ARTICLE
5 March 2021

Amendment To The Central Agency For Equal Distribution Of Burdens (Creation, Objects, Responsibilities, And Other Related Matters) Law Of 1989 (As Amended)

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PwC Cyprus

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On 11 February 2021 the Cyprus Parliament voted to amend certain provisions relating to the Central Agency for Equal Distribution of Burdens (Creation, Objects, Responsibilities, and Other...
Cyprus Finance and Banking

In brief

On 11 February 2021 the Cyprus Parliament voted to amend certain provisions relating to the Central Agency for Equal Distribution of Burdens (Creation, Objects, Responsibilities, and Other Related Matters) Law of 1989, as amended, (the "Law") aiming to finance the activities of this Central Agency through the introduction of a 0,4% levy on Cyprus real estate disposals. The amendments (outlined in detail below) were gazetted on 22 February 2021, which is their effective date.

In detail

Following the amendment to the Law, a 0,4% levy is to be imposed on the sale proceeds from all disposals of immovable property which is within the current control of the Republic.

The amendment extends also to disposal of shares of a company which is the owner of such immovable property, to the extent that the buyer of the shares assumes control of such company. The relevant value of the shares for the purposes of calculating the amount of the levy due equals the latest valuation of the immovable property by the Department of Lands and Surveys.

In accordance with the Law amendment, the obligation for payment of the levy lies with the seller of the property.

The amendment does not provide clarity with respect to certain issues such as:

  • the taxing point (i.e. date of agreement to sell the property, or any other), as there is no provision for interest and penalties;
  • basis of calculation of the levy (e.g. remuneration actually received or agreed disposal consideration);
  • the payment method and payment recipient, which is yet to be decided;
  • application of the Law amendment to indirect disposal of shares;
  • potential exemptions from the levy (e.g. reorganisations, debt for asset swaps and listed shares);
  • pro-rata calculation of levy on non 100% share disposals.

The Law amendment also allows for the issuance of relevant Regulations which may provide some clarity with respect to the above, and other, open issues.

The takeaway

Sellers of Cyprus immovable property may wish to take into consideration the effect of the above amendments when considering the sale of property falling within their scope.

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.

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