Title Deeds for development projects

Nigel Howarth
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Title Deeds for development projects

THE department of Lands and Surveys is now publishing monthly statistics on the number of Title Deeds issued for development projects.

Under the terms of the Memorandum of Agreement (MoU) agreed with its international lenders, Cyprus must ensure that the Title Deed issuance backlog drops to less than 2,000 cases of immovable property units with title deed issuance pending for more than one year by Q4-2014 (backlog refers to (i) applications, (ii) units that are eligible for the “exofficio” issuance of title deeds, required certificates and permits).

At the beginning of July this year the backlog stood at more than 23,000. During July and August a further 3,334 Title Deeds were issued for development projects, reducing the number outstanding to below 20,000.

Title Deeds for development projects

But in addition to this backlog, many sale contracts have been registered for which neither an application to issue Title Deeds has been received nor units that are eligible for the “exofficio” issuance of title deeds.

Furthermore, although the Land Registries have issued 10,602 Title Deeds this year, there is no indication as to whether these properties are unencumbered and therefore available for transfer to their purchasers.

Eighty per cent IPT revenue collected

Nigel Howarth
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3
Eighty per cent IPT revenue collected

Eighty per cent IPT revenue collectedONLY 80% of the total Immovable Property Tax (IPT) was paid last year according to figures submitted to Parliament by the Finance Ministry.

Overall, the state collected €98 million out of the €135 million for which tax notices were issued and offered a 10% discount for those who paid by the due date.

Compared to previous years, the percentage of tax paid is relatively high. In a written reply to a question raised by George Perdikis MP, Finance Minister Haris Georgiades said that the compliance rates for IPT for years 2008 to 2013 were 39%, 36%, 77%, 46%, 52% and 80% respectively.

The Finance Ministry’s figures showed that until July 2014, 2,802 individuals and companies had not paid IPT for 2013 and that their unpaid tax amounted to €20.8 million.

For those who were registered with the Inland Revenue Department, IPT notices were sent to their last known residential address.

Those who had not registered with the Inland Revenue Department were registered automatically using information made available to the Department. In these cases IPT notices were sent regardless of the taxpayer’s place of residence.

Thirty companies owe €100m in VAT

Elias Hazou
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6
Thirty companies owe €100m in VAT

Thirty companies owe €100m in VATAS MANY as 30 companies in Cyprus owe the state about €100m in VAT, according to data revealed by Politis yesterday.

Of the 30 legal entities, two of them (or their directors) cannot be traced, while criminal prosecutions are pending against another seven.

The data was prepared by tax authorities and handed to parliament at the latter’s request. The list of 30 largest corporate debtors includes investment companies, contractors, developers, banks, trading companies and football clubs. The tax data of individuals are not released due to privacy protection laws.

According to Politis, the majority of these companies have challenged all or part of the calculated tax debt, and tax authorities anticipate that ultimately they will collect far less than the €100.3m owed.

The biggest debtor by far is Blue Ocean Yacht Management Limited, owing €20.6m, followed by contractors Ch. Apostolides Ltd and A. Panayides Contracting Ltd at €18.9m. The former has filed an appeal with the Supreme Court, whereas the latter has filed an objection with the tax commissioner.

Third down the list is Ocean Tankers Holdings Public Company Ltd with €7.7m; an objection before the tax commissioner is pending. Next is K&M (Famagusta) Developers and Constructions Ltd with €5.5m; the company has filed an appeal to the Supreme Court challenging the greater part of that amount.

Criminal prosecutions are pending against seven corporations in VAT arrears. These are: Oliveron Investments Ltd (€2.8m), Global Value PLC (€1.9m), W Investments Ltd (€1.7m), Michalis Avraam & Andrew Andronikou (€1.7m), Raquel Ltd (€1.47m), Couvas Carton Industries Ltd (€1.1m), and Kyriacos Papavasiliou (Trading) Ltd (€1m).

The two companies which cannot be traced are MK Digital World (Cyprus) Ltd, owing €1.7m, and Salih Konti Company Ltd which owes €1.3 but whose director is apparently currently residing in the occupied territories in the north.

Also on the list is Wadnic Trading Limited – known for its implication in an ongoing criminal trial concerning a development in Dromolaxia. The company owes €1.34m.

Now-defunct Cyprus Popular Bank Public Co Ltd owes €2.68m, and Bank of Cyprus Public Company Ltd €2.2m. Both have appeals pending before the Supreme Court.

Top division football clubs feature heavily, although these fall under a special scheme involving partial ‘bailouts’ of tax arrears via state grants (for arrears between January 1999 to May 2007) and repayment of tax debts in installments for arrears between June 2007 and December 2013.

Anorthosis football club owes the taxman €2.5m, Omonia Nicosia €1.5m, Ethnikos Achnas €1.3m, Apoel €1.2m and AEK Larnaca €1.13m.

Back in June, parliament was told the state is owed €400m in unpaid VAT. The lion’s share – €156m –was owed by just 242 entities.

According to the finance ministry, as of December 31, 2013 the VAT service is owed €421m. The total number of VAT dodgers was 23,860, of which 242 businesses/persons owe amounts over €100,000 which, added up, came to €156m.

In addition to VAT arrears, the state is owed €525m in unpaid income tax. The Inland Revenue Department merged with the VAT Service in July to form the new Tax Department.

In a bid to improve tax collection – a condition set by Cyprus’ international lenders – new legislation was enacted this year giving the taxman sweeping powers, including the right to seize debtors’ bank accounts as well as immovable assets and prevent debtors from selling or transferring real estate until they settle their dues. The action relates to tax arrears that are considered both final and recoverable.

Politis VAT article

Politis article naming 30 companies and their VAT debt.

Cyprus building permits down 14 per cent

David Crowther
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2
Cyprus building permits down 14 per cent

THE NUMBER of building permits authorised in July 2014 stood at 449 compared with the 519 authorised in July last year; a fall of 14%, according to figures released by the Cyprus Statistical Service.

Compared to July 2013, the total area of these permits fell by 22% to 64,129 square metres from 81,682, while their value fell 9% to €82.5 million from €91.1 million.

During July, building permits were issued for:

  • Residential buildings – 302 permits
  • Non-residential buildings – 98 permits
  • Civil engineering projects – 9 permits
  • Division of plots of land – 35 permits
  • Road construction – 5 permits

Building permits for new home construction

The 302 residential building permits authorised in July provided for the construction of 196 dwelling units comprising 125 single houses and 71 multiple housing units (such as apartments, semis, townhouses and other residential complexes).

This is a drop of 39% compared with July 2013 when building permits were issued for the construction of 321 new homes.

Cyprus building permits July 2014

Year to date

During the first seven months of 2014, a total of 3,009 building permits were authorised; a fall of 7% compared to the 3,220 permits authorised during the same period last year. The total value of these permits has fallen by 30%, while their total area has fallen 32%.

According to the Cyprus Statistical Service, building permits constitute a leading indicator of future activity in the construction sector.

Non-performing loans €27.90 billion

Editorial
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5
Non-performing loans €27.90 billion

NON-PERFORMING Loans (NPLs) in the Cypriot financial system stood at 47.66% of total loans at the end of August 2014, from 46.94% in the previous month, according to data released on Wednesday by the Central Bank of Cyprus.

However, despite the increase in percentage, NPLs fell in August in real terms by €55 million to €27.90 billion from €27.95 billion in the previous month. This is due to the repayment of a total amount of €1.01 billion of loans in August, decreasing the total amount of loans to €58.54 billion from €59.56 billion in July 2014.

Since June 2013, when the Central Bank of Cyprus started to publish data on NPLs, the total amount of loans fell by around €10 billion, from €68.62 billion to €58.54 at the end of August 2014.

NPLs that have been restructured and remain classified as NPLs declined in August 2014 to 10.81% compared with 10.94% in July 2014. After restructuring, a 9.62% has been removed from the NPLs classification.

Loans to businesses rose in August 2014 to €32.01 billion, of which 49.11% were classified as NPLs, compared with 49.54% in the previous month.

Loans to individuals and households amounted to €24.26 billion, of which 50.18% were NPLs, compared with 49.82% in the previous month.

With 73.16% of loans classified as NPLs compared to 72.62% in July 2014, the construction sector continued to be the sector with the highest rate of NPLs. Total loans to the sector amounted to €7.50 billion in August, compared to €7.54 billion in June.

The NPLs in the property sector, which is the next big category in corporate loans, decreased to 56.95% of €4.45 billion total loans, compared with 55.92% in the previous month.

In relation to loans to individuals for purchase of immovable property, the total facilities amounted to €14.51 billion in August 2014, with a percentage of 43.57% being classified as NPLs, compared with 43.14% in the previous month.

Consumer loans rose in July to €7.18 billion, of which 60.17% were NPLs, compared with 60% or €7.17 billion in June 2014.

– Cyprus News Agency

Further reading

Non-performing loans August 2014 (Cyprus Central Bank)

Paying Immovable Property Tax 2014

Nigel Howarth
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35
Paying Immovable Property Tax 2014

SINCE announcing that those who purchased property for which a Title Deed has yet to be issued are required to pay Immovable Property Tax this year, I have been inundated with requests for further information.

I am grateful to Mr Christofi at the Finance Ministry’s Tax Department for providing me with the following advice:

Any person who has purchased and has the use of an immovable property in Cyprus (before 1/1/2014), for which a Title Deed has yet to be issued, should complete the Declaration of buyer/assignee/beneficial owner (Form T.D. 318A) 2014, even if the development company is in the hands of the Official Receiver or a liquidator.

In case that the vendor (developer) of the property is unwilling to provide the buyer with all information needed to complete the above mentioned Form, the buyer may provide us with any information that would be useful in order to be able to proceed with a valuation of the property as at 1/1/1980. This information may include description of the property such as the area where the property is located, square metres of the land and building, description of the building e.g. house, apartment, number of rooms etc.

Please note that, in case where the buyer (non-Cyprus resident) has not yet obtained a Cyprus Tax Identification Code (T.I.C.), he should fill and submit the “Registration form of new taxpayers” (Form I.R.163A), which should be accompanied by a clear copy of the relevant page of his passport, in order to be registered with the Tax Department for immovable property tax purposes.

The above mentioned Forms and documents should be submitted to the District Tax Office where the property is located.

Completing form 163A

To be submitted by non-residents of Cyprus who do not have a Tax Identification Code (TIC).

Complete sections 4, 6, 10, 11, 12, 13, 16, 22 and in section 14 tick box 92 – Individual with Immovable Property obligation ONLY, plus their name, signature and date at the bottom.

Download Form I.R.163A

Form T.D. 318A 2014

Download form T.D. 318A 2014

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