Download Research Bulletin - Immovable Property Legislation

New Legislation on the
Immovable Property Tax Rates
July 2014
Under the revised provisions of the Immovable Property Tax (IPT) Law passed by the House of Representatives
this month, all property owners in Cyprus with property value that exceeds €12,500 (as per the 1980 valuation)
are liable to pay an annual tax to the Inland Revenue Department (IRD). The amount that they have to pay
is in accordance with the total 1980 value of all immovable property registered in their name on January 1,
2014. In effect, the IPT rates remain the same as those in 2013.
Immovable
Property Tax Rate*
Tax (€)
6‰
240
240
40,001 - 120,000
8‰
640
880
120,001 - 170,000
9‰
450
1,330
170,001 - 300,000
11‰
1,430
2,760
300,001 - 500,000
13‰
2,600
5,360
500,001 - 800,000
15‰
4,500
9,860
800,001 - 3,000,000
17‰
37,400
47,260
Value of Property (€)
1 - 40,000
Over 3,000,001
Accumulated
Tax (€)
19‰
* The persons whose immovable property in the Republic does not exceed €12,500 in
value they do not pay any IPT.
The current legislation is differentiated from the previous one in the following:
κκ
κκ
κκ
κκ
κκ
The IPT will be payable by the purchaser or transferee or beneficiary of the property.
The taxpayers that will pay the IPT before 31st of October, will enjoy a 15% discount.
The deadline for settling the payment of the IPT is extended until 30.11.2014.
Any tax paid after 30.11.2014 will incur a 10% penalty plus interest of 4.5% pa.
Property owners can submit appeals within three months. The fees for lodging a complaint are
increased compared to the 2013 rates, as shown in the table below:
Value of Property (€)
1
Fee for Lodging
a Complaint (€)
1 - 100,000
37.5
100,001 - 500,000
75
500,001 - 1,000,000
150
Over 1,000,000
375
© Emergo Wealth - Immovable Property Research Bulletin - July 2014
Calculation of IPT for 2014 - Example
κκ A property registered in a single name, with a 1980 value of €60,000.
Amount to pay:
€40,000*6‰ = €240
€20,000*8‰ = €160
κκ The same property is registered in joint names, each of their IPT liability will be calculated on half the
1980 value – €30,000 – and each will be asked to pay:
€30,000*6‰ = €180
The owners will pay €180 each.
Chronicle of IPT changes - 2014
Under the conditions included in the revised MoU (May 2014), Cypriot Authorities had to reform IPT in order
to improve the fairness of the tax burden and the efficiency of the tax administration.
MoU
Implementation
2Q-2014
Update Valuations of all
immovable properties
based on the values as
at 01/01/2013
2015
Introduce the recurrent
immovable property tax
based on the updated
valuations
25/06/2014
The revaluation process
completed
02/07/2014
The Cabinet approved a bill proposing
the exemption of property valued up to
€200,000 from property tax. For all other
properties valued in excess of €200,000,
the applicable tax rate would be 1‰
10/07/2014
The Parliament passed a law dictating
that the IPT for the tax year 2014 will be
levied on the 1980 property values.
Revaluation Process
After the completion of the revaluation process by Ministry of Interior, 300,000 new cases were added in
the list of taxable properties based on the values as at 01/01/2013. The total value of the Cyprus private
property is estimated to €200bn, based on the values as at 01/01/2013.
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© Emergo Wealth - Immovable Property Research Bulletin - July 2014
Collections of IRD from IPT
2013
2014
Target
€101,066,495
€100,000,000
Challenges Ahead
According to the current legislation, the IPT is calculated on the total property value owned per individual or
legal entity. In addition to the IPT that each tax payer has to pay, more taxes related to immovable property,
such as the Municipal / Town tax, and the sewerage rates. The Government announced that it is exploring
the possibility of incorporating all these various taxations into a single IPT in order to this way lower the
administrative fees and improve collection.
Emergo Wealth Research Desk
[email protected]
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© Emergo Wealth - Immovable Property Research Bulletin - July 2014