Calls to end Golden Visa schemes

Jean Christou
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Calls to end Golden Visa schemes

THE EUROPEAN Parliament urged EU member states on Tuesday to curb money-laundering in the bloc by ending programmes by several countries, including Cyprus, to sell visa and passports, a step the multi-billion-dollar industry said would cause economic damage.

The recommendation is part of a hard-hitting report released late last month, which accused seven EU countries of acting as tax havens: Cyprus, Luxembourg, Ireland, Malta, Hungary, Belgium and the Netherlands.

The document was the result of a year’s work by the parliament’s committee on financial crime and tax evasion. The report has now been adopted by the whole assembly, boosting its political weight, though it remains non-binding.

Lawmakers said EU states should “phase out” as soon as possible all existing schemes to market citizenship and residency permits to wealthy foreigners. Currently 20 of the 28 EU states run these programmes.

The economic advantages of these schemes “do not offset the serious security, money laundering and tax evasion risks they present”, the resolution said, echoing a report from the European Commission in January.

The industry’s trade association, the Investment Migration Council, said that ending the programmes would threaten vital investments in “peripheral economies”.

Lawmakers upheld the Commission’s warnings on risks posed mostly by programmes run by Malta and Cyprus.

“A good first step to combat intra-EU money laundering would be to get rid of the so-called ‘golden visa’ which are a gateway for money laundering and organised crime,” said Markus Ferber, head of the conservative group in the parliament’s economic committee.

In the report, lawmakers also urged the creation of an EU-wide financial police to counter the laundering of proceeds from criminal activities, which they estimated amount to €110 billion annually in the EU.

They called for stricter rules and supervision to counter money laundering in the face of the series of scandals which hit several banks, noting that the latest overhauls maintained several loopholes in the EU legal framework.

The report further urged the EU Commission to assess money-laundering risks posed by legal arrangements such as special purpose vehicles and non-charitable purpose trusts, especially in Britain and its crown dependencies and overseas territories.

More broadly, deputies called for tougher EU rules against tax evasion and tax avoidance, saying the bloc should counter these practices in foreign tax havens and also in the seven EU states that “facilitate aggressive tax planning”.

The report by a special European Parliament committee on financial crime and taxation that was made public at the end of last month named Cyprus and the six other member states as displaying traits of tax havens.

Its report was adopted in February by the overwhelming majority of MEPs, including the European People’s Party (EPP) – the biggest group in the European Parliament whose membership includes ruling Disy.

Included among the committee’s findings and recommendations were that the seven EU countries facilitate aggressive tax planning; that the golden visas and passports were problematic and should be phased out; that there was great concern about member states’ general lack of political will in Council to tackle tax evasion/avoidance and financial crime; that the cum-ex fraud scheme clearly showed that the complexity of tax systems results in legal loopholes and that multilateral, and not bilateral, tax treaties were the way forward.

The recommendations ranged from overhauling the system for dealing with financial crimes, tax evasion and tax avoidance by thoroughly improving cooperation in all areas between the multitude of authorities involved, to setting up new bodies at the EU and global level.

Cyprus has been censured a number of times by the EU over the lack of transparency of its citizenship-by-investment programme and inadequate checks regarding the origins of wealth of individuals.

In the initial report, Polish MEP and committee coordinator Dariusz Rosati pointed out Russia’s role in several scandals was investigated by the special committee. “Money laundering cases, including ING Bank, ABLV Bank, Danske Bank as well as Deutsche Bank were linked to Russian capital or citizens,” said Rosati, the EPP group’s spokesman in the special committee.

“In addition, the infamous golden visa programmes very often benefit Russian oligarchs. Our work in the committee has proven that Russians and Russia play a disreputable role in tax avoidance, tax evasion and money laundering within the EU.”

The EPP group also censured the inability of EU member states to agree on fundamental measures to tackle the problem of legal tax avoidance.

“Through inaction and lack of cooperation, member states are enabling the problem. The single market needs, among others, a Common Consolidated Corporate Tax Base. We call on the Council to stop quarrelling. European citizens do not want their leaders to be the weakest link in this battle,” Rosati said.

Government not accountable for Pissouri landslide

Stelios Marathovouniotis
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Government not accountable for Pissouri landslide

AUDITOR General Odysseas Michaelides has argued that the government cannot be held accountable for the land slippage in Pissouri and that the Interior Ministry should first consult the Attorney General before compensating affected homeowners.

In a letter to Interior Minister Constantinos Petrides, dated March 22, the Auditor General said that his office considers it “unacceptable” to “transfer the burden of a non-existent responsibility to the government.”

Michaelides argued that the responsibility for evaluating the structural calculations before building the houses, should have normally been in the hands of a engineer appointed by the land development company that sold the properties.

He added that the fact that authorities check the structural calculations does not exempt the engineers of their responsibility as it is they who sign them.

Michaelides described a possible decision to compensate affected homeowners as a “gift to land developers who sold the properties to unsuspecting buyers”.

He also claimed that a whole residential complex in Pissouri which is now suffering from serious damages was sold by “a single, well-known land development company which will now be relieved of its responsibilities”.

Moreover, the Auditor General argued that providing compensation to homeowners will create a precedent as the Republic will essentially accept the responsibility for issuing a construction permit based on inadequate structural calculations.

“According to the Road and Building Law 9A(5), land developers should conduct their own structural calculations with their own civil engineers,” Michaelides added.

“Will we now consider that civil engineers working in District Offices have the responsibility for the hundreds of structural calculations that pass through their hands each year?”, the Auditor General wrote, concluding his letter.

On February 25, an Interior Ministry representative told Parliament that the government will compensate Pissouri homeowners whose houses have been affected by land slippage.

A proposal for a lump sum payment to families whose homes have suffered irreparable damage will be submitted to the cabinet, he said.

A slow-moving landslide which has caused damage to the soil and houses is affecting the area “Limnes” in Pissouri, as the village is located in a geologically problematic zone.

Pissouri residents have been raising the problem since 2012, when the land slippage first appeared in the village.

Since then, many houses have sustained enormous damage.

Video by the group Fight for Pissouri:

[youtube=https://www.youtube.com/watch?v=AbUqSfMlsdY&w=470&rel=0]

© 2019 In-Cyprus.com

Comment by Georgia-Elina Zoi, lawyer for the Pissouri Housing Initiative Group

It is easy to “intervene” and to say whatever you want when you are safe in your home, you get your salary, you are safe because of your position whatever happens, and no one controls you.

Hell NO!! It is not a gift to any developer who did not make proper structural studies to compensate the victims of the landslide in Pissouri. Auditor General (AG), rather than pretending to be tough against eight-year-olds, should check on those who gave him the false information to issue his announcement.

Those who are responsible for the project on Anexartisias Street in Pissouri, who cut off the flow of water coming from the village square and re-diverted it in the area of the ancient landslide?? and re-activated it the next year from the construction of the project.

Those who for years have refused to develop water management infrastructure in the area (perhaps because they knew that the largest amount was not from rainwater or sewers but from the work they built).

Those who tried from the first day to deceive everybody in order to avoid any control of the real cause of the flood in the area of the ancient landslide. And they misleadingly used and continue using the word “Limnes” which means lakes in Greek, a locality that was actually used only for a field with mulberry trees.

Those who, even when they realized that there was an active landslide, continued to talk about “local settlements”, continuing to mislead.

Those who have spent €700,000 in the last three and a half years filling fissures on empty fields and roads, repairing over and over and over again the same roads, the same sidewalks, not to admit they were wrong.

Those who delay, lie, mislead the House of Representatives of the Cypriot People and the Media (although the latter should know better and do research before publishing the allegations of government officials).

Those who were utterly cruel and inhumane when in the Parliament a month ago gave hope to people who have been literally tortured for seven years, only to have now the Auditor General to advise against offering them any help.

SHAME!!! I cannot describe how angry I am.

 

Five more Armou landslide victims

Nigel Howarth
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Five more Armou landslide victims

A CREEPING landslide is slowly destroying a further five homes located on a slope just below the church in the picturesque Paphos village of Armou and there are ominous signs that their homes will be declared uninhabitable.

In November 2012, a development of six houses built lower down the slope by JNM developers in 2004 were declared unfit for habitation, a banning order was issued, the electricity supply was disconnected, and the six families were forced to leave.

Permits to build the six houses in a residential zone (H4) were granted, which can be seen in the Banning Order issued by the Paphos District Administration Officer in November 2012.

In addition to the six houses, a further five homes in the residential zone, all of which have been issued with Title Deeds, are suffering damage caused by the same landslide. Their owners are constantly patching up damage to their walls, patios, drives and utility supplies – and they’ve filled in their swimming pools.

One of the owners, whose home is in a very poor condition, has moved into a single room annex building.

One of the access roads to houses has been closed and others have cracked and are frequently patched to keep them in a usable condition.

Although the five houses remain habitable, damage has accelerated this year which their owners believe has been caused by heavy winter rains.

One of the homeowners I met, David Coppin, knows he will be forced to leave when his home becomes uninhabitable and move into rented accommodation. He is selling much of his furniture and putting the money aside to help pay the rent when the inevitable happens. Although his home may have some value, no-one will be willing to buy and Mr Coppin and others affected have written to the government seeking their help.

In 2013 Mr Coppin commissioned Geoinvest Ltd. to undertake an independent investigation of his land. The company’s comprehensive report noted that “The whole area is occupied by the bentonitic clays, which belong to the ‘Kannaviou Formation’ of Upper Campanian – Lower Maastrichtian (Upper Cretaceous) age”.

Bentonite was clearly visible as I walked around the area.

Armou bentonite
Exposed bentonite deposit close to the damaged houses at Armou

When is residential land safe to build?

The area is well known by locals as being unsafe. Speaking to the Sunday Mail in 2012 the mukhtar of Armou, Panikos Hadjitheoris, said “Everyone in the village knows that below the church isn’t a safe place to build. When I was a small boy, I was told to be careful of this area and not to go there in bad weather.”

The Geological Survey Department (GSD) has produced maps identifying residential zones in Paphos they considered to be very dangerous to residents. At that time the Greek media reported that the Paphos District authorities were considering declaring the dangerous areas as ‘White Zones’ (where development is prohibited.)

These maps are kept under lock and key by the Planning Department; they are not available for public inspection!

Why do the Paphos District authorities allow land that is clearly dangerous for building to be classed as residential rather than declaring them ‘White Zones’?

Could it be the backlash they’ll receive from landowners and demands for compensation when they realise their land is virtually worthless and they’ll be unable to sell it for a decent price or use it as loan collateral?

As soon as land is reclassified as ‘Residential’ (H4) its value skyrockets:

The residential (H4) plot on which the six condemned houses in Armou are built, which is currently described as ‘Almond Trees’, has been valued by the Department of Lands & Surveys at €247/sqm. (The plot measures 5,315 sqm.)

An agricultural (?3) plot within 100 metres of the ‘Almond Trees’ has been valued at €7.50/sqm. (The plot measures 13,044 sqm.)

Planning Departments have an obligation to advise potential purchasers whether residential land is safe and prohibit building in dangerous areas such as those in Armou – and compensate those whose homes, built on land that should have never been designated ‘Residential’, collapse around them.

Renewed call to reform Title Deeds system

Cyprus News Agency
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Renewed call to reform Title Deeds system

THE ECONOMY of Cyprus will continue to grow and will return to primary surpluses, but non-performing loans (NPLs) continue to weigh on the banking system, according to a joint assessment by the European Commission and the European Stability Mechanism together with the European Central Bank, upon the completion of the 6th Post Program Monitoring (PPS) mission.

More specifically the report says that the Cypriot economy continued to grow strongly in 2018, however “external headwinds are increasing and important national vulnerabilities remain.”

It is added that despite the global economic slowdown, remarkably strong growth continued for the third year in a row, reaching 3.9% in 2018. Growth was driven by domestic demand and exports of services, particularly tourism, while inflation remained subdued, the report says.

Moreover, it is noted that domestic demand is expected to continue to perform strongly in 2019, on the back of rapidly declining unemployment and moderately rising wages. “Nevertheless, the growth momentum is forecast to ease further, mostly reflecting the less favourable external environment” it says.

The report notes that “these challenges are further compounded by key vulnerabilities of the Cypriot economy, notably the still very high levels of non-performing loans (NPLs), private, public and external debt in a context of low productivity growth and high dependency on foreign capital flows.”

The underlying fiscal performance continued to be very strong in 2018 on account of buoyant revenues, it goes on, even though the general government surplus turned into a deficit due to the one-off banking support measures related to the sale of the Cyprus Cooperative Bank (CCB).

Furthermore, it is noted that for 2019 and 2020, the budget balance is expected to resume posting sizeable surpluses. “Risks mainly relate to the fiscal impact of the healthcare reform and the outcome of court rulings on past measures to reign in the public sector wage bill. Moreover, a sharper-than-currently-expected slowdown may adversely affect fiscal revenues” it is added.

On public debt, the report notes that increased significantly in 2018 due to the bank support measures related to the CCB sale, but is expected to steadily decline thereafter. “The high public debt underlines the importance of a continued prudent expenditure management to firmly anchor the downward path of public debt in line with the requirements of the Stability and Growth Pact” it is added.

Moreover, the Post Program Assessment says that last year Cyprus made significant progress in consolidating its banking sector and reducing non-performing loans (NPLs) held by banks, “but important challenges remain.” “In 2018 NPLs declined markedly mainly on account of two one-off transactions, i.e. the transfer of the non-performing CCB assets to the state-owned asset management company KEDIPES and the sale of a large NPL portfolio by Bank of Cyprus. This strengthened the balance sheets of the two largest banks. Notwithstanding this important progress, NPL resolution remains a top priority as the NPL ratio in the Cypriot banking sector continues to be the second-highest in the euro area” it says.

Moreover, it is noted that the NPLs transferred to KEDIPES and other credit-acquiring companies continue to weigh on the economy. “To continue with NPL resolution, it is now essential to enhance payment discipline and resolve unviable debt by fully using the amended insolvency and foreclosure frameworks. Rigorously assessing the compliance with the eligibility criteria and swiftly triggering foreclosure procedures in the case of re-defaults will be critical for the performance of the forthcoming ESTIA scheme for NPLs collateralised with primary residences.”

Another key priority is, according to the report, the establishment of KEDIPES as a successful asset management company in line with the corresponding State aid decision. “This includes setting up an effective governance framework, ensuring operational independence from the State, and having an adequate supervisory framework” it is added.

Institutions believe, moreover that the still favourable economic conditions provide a window of opportunity to step up the pace of structural reforms to boost potential growth. “A key priority is the judicial reform, which is essential for the functioning of the economy. This involves increasing the specialisation of courts, clearing the high accumulation of cases and revising the outdated civil procedure rules. This would also have a beneficial impact on repayment discipline” they say.

Moreover, it is noted that “it is important to swiftly address the long-overdue reform of the title deeds issuance and transfer system” and improve the efficiency in the public sector, in particular the functioning of the public administration and of local governments. “Furthermore, the business environment needs to be improved, including through the simplification of the procedures to obtain permits to invest in Cyprus, the opening up of the electricity market, and the completion of privatisation projects” it is added.

These reforms would, according to the assessment, help diversify investment to sectors other than construction and tourism, currently the key drivers of growth. It is also noted that the implementation of the national healthcare system is expected to improve access to affordable health care services by reducing high out-of-pocket expenditure and at the same time, it will be important to contain related fiscal risks.

European Commission staff, in liaison with staff from the European Central Bank, visited Cyprus from 18 to 22 March to conduct the sixth post-programme surveillance (PPS) mission. The mission was coordinated with an International Monetary Fund (IMF) “Post Program Monitoring” mission. Staff from the European Stability Mechanism (ESM) also participated in the mission on aspects related to the ESM’s Early Warning System. The next PPS mission will take place in the autumn of 2019.

Further reading

Staff statement following the sixth post-programme surveillance (PPS) mission to Cyprus.

Energy saving measures grant scheme

Xenios Chr. Sofianos
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Energy saving measures grant scheme

ON MARCH 8TH 2019 the Ministry of Energy announced a new grant scheme for households which aims to reduce the cost of energy for consumers, as well as to support the country’s efforts in meeting the required energy saving goals for the period that ends in 2020.

The scheme which opened on March 12th 2019 and it is titled “the grant scheme for the encouragement of the use of renewable energy sources and the energy saving in households” has a total budget of €24.5M it will remain open until 02/09/2019 or until the budget runs out, and it is co-funded by the Renewable Energy and the Energy-Saving Funds.

The scheme covers the three following categories:

1. Revision of the existing scheme which has been in effect since October 2018 for the insulation of roofs on existing houses. This category which offers a 30% grant on the eligible expenditures and up to an amount of €1500 is retroactive for any insulation works that took place after 08/10/2018.

2. Roof insulation and installation of a photovoltaic system with the net metering method. This category offers a grant of 35% on the eligible expenditures for roof insulation and up to an amount of €1800 and €300 per installed kW of a photovoltaic system with a maximum amount of €1200. This category is retroactive also for roof insulation works that were carried out after 08/10/2018 and for net metering systems which were installed after 01/11/2018.

3. Installation of a photovoltaic system with the net metering method. This category offers a grant of €250 per installed kW of a photovoltaic system with a maximum amount of €1000 and again the grant works retroactively for systems installed after 01/11/2018. For this category there is also a sub-category only for vulnerable groups and the grant can reach the amount of €3600.

For categories B & C the grant also applies in the case of an increase in the capacity of existing photovoltaic systems. Additionally to the new grant scheme, under certain conditions set out by an older regulatory administrative act and an explanatory circular that followed, consumers in the first and second category could qualify for a reduced (5%) VAT.

Further to the above categories, publically available information speaks of another category which is expected to be announced soon and which will be offering a grant for the purchase of a photovoltaic system, under the net metering method, for the charging of an electric/hybrid car.

These days investing in renewable energy and high energy performance has become a necessity. In January of 2017 the maximum allowed energy losses for building components, on new and existing under renovation/alterations buildings, were further revised, bringing values in some cases down to less than half of what they used to be when the Law for the energy performance of buildings was firstly introduced. Any renovation/alteration works on any existing building, regardless the scale of the works, should not exceed these values something which will have to be appropriately certified by an expert. After 2020 all new buildings in Cyprus will have to meet the high standards of energy performance and environmental friendliness that describe a zero net energy building.

For Cyprus the use of renewable energy and the improvement of the energy performance of buildings is the way forward. The availability to all of appropriate grant schemes will upgrade living standards for everyone and elevate the country to a new level of efficiency and environmental sensitivity.

About the author

Xenios Chr. Sofianos
CONSULTANT ENGINEER

Accredited Expert of the Energy Service of Cyprus (ABXX100014) (For both residential and commercial properties.)

Member of the Cyprus Scientific and Technical Chamber (E.T.E.K.)
Member of the Cyprus Association of Civil Engineers.

www.skyyconsultingservices.com
www.cyprusepc.com

Supreme court upholds Aristo acquittal

Evie Andreou
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Supreme court upholds Aristo acquittal

Theodoros Aristodimou of Aristo DevelopersTHE SUPREME court on Monday rejected a state appeal against the acquittal by the Paphos criminal court of developer Theodoros Aristodemou, his wife, and two others, in connection with a land development project in Skali, Paphos.

The four had been acquitted of charges in July 2015 but the attorney-general had filed an appeal.

Aristodemou, his wife Roulla, company draftsman Christos Solomonides, and former Paphos municipal engineer Savvas Savva had been charged in relation with the demarcation of land in Skali.

The court had heard that the company had been granted a permit for 177 plots but this was allegedly falsified later by replacing the approved architectural plans with amended ones, which ceded the company an additional area of 2,730 square metres for development at the expense of the legally mandated green space and road network.

Aristo Developers said in an announcement on Monday that the hardship both of the company and the Aristodemou couple that started some six years when their family was targeted, ended with the latest court decision.

“The scars however will never fully heal,” it said.

Savva’s lawyer, Elias Stefanou, said that the court agreed with the criminal court’s decision that his client’s actions had been made in good faith and without intent to deceive. Savva was facing charges of corruption.

The state had appealed the court decision to acquit the four who had been accused of forgery, circulation of a forged document, conspiracy, abuse of authority, bribery, and obtaining property under false pretences.

The criminal court had ruled at the time that the state prosecutors had failed to prove intent to defraud the public beyond a reasonable doubt.

Despite “certain irregularities” in the paperwork and the manner it was compiled, there was no deliberate intent on the part of the accused to secure a town planning permit under false pretences or to conceal the true dimensions of the green area within the land in question, the court had said.

On the alleged bribery of Savva by Aristodemou, the court likewise said this was not proven.

According to police findings, Aristodemou cashed a cheque for €20,000 in €500 notes in August 2010. Two days later, Savva was found to have deposited the same amount, in notes of identical denomination, to his own bank account.

The court said that although the proximity of the two dates “may create suspicion, it is not sufficient, based on the defendants’ testimony, to lead to a certainty of guilty.”

Savva had said that the money had come from his aunt and uncle.

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