Filenews 6 January 2023 - by Eleftheria Paizanos
40% of the taxpayers who benefited from the 5% VAT when buying or building a main residence and voluntarily presented themselves to the Tax Department and stated that they abused the legislation, concern property owners in Limassol.
These are buyers who initially paid reduced tax (5% instead of 19%), as the property would be used as their main residence and then rented it, reaping financial benefit. These taxpayers will have to pay an additional amount of €2.8 million, which is the difference with 19% VAT, i.e. they will pay an additional 14% tax.
According to data from the Tax Department, out of a total of €2.8 million, an amount of €1.2 million concerns additional taxation on real estate in Limassol. This refers to the conclusion that these properties concern villas of millions and were "christened" by foreign investors as main residences in order to receive Cypriot citizenship under the Cyprus Investment Program.
Something similar, but with different protagonists, seems to have been applied in the Free Area of Famagusta, where the owners, mainly Cypriots, initially declared the houses as the main residence, paying 5%, but in the process used them as holiday homes or rented them.
These taxpayers, who voluntarily declared a change of use of residence, will have to pay an additional VAT of €653.921. Also, for properties in Paphos, their owners will have to pay an additional €571,000 tax and in Larnaca €201,000. In Nicosia, for the properties that have changed their use, an additional VAT of €159,000 will have to be paid.
The Superintendent sends teams out
The Superintendent of Taxation Sotiris Markides, speaking to "F", stated that in less than 2 months, with 30 teams of the two officers of the Tax Department, 2,171 on-the-spot checks have been carried out nationwide, during which of the 1,039 persons identified in the residences, 391 revealed that they were not the eligible applicants. As he said, tenants or non-eligible users were identified, indicating non-compliance with the commitment made during the examination of the application. So far, €23.5 million will have to be paid to the Tax Department.
Already, the relevant department began sending letters to citizens to demand repayment of debt. In addition, it will receive an amount of €2.8 million with the voluntary attendance of property owners, i.e. a total amount of €26.3 million.
The results of tests
In detail, in Limassol, in 281 cases, some persons were found to reside in the properties, of which 103 did not comply with the law, resulting in them having to pay an additional tax of €7.2 million.
In Famagusta area, out of the 60 cases where someone was found in the properties, 54 violated the law. They will have to pay an additional €5.3 million VAT.
In Larnaca, 141 properties were identified, of which 79 did not comply. The total amount of tax they will pay is €5.1 million.
In Paphos, out of the 80 cases where someone was found in the property, 45 violated the law, resulting in an additional VAT of €3.7 million having to be paid.
In Nicosia, of the 477 cases where someone was found on the property, 110 violated the law. The additional VAT to be paid is €2.1 million.
The campaign will be extended to others
The Tax Commissioner also told "F" that the amount of €26.3 million was not enough. as the money the state will receive was the result of the work of 60 officers of the Department, who worked in echelons of two, on the basis of overtime work during the afternoon hours, weekdays and Saturdays morning and afternoon, and who will be paid a total of about € 60,000. Checks will continue for this type of tax and will be extended to other categories of taxpayers and other types of taxes.
