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The House of Representatives of Cyprus, for the purposes of harmonizing the legislation with the EU Value Added Tax (“VAT”) Directive, voted on 30/11/2017 a new VAT Law which amends the main VAT Law N.95(I)/2000.

A. VAT on the sale of building land (apply as from 02/01/2018)

The supply of undeveloped building land, in the course of a business activity, is subject to VAT at the standard VAT rate of 19%.

Business activity should be based on the facts of each case separately. The supply of land is not taxed when it is done as an isolated transaction.

Criteria should be taken into consideration to determine whether the supply of undeveloped building land is in the course of a business activity:

  • Is the activity a serious undertaking earnestly pursued?
  • Is the activity an occupation or function, which is actively pursued with reasonable or recognisable continuity?
  • Does the activity have a certain measure of substance in terms of the quarterly or annual value of taxable supplies made (bearing in mind that exempt supplies can also be a business)?
  • Is the activity conducted in a regular manner and on a sound and recognised business principles?
  • Is the activity predominantly concerned with the making of taxable supplies for a consideration?
  • Are the taxable supplies that are being made of a kind which, subject to differences of detail, are commonly made by those who seek to profit from them?

Examples

  • Sale of undeveloped land by a person who inherited the land and who does not carry out a business activity and this transaction took place after seven (7) or ten (10) years followed up by a transaction for another plot of land, then this is a strong indication that it relates to an isolated transaction.
  • If the plot of land is company’s asset, its disposal will be a taxable(vatable) transaction, irrespective of the type of economic activity that the company carries out.
  • Supply of two (2) plots of land on 2017 and three (3) plots of land on 2018. These transactions are indication of business activity.

No VAT will be imposed on the supply of land located in livestock zone or areas which are not intended for development such as zones/areas of environmental protection, archaeological and agricultural.

B.VAT on the rental of properties (apply as from 13/11/2017)

The lease or rental of immovable property to a taxable person for business premises (all properties other than residential properties) is considered as a taxable transaction and is taxed at a rate of 19%.

The lessor will have the right to elect for such transactions to continue to be exempt by notified the Commissioner. If this right exercise it cannot be retracted a later stage.

Based on the new legislation:

  • the lease or rental of immovable property to a taxable person for furtherance of the business is considered as a taxable transaction and is taxed at a rate of 19%, unless the building is used as a dwelling
  • the above applies provided that the commencement of the lease or rental agreement was on or after the coming into effect of the amending law
  • the value of the supplies in the period of one year has to exceeded €15.600
  • the lessor may opt for the exemption from VAT of the lease or rental of immovable property (subject to terms and conditions which will be determined by notification in the Official Gazette of the Republic), provided the lessor informs the Tax Commissioner of this decision
  • the lessor cannot subsequently change the decision for the exemption from VAT of the lease or rental

Existing contracts for the lease or rental of real estate (except residential properties), remain in force and are not affected by the above amendment. Therefore, the lease/rental is deemed to be an exempt transaction and is not taxable.

In case of termination and conclusion of a new agreement after 13 November 2017, the lease/rental will be a taxable transaction.

VAT refund

For a property that the lease/rent was made as an exempt transaction before 13 November 2017, the lessor is entitled to deduct the VAT on the construction costs of the building, provided that (i) 10 years have not elapsed since the date of construction/ purchase, and (ii) the lessor concluded a new lease/rental agreement after 13 November 2017 (i.e. a taxable transaction).

In case which the property falls within the 10-year timeframe, the VAT on construction costs is adjusted for the remaining years, starting from the year of its initial use. The initial use is deemed to be the time of acquisition of the building or its first use whichever comes first, and whether the owner was a VAT registered person or not.

C. The reverse charge is imposed on the transfer of property in the context of loan restructuring (apply as from 02/01/2018)

 

Its apply when a property is transferred from the borrower in the course of a loan restructuring process as well as under a compulsory transfer procedure to the lender.

This provision was enacted in order to facilitate the payment of VAT in cases where the taxpayer is no longer in a sustainable financial position, with a bank having to take possession of the property which was held as a guarantee against the loans provided.

The above supplies are deemed to be taxable transactions for both the recipient and the person who makes them, provided that the recipient receives the goods

in furtherance of the business.

The VAT deduction on the above-mentioned transactions based on the reverse charge method is possible, if:

  • the taxable person supplies the property to the recipient
  • the recipient is a taxable person at the time of the transaction and receives the Property for furtherance of the business
  • input tax is deductible by the taxable person, provided that VAT is accounted for by the recipient

Contact
Tax Advisor
Andreas Avgousti
Andreas.Avgousti@aretilaw.com

 

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出于将增值税法律与欧盟增值税(“增值税”)指令接轨的目的,塞浦路斯众议院于2017年11月30日投票通过新的增值税法律,对主要增值税法律N.95(I)/2000进行修改。

A 建筑用地出售增值税(自2018年1月2日起生效)

商业活动过程中未开发建筑用地的供应应缴纳19%的标准增值税。

商业活动依个案决定。若土地供应为被隔离交易,则无需纳税。

在决定未开发建筑用地的供应是否处于商业活动过程中时应考虑以下标准

  • 该活动是否属于严肃从事的事业?
  • 该活动是否属于职业型还是功能型,其是否会通过合理及可见的方式积极持续下去?
  • 该活动是否有特定的实质性衡量标准用于计量季度或者年度应税供应价值(记住被豁免供应也可以成为业务)?
  • 该活动是否有规则的进行,并且有良好和可识别的商业准则?
  • 该活动是否主要涉及有偿制造应税供应?
  • 应税供应基于其细节差异是否属于被用于逐利的常规制造类别?

 

案例

  • 继承未开发土地的没有从事任何业务活动的人士在出售该等土地时,若该等出售距离其上次出售另一块土地时间相差七 (7) 年或十 (10) 年,则该等出售有很大可能属于被隔离交易。
  • 若该等土地为公司资产,其处置将会构成应税(vatable)交易,不论该等公司在从事何种经济活动。
  • 2017年供应两 (2) 块土地,而2018年供应三 (3) 块土地。该等交易可能属于商业活动。

畜牧区或非用于开发用途区域(比如环保、考古和农业区/区域)的土地供应不会被收取增值税。

  1. 物业出租增值税(自2017年11月13日起生效)

不动产被出租或租赁给应税人士以用于商业场所(除住宅物业之外的所有物业)用途将被视作应税交易,并应按19%的税率缴税。

出租人有权选择通知税务专员其交易属于被豁免类别。若行使该等权利,其不得在下一阶段撤回。

基于新法律:

  • 将不动产出租或租赁给应税人士用于业务营运应被视作应税交易,并且应按19%的税率纳税,除非该等物业被用于住宅用途。
  • 上述规则适用于所有于修订法律生效之日或之后开始的出租或租赁协议。
  • 一年内的供应物价值必须超过600欧元
  • 出租人可以选择将不动产以被豁免支付增值税的方式出租或租赁(根据共和国官方公告条款决定),唯出租人须通知税务官其决定
  • 出租人不得在随后更改该等以被豁免支付增值税的方式出租或租赁的决定

现有房地产出租或租赁合同(住宅物业除外)将不受上述修订影响并持续有效。因此,租赁/出租应被视为被豁免交易且无须纳税。

若在2017年11月13日之后终止和结束新协议,则该等租赁/出租将被视作应税交易。

增值税返还

对于在2017年11月13日之前以被豁免方式租赁/出租的物业,出租人有权从建筑的建造成本中扣除增值税,前提为 (i) 相关建筑建造/购买于不超过10年之前,且 (ii) 出租人在2017年11月13日后达成了新的租赁/出租协议(即应税交易)。

若物业期限在10年之内,建造成本的增值税将调整至于剩余年限计提,从其被初次使用年份开始计算。初次使用年份即建筑被收购年份或第一次被使用年份,以较早者为准,不论物业持有人是否为注册增值税人士。

  1. 贷款重组中的物业转让将被反向收费(自2018年1月2日起生效)

该条规定适用于在借款人于贷款重组过程或在强制性转让程序中将物业转让给贷款人。

该等规定的目的在于让处于不利财务状况的纳税人更便利的支付增值税,且相关物业将被以该等物业作为担保发放贷款的银行占有。

上述供应在业务持续运营过程中对于供应生产人士和供应接收方来讲都属于应税交易。

上述基于反向收费方法的交易可能进行增值税扣除,前提是

  • 应税人士向接收方供应物业
  • 接收方在交易进行时为应税人士且接收物业用于业务持续运营
  • 进项税由应税人士扣减,惟增值税应由接收方入账


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税务顾问

Andreas Avgousti
Andreas.Avgousti@aretilaw.com

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