The legislation specifies that all persons (physical or legal persons) owning immovable property in the Republic of Cyprus are subject to Immovable Property Tax. The minimum tax payable which was set at €75 per property owner is not applicable anymore, as the parliament revised the law on 26th of September 2013 exempting owners whose total property value is lower than €12,500 as at 01.01.1980.

The tax is calculated on the total value of properties owned by a person at the beginning of each year and it is due on the 30th of September each year. Usually a discount of 10% is given for early payments.

In cases where a property has more than one owner, the tax is calculated in accordance with the % that each person holds.

The value of each property is defined as its estimated market value as at 1 January 1980, irrespective if the property existed at that date or not. This value is given by the Land Registry Department and it is presented on the title deed of each property.

From 1980 onwards every person that buys or sells immovable property during a year, is obliged to inform the Inland Revenue Department about this change by submitting the relevant form IR.303 the latest by the 30th of September of the following year.

Until the year 2011 there was no penalty for not submitting this form, but from the year 2012 onwards there is a penalty of €100 for late submission.

In addition, if for any reason a person will pay less than 75% of the amount he is supposed to pay an additional charge of 10% will be imposed. However, some title deeds do not include the building value because the final approval has not been obtained yet by the Land Registry and as a result the value on the title deed is much less than the actual value as at 01.01.1980. In such cases the taxpayers should revise their own tax liability by including their estimated building value as at 01.01.1980 in IR.303 form.

In cases where the tax payer has not received any tax assessments, he is still obliged to pay the tax by using the IR.303 form.

REGISTERED OWNER VS. ACTUAL OWNER

The tax plus any penalties are imposed on the registered owner of the property and not the real owner. This creates problems in cases where the real owners are expecting their title deeds from their developers, because the developers usually include a clause in their contracts of sale that make the buyers liable for the tax when they take delivery of the property. In such cases not only the real owner is liable to pay the tax, but he will also be charged at a higher tax rate because he has to reimburse his developer who is subject to high tax bands.

Although this is unfair on behalf of the buyer, the legislation gives the right to the buyers to reclaim any overpayment of tax by submitting the form IR.314.

In an effort to eliminate the above issue on 10 July 2014 an amendment to the legislation was voted that removed the tax obligation on sold properties from developers and placing it on buyers, with the deed of sale serving as sufficient proof of ownership transfer in the absence of title deeds. According to the law, the only evidence a developer needs is a list of properties sold as at the start of each year to the IRD, along with a deed of sale for each, otherwise the developer remains liable for any tax payable.

To make things even more complicated, a sub clause in the legislation stipulated that the above rulings do not apply if the developer is deemed responsible for not issuing the title deeds. (eg. properties sold while encumbered with a mortgage already taken out of it)

If you are not the registered owner of your property and your developer will request from you a payment regarding the payment of the Immovable Property Tax, ensure that he will provide you with records of the amount paid as Immovable Property Tax relating to your property and a certificate showing the applicable tax rate.

OBJECTIONS AND TAX REFUNDS

Due to the fact that the information held by Inland Revenue Department might not be accurate, various errors may occur, for example; a tax assessment may be issued to the wrong person and for the incorrect amount. In such cases taxpayers have the right to make an objection by submitting the form IR.15 to Inland Revenue Department for examination. The department will accept to examine the objection only if the taxpayer has paid the tax based on his own estimations and he filed his objection accompanied by the tax receipt.

As already mentioned above, in accordance with the article 7 of Immovable Tax Law 24/1980 if a person has overpaid his immovable tax for any reason, he has the right to request a refund from Inland Revenue Department by submitting the form IR.314.

TAX RATES

BandsTax RateTaxAccumulated Tax
€1 - €12,500 (exempt only)0‰€0€0
€1 - €40,0006‰€240€240
€40,001 - €120,0008‰€640€880
€120,001 - €170,0009‰€450€1,330
€170,001 - €300,00011‰€1,430€2,760
€300,001 - €500,00013‰€2,600€5,360
€500,001 - €800,00015‰€4,500€9,860
€800,001 - €3,000,00017‰€37,400€47,260
Above €3,000,00119‰to be calculated

to be calculated