHAT WOULD HAPPEN TO U.K. CITIZENS LIVING/WORKING IN CYPRUS?
It is my opinion that U.K. citizens who are already living/working in Cyprus, or any EU country, will keep that right should the U.K. decide to exit the European Union.
I say this because the Vienna Convention of 1969 states that the termination of a treaty “does not affect any right, obligation or legal situation of the parties created through the execution of the treaty prior to its termination.” The House of Commons Library says that “withdrawing from a treaty releases the parties from any future obligations to each other, but does not affect any rights or obligations acquired under it before withdrawal.”
I must clarify here though that the above is only applicable to those U.K. citizens who became expats in Cyprus (or another EU state) before Brexit.
As far as health services go I believe it is unlikely that U.K. citizens would be denied EU health care services as the U.K. could retaliate by refusing these services to EU citizens living in the United Kingdom.
NEW LEGISLATION REGARDING WILLS
Cypriot law regarding inheritance was amended in July of this year (2015) in order to abolish the absolute right of a testator in Cyprus disposing of the whole of his/her estate, however they desired, through a Will.
However, new EEC regulations give someone the option of choosing which country they wish their inheritance matters to be dealt with, as long as it is not in conflict with the laws of the country they choose.
The best way forward is to re-do an existing Will and add the following provision:
“It is my wish that the present Will be treated under the inheritance laws of ……………….”
REDUCED RATE OF 5% VAT FOR IMMOVABLE PROPERTY PURCHASE
The reduced rate of 5% VAT applies to the first time purchase or building of a permanent residence (home). The property must be currently used as the permanent home (not holiday house), or it must be intended for use as the permanent/main residence for the purchaser and his/her family.
The following criteria have to be met in order to qualify for this reduction:
a) Purchaser must be 18 years of age or older.
b) Purchaser must be a citizen of Cyprus or the E.U.
c) The purchaser should be permanently residing in Cyprus, or have the intention to permanently reside in Cyprus, with the purchased property being intended for use as the main home/residence for 10 years.
If approved, only 200 sq. metres will qualify for the discounted VAT and the total residence should be no larger than 275 sq. metres.
So, if you are a first time purchaser of a property intended to be your main residence for 10 years, and you meet the above criteria, an application form to reduce the VAT to 5% can be submitted to the VAT authority, stating your intention to live permanently in the property. It is not necessary to have obtained permanent residence status prior to submitting the form.
ARCHANGEL MICHAEL HOSPICE
FIRST LEGACY
The first legacy has been received by the Archangel Michael Hospice in Mesa Chorio, Paphos. It was gifted to the hospice by a lady from the U.K. in memory of her late husband.
The legacy came from the sale of an apartment in Kato Paphos and is the first large amount (50,000 Euros) received since the hospice began admitting patients three months ago.
All those in need of palliative care are welcome at the hospice regardless of religious beliefs, nationality, age or the type of illness and are treated free of charge. The costs of the hospice are financed by donations, legacies and fund raising events.
‘A GRAND DAY OUT’ – October 16, 2015
A fund raising event titled ‘A Grand Day Out’ will be held on October 16, 2015. A bus will travel from Paphos, leaving Debenham’s at 8 a.m. and will cross through the checkpoint in Nicosia, returning to Paphos by 18.30. Full details of the coach trip and sites to be visited can be obtained by visiting the hospice website: www.archangel-michael-hospice.com or telephoning 99494140.
NEW TITLE DEED LEGISLATION
As of the 4th September 2015, any buyer who has a pending, registered contract with the Lands Office, and has either paid in full or partially, can now apply directly to the District Land Registry Officer requesting the transfer of the title deed into his/her name regardless of the existence of any legal or financial obstacle which, in the past, would have obstructed the transfer.
Buyers of properties without separate, individual title deeds may apply the same way but these applications will be suspended until the individual title is issued for the property in question.
For those buyers whose deeds are not yet issued the government will follow a shortcut/speedy process and issue the deeds for all projects for which an application for sub-division has been submitted – even in cases where there are technical omissions and/or irregularities on those projects. Individual deeds will be issued with the notation that they have technical irregularities and buyers will have the option to correct these irregularities after taking their deeds.
This new legislation bypasses all memos (liens) registered by individuals or the government and any other impediment which, under the previous legislation, prevented the transfer of the title deeds.
Buyers are now given the option of paying the transfer fees to the Lands Office in 12 equal monthly installments.
WORKING IN CYPRUS
EU CITIZENS
- Citizens of the European Union are free to enter Cyprus and look for employment for up to 4 months. During this period it is necessary to make an appointment to register with the Aliens & Migration Department in your area. A quick visit there will set you up with an appointment to register at a future date. They will also provide you with a handout specifying which documents you need to take with you the day of registration.
- Once employment is secured and you start working, your employer is legally required to register you with the local social security office which will issue a number for you.
- Take your employment contract, along with the other necessary documents, to your registration appointment at the Aliens & Migration office.
- Provided all your paperwork is in order, your residence/work permit (yellow slip) will be handed to you the day of your appointment.
- If you are the non-EU spouse of an EU citizen you are granted the same rights of residence and employment as your husband/wife.
SELF-EMPLOYMENT
If you are planning on being self-employed you should first visit the Aliens & Migration office to arrange an appointment. They will hand you a list of the documents you will need to take with you during your registration appointment. You will also need to register yourself as self-employed with the local social security office and obtain from them a social security number. They will explain when your contributions are due and the penalties for late or non-payment.
SOCIAL SECURITY OBLIGATIONS & BENEFITS
For more in depth explanations of your rights and obligations under the Cyprus Social Security scheme please click the following link:
http://www.mfa.gov.cy/mfa/mfa2006.nsf/All/7BF0F66F1B3AF568C22571A90023B098
NON-EU CITIZENS – EMPLOYMENT REGULATIONS
It is extremely difficult and a long, complicated procedure for a non-EU citizen to obtain an employment and residence permit in order to legally work in Cyprus, and there is no guarantee that in the end it will be granted.
If you want/need to work in Cyprus it is advisable to secure an employment/residence permit BEFORE relocating here – this is done through the person/company that wants to employ you.
If you are offered employment, your employer NOT you, is required to apply for all the necessary permits on your behalf BEFORE you start working. It is illegal to work without all the required permits and the penalties can be quite harsh for both employee and employer (prison sentences and fines).
NON-EU CITIZENS – FORMING A COMPANY
A non-EU citizen may form a company, operate a company, be the sole director and shareholder of the company and the company can employ staff to work. However, as a non-EU citizen, you will still need to apply for a work/residence permit in order to secure the right to actively work in Cyprus yourself.
IMMOVABLE PROPERTY TAX (IPT) INFORMATION
UPDATE:
IMMOVABLE PROPERTY TAX (IPT) DISCOUNT
The Cyprus government announced officially on Thursday, 17th September 2015 the amount of the discounts that will apply to those who pay their Immovable Property Tax (IPT) by 30th November 2015. They are as follows:
a) If paid online, or through the bank, by 30th November 2015 a 20% discount will be given.
b) If paid in person at the tax office by 30th November 2015 the discount will be 17.5%.
c) There will be a penalty attached to any payment made after 30th November 2015.
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There has been a recent announcement by the Cyprus government that there will soon be an increase in the amount of discount given to those who pay their IPT early (before 31st October 2015).
The discounts will apply as follows:
a) Payments made either online or through the bank before 31st October 2015 will have a 17.5% discount.
b) Payments made in person at the tax office before 31st October 2015 will have a 15% discount.
c) No discount from 1st November 2015 – 30th November 2015.
d) If the IPT is not paid by 30 November 2015 penalties will be imposed from 1st December 2015.
As there are approximately 6 weeks in front of us before the discounts end on 31st October 2015 it doesn’t hurt to wait a little – until the official announcement of the date that the increased discounts will apply – in order to take advantage of this offer.
CONNECTION OF UTILITIES AFTER PURCHASE OF A PROPERTY
After all the legal formalities have been completed for the purchase of your new home the next step is the connection of utilities.
If you have provided a power of attorney to your lawyer then he/she can connect them on your behalf and arrange standing orders for bills to be paid through your bank – if not, then you will need to do the following:
Electricity Connection:
1) Go along to the electricity authority with the following documents:
a) Copy of either your contract of sale or title deed (in your name).
b) Copy of an old electricity bill from the property you have purchased or the meter number.
c) Your passport.
There is a Euros 75 (Seventy Five) guarantee required and also a Euros 15 + VAT connection fee for a private home both of which will be included on your first bill. The amount of the guarantee will be adjusted on your final bill should you sell the property.
Connecting Electricity to a Rental Property:
If renting a property take your rental agreement, passport and an old electricity bill or the meter number of the property to the electricity authority.
There will be a Euros 200 (Two Hundred) guarantee required for EU citizens (payable immediately upon submitting the application) plus a Euros 15 + VAT connection fee which will be on the first bill.
If you are a non-EU citizen the guarantee required is Euros 350 (Three Hundred and Fifty) and must be paid immediately at the time an application for services is submitted. There is also the connection charge of Euros 15 + VAT which will be included on your first bill. The guarantee amount will be adjusted on your final bill when you vacate the property.
Water Connection:
Visit the water board in the area you live.
The same documents as above are required for the water connection.
Each area has different requirements regarding the deposit amount but it is usually between Euros 200 – 300 and must be paid at the time an application is submitted. The deposit will be adjusted on your final bill should you sell or vacate the property.
Home Insurance:
Don’t forget to insure your new property – building and contents. If renting a property then only contents insurance is necessary.