Cyprus: Disposals of Land. Applicability of VAT to Land Disposal Transactions

 

Cyprus. Disposals of Land. Applicability of VAT to Land Disposal Transactions

 

The bill, which came into force on 2nd January 2018, has amended the Value Added Tax Law (95(I)/2000) (the “VAT Law”), so that a VAT rate will be levied on transactions of undeveloped building land which are carried out after the 2nd of January 2018 for business purposes.

 

The amendment introduced VAT at the standard rate of 19% for the supply of undeveloped building land. The VAT is imposed in cases where the supply is intended for the erection of one or more constructions and the supply falls within the course of a person’s economic or business activities.

 

It is noted that the supply of land is not subject to VAT in cases where the supply is an occasional transaction. On the other hand, VAT could be levied even if the supplier is not in the business of selling land.

 

The amendment provides that VAT is imposed on the supply of undeveloped and buildable land including plots of land under creation or under construction, completed plots or plots with a certificate of final approval or title deed. A piece of land can be subject to VAT even if it is registered with the Lands and Surveys Department with other names such as building, residence, courtyard. Pieces of land located outside the development area for which a planning permit or/and a building permit has been obtained for a large or other type of development can be subject to VAT.

 

The following examples of supply are excluded from VAT: (i) the supply of land which is located in livestock zone or (ii) in areas which are not intended for development e.g. archeological or agricultural areas or zones of environmental protection.

 

Besides the type of the land, the nature of the supply as well as the number and frequency of the transactions are crucial factors to be taken into consideration to determine if the transaction will be regarded as a business activity. Nonetheless, each case is examined by the Tax Department on its own conditions. The Tax Department will examine, amongst the others:

 

(i) if an economic activity is carried out systematically or as part of a profession;

 

(ii) if it is based on recognized business practice or targets consumers for a consideration.

 

As per the provisions of the s. 3 of the VAT Law, the business activity is exercised independently, and in any place, irrespective of the intended purpose or result of the activity. Economic activities within the meaning of this Section are all the activities of a producer, merchant or service provider including extraction, farming or freelancing activities, as well as the exploitation of tangible or intangible assets for the purpose of generating lasting income.

 

If the plot of land belongs to a company, the land’s disposal will be subject to VAT, irrespective of the type of the economic activity that the company carries out.

 

The amendment provides that if the transfer of the land was concluded before the 2nd of January 2018 or if the Sales Agreement was lodged with the Land Registry or with the Tax Commissioner before the 2nd of January 2018, the transaction will not be subject to VAT.

 

 

 

 

For further information on this topic please contact

Mrs. Liza Bokova ( lbokova@pittaslegal.com) at SOTERIS PITTAS & CO LLC,

by telephone (+357 25 028460) or by fax (+357 25 028461)

 

 

The content of this article is intended to provide a general guide to the subject matter. Specialist advise should be sought about your specific circumstances.

PUBLICATIONS 2019

Thursday, 19 December 2019 11:55

  CYPRUS: NO PHARMACAL ORDERS WHEN THERE IS AN INFRINGEMENT OF THE “MERE WITNESS” RULE.   In the English case AXA EQUITY & LAW LIFE –V- NATIONAL WESTMINISTER BANK (1998) CHC 117 (which has...

Tuesday, 17 December 2019 09:03

  Cyprus: Deadlock at the Level of Board of Directors and the Power of the General Meeting to Act Despite Provisions in the Articles of Association Reserving the Matter for the Board   According...

Friday, 06 December 2019 12:03

  CYPRUS: JURISDICTION OF THE CYPRUS COURTS TO GRANT INTERIM RELIEF IN AID AND/OR IN SUPPORT OF PROCEEDINGS PENDING BEFORE THE COURTS OF MEMBER STATES, OR IN AID AND/OR IN SUPPORT OF FOREIGN...

Tuesday, 19 November 2019 09:09

  Cyprus: New Double Tax Treaty between Cyprus and Egypt   On the 8th of October 2019, Cyprus and the Arab Republic of Egypt have signed a new Double Tax Treaty between them, which will update...

Friday, 15 November 2019 10:20

  Cyprus: Duties and Liabilities of ‘’Nominee Directors’’   The Law Commission in its Consultation Paper on Directors’ Duties 1998 (CP 153), explained the term ‘’nominee director’’ as referring...

Friday, 08 November 2019 08:46

  CYPRUS: AN ANTISUIT INJUNCTION ISSUED BY AN ARBITRAL TRIBUNAL DOES NOT VIOLATE THE EU REGULATION 44/2001 (which has been replaced by EU Reg. 1215/12).   In its judgment in Gazprom case, the...

Tuesday, 05 November 2019 12:22

  GCEU ruling for arbitral award considered as illegal state aid: Micula brothers v. Government of Romania   On 18th of June 2019, the GCEU issued a judgement in the Micula Case, between European...

Wednesday, 30 October 2019 10:21

  AN INTERNATIONAL ARBITRAL AWARD MAY BE RECOGNIZED AND ENFORCED, EITHER BY THE SUMMARY PROCESS STATED IN THE NEW YORK CONVENTION, OR AT COMMON LAW, BY FILING OF A CIVIL ACTION BASED ON THE...

Friday, 25 October 2019 11:46

  CYPRUS: THE EFFECT OF A JUDGMENT BY A COURT OF SUPERVISORY JURISDICTION AT THE SEAT OF ARBITRATION, ON THE VALIDITY, LEGALITY AND ENFORCEABILITY OF ARBITRAL AWARDS IN THE ENFORCING COUNTRIES  ...

Tuesday, 22 October 2019 12:22

  CYPRUS: Common Law Tort of Conspiracy   Conspiracy is recognized in Cyprus as a common law tort.   The Supreme Court of Cyprus in CHRISTOFOROU & OTHERS -V- BARCLAYS BANK PLC (2009), held...

Monday, 14 October 2019 12:58

  Cyprus: Achieving Re-domiciliation of Companies in Jurisdictions that do not provide ‘’Pure Re-domiciliation’’ Procedures   Jurisdictions such as Cyprus, BVI, Delaware, Luxembourg and...

Wednesday, 09 October 2019 08:57

  CYPRUS: Breach of an injunction constitutes unlawful means Conspiracy   In the recent English case JSC BTA BANK -V- KHRAPUNOV (2018), the Supreme Court, held inter alia, that third parties may...

Tuesday, 08 October 2019 14:44

  The 5th EU Anti-Money laundering Directive   Money laundering, terrorism financing and organized crime consist significant problems, addressed at Union Level, as money launderers usually take...

Wednesday, 25 September 2019 09:05

  CYPRUS: The Chabra jurisdiction of Cypriot Courts   In the case GDL TRADING LTD -V- AGROMARKETS LTD & OTHERS, the District Court of Nicosia inter alia held – (adopting English case law) -...

Monday, 23 September 2019 10:39

  Time limitation in Enforcing an Arbitral Award   Arbitral awards are enforceable in Cyprus under the provisions of the Cypriot Law on International Arbitration in Commercial Matters Law No....

Monday, 09 September 2019 12:39

  CYPRUS: Useful guidance for Cypriot courts as to their jurisdiction to control the manner in which a Party obtains evidence to support its case   In the English case SOUTH CAROLINA INSURANCE CO...

Thursday, 29 August 2019 11:09

  Draft Bill for Memo on property for social insurance debts   A draft bill that has been put forward before the House of Representatives relating to the seizure and foreclosure of movable...

Thursday, 25 July 2019 14:46

  CYPRUS: Methods of Enforcement of an Arbitral Award in the Republic of Cyprus   A successful party in an arbitration may find the losing party unwilling to honor the arbitral award.   The...

Thursday, 18 July 2019 16:39

  CYPRUS: INHERENT JURISDICTION OF CYPRIOT COURT TO STAY ENFORCEMENT PROCEEDINGS OF AN ARBITRAL AWARD   In the leading Appellate case, Attorney General of The Republic of Kenya -v- Bank Fur...

Wednesday, 17 July 2019 11:22

  New Hague Convention for the enforcement of foreign judgments   On the 2nd July 2019, the Hague Conference on Private International Law finalized a new treaty on enforcement of judgments (“the...

Thursday, 11 July 2019 14:38

  Supreme Court examines Article IV of New York Convention overturning First Instance Judgment   In a recent Supreme Court case, the court examined whether the first instance judge as was the...

Tuesday, 25 June 2019 12:31

  CYPRUS: LOCUS STANDING OF A FOREIGN LIQUIDATOR OR FOREIGN COURT APPOINTED INTERIM RECEIVER TO FILE COURTS PROCEEDINGS BEFORE CYPRUS COURT   The Supreme Court of Cyprus in the leading case...

Thursday, 20 June 2019 09:56

  CYPRUS: NEW LAW FOR CERTIFIED TRANSLATORS   Up until now, official translations in Cyprus were solely carried out by the Press and Information Office via its translators’ associates, but...

Thursday, 30 May 2019 09:47

  CYPRUS: Cypriot Courts do not have jurisdiction to grant anti-suit injunctions in aid of arbitral proceedings pursuant to Section 9 of Law 101/87 (UNCITRAL MODEL LAW).   The Supreme Court of...

Wednesday, 22 May 2019 10:30

  Cyprus: The amendments to CAP 113. Update. PART 2. Strike-Off   Effective as of 18 December 2018:   Strike - Off S. 327(5).   Amendments relating to the strike-off of a company Members...

Monday, 13 May 2019 12:51

  Cyprus: The amendments to CAP 113. Update. PART 1   Effective as of 18 December 2018:   (1) The abolition of Capital Duty The Council of Ministers abolished the obligation to pay capital...

Friday, 19 April 2019 09:59

  Cyprus. Disposals of Land. Applicability of VAT to Land Disposal Transactions   The bill, which came into force on 2nd January 2018, has amended the Value Added Tax Law (95(I)/2000) (the “VAT...

Tuesday, 16 April 2019 14:42

  Cyprus: Company Law – Power of court to rectify the Register of Members of a Cyprus company   It has been held by Cypriot courts (adopting English case law) that the power of court to order the...

Tuesday, 09 April 2019 10:12

  Cyprus: Requirements for obtaining a Chabra injunction   In the case of Re Nicolaou Bros Tourist Enterprises Ltd (1999) 1 AAD 201, the Supreme Court of Cyprus, by adopting English legal...

Friday, 29 March 2019 10:19

  Cyprus Tax Authorities introduce guidance for taxation of Intra-Group Financing Transactions.   In Cyprus Transfer Pricing rules are regulated by the circular issued on 30 June 2017 by the...

Friday, 15 March 2019 09:21

  Cyprus: Directors Duties in Insolvency and its Vicinity- An Alternative Approach for Creditors to Recover   When a company enters insolvency or its ‘’vicinity’’[1], the fiduciary duties of...

Wednesday, 13 March 2019 16:19

  Amendments to the Cyprus Investment Scheme   Certain significant amendments have been made to the Cyprus Investment Scheme whereby the Government has taken a step to limit the program, even...

Friday, 01 March 2019 09:05

  Cyprus: Enforcing Specific Performance Orders made by Arbitral Tribunals   Generally, in international commercial arbitrations the remedy which is most commonly sought and which is usually...

Wednesday, 13 February 2019 16:18

  Cyprus – UK/Cyprus Double Taxation Convention   On 19 December 2018, the Cyprus Minister of Finance, Harris Georgiades and the British High Commissioner to Cyprus, Stephen Lillie, signed a...

Tuesday, 05 February 2019 11:49

  Cyprus: Intellectual Property - Efficient IP Regime   Soteris Pittas & Co LLC has observed an increase in the amounts of the IP asset registrations that are taking place. One may wonder...

Thursday, 24 January 2019 15:55

  CYPRUS: STAY OF WINDING UP PROCEEDINGS AGAINST A CYPRIOT COMPANY DUE TO ARBITRATION AGREEMENT   In a recent decision, in the case ERIN -V- RAYHILL, the District Court of Limassol decided to...

Thursday, 10 January 2019 11:35

  CYPRUS: The Arbitral Claim in whose support interim relief has been granted as per Section 9 of Law 101/87 by Cypriot Courts, shall be filed within reasonable time   In the case CFG CAPITAL...

Subscribe to our Publications

Image
We are dedicated to providing our clients with outstanding, highly personalized, legal representation.
Chrysanthou Mylona 10 
3030 - Limassol, Cyprus
© Soteris Pittas & Co LLC. All Rights Reserved.
Image