Filenews 18 May 2023 - by Eleftheria Paizanou
While discussions are ongoing between the Ministry of Finance and the Equal Burden Sharing Body on how to allocate the revenues collected by the state from the imposition of 0.4% on real estate sales, the Tax Department issued a circular clarifying the payment of this fee and the additional charges when there is a delay in its payment.
The Commissioner of Taxation Sotiris Markides notes in the circular that the fee is paid upon the transfer of immovable property or shares. At the same time, it points out that in case the fee is not paid during the transfer, interest is charged on the amount due, according to the state interest rate, from the date of transfer of the immovable property or shares, as well as a monetary charge of 5% on the fee due.
In addition, if two months have elapsed since the date of transfer or the date specified in a relevant notice to the Registrar and the fee has not been paid, an additional charge of 5% will be imposed on the fee due. It is also clarified that the refund of the fee that has been paid is offset against any other debts of the beneficiary on the date of the refund.
Background
On February 22, 2021, the law was published in the Official Gazette of the Republic, which will impose the 0.4% fee on real estate sales, which will be available for financing projects of the Agency, while on November 18, 2022, a bill was approved designating the Commissioner of Taxation as the competent authority for collecting the fee. The fee is levied retroactively, i.e. it also covers sales made after February 22, 2021. 0.4% will not be imposed when a transfer of immovable property or a transfer of shares of a company, which directly or indirectly owns immovable property, is required in the context of the review of loans to reduce or repay non-performing loans, as well as in cases of company reorganisation.
The exceptions
According to the circular, the 0.4% fee is not imposed on sales of immovable property for which a purchase document has been submitted to the Land Registry and information has been submitted to the Tax Department before February 22, 2021. It is also not imposed on sales of shares listed on the CSE or any other recognized stock exchange, in immovable property or shares due to company reorganization, in forced expropriations, etc. It is not imposed in cases of registration for the first time of a lease in the Land Registry.
Imposition of a levy on foreclosures
The fee will also apply to transfers relating to mortgage sales by a mortgagee, including sales at auction and property recoveries following a failed auction. In addition, it concerns property sales through auctions, due to the owner's debt and the application date is on or after February 22nd. In addition, it is imposed on sales of immovable property transferred following a court decision, sales of immovable property for consideration, sales of leases including marinas, etc.
Effective November 18
From 18 November 2022 onwards, sales of immovable property and shares not listed on a stock exchange, sales of real estate and shares in the context of restructuring loans not used to reduce or repay non-performing loans, as well as assignments of sales of rights and obligations on existing contracts for the sale or exchange of immovable property, will be charged 0.4%.
