CAEDB - Tax on Sales

[HappyCamper]

We (wife and I) sold our apartment in Paphos at the end of August 2022. Our solicitors advised us on tax implications which we settled in full at the time of the sale. Our solicitors provided us with a final settlement statement

However, it turns out that our solicitors were unaware of a new tax liability for sellers - a Tax of 0,4% of the selling price to be paid to the Central Agency for Equal Distribution of Burdens(CAEDB). This became law on from 22 February 2021. But 18 months later, when we sold in 2022, our solicitors were blissfully unaware that this Tax existed and did not include it in our final settlement figure.

They are now aware of it as the CAEDB have sent them a bill, as the solicitors who handled my sale, dated last week (November 2023) for me to pay!
In fairness I gather CAEDB are only now trying to collect these taxes, that they failed to bill at the time, retrospectively.

Not impressed at at all with my solicitors. I would have expected them to have known what Cypriot Law was at the time of my sale. That is their job after all. That would have and enabled me to reach a different selling price that reflected the Tax Burdon on the seller.

I am tempted not to pay this tax - I have a "Full Settlement" figure in writing from my solicitors at the time I sold. Not being aware of this CAEDB tax is professional negligence in my view and I would look to my solicitors to settle this bill out of the professional fees I have paid them.

Anyone else had experience of this?

Brian

[Nigel Howarth]

Hi HappyCamper

The law was introduced in February 2021 that levied 0.4% tax of all sales of immovable property. The 0.4%, was to go towards supporting Greek Cypriot refugees for their inability to possess, have access to, or otherwise gainfully use their land in the occupied north.

However, the law had two major flaws that made it unenforceable - (i) It didn't state how the tax would be levied and (ii) which department would be responsible for collecting it.

Fast forward to late October 2022 when the law was corrected making the Tax Department responsible for levying and collecting the 0.4% tax.

To be fair to your lawyer, at the time you sold (August 2022) the law was a mess and effectively, the tax did not exist.

I expect the Tax Department is catching up on those who sold after the law was introduced in February 2021.

Regards,

[HappyCamper]

Thanks Nigel

for what it is worth my solicitor now tells me ...

We received your email and noted the contents.
The decision is yours. We just sent you the letters because they are given to us together with other 300 letters for other people they sold during the specific period of time.
The law was existing, but the government didn’t put in operation the mechanism to start collecting them.
They are wrong to come afterwards requesting money but unfortunately this is the situation.

I think I shall not pay this bill

Cheers

[Nigel Howarth]

If your lawyer received 300+ letters, imagine how many thousands were sent to other lawyers.

All down to the incompetence of MPs.

Regards,