Stamp Duty on Contracts
The deposit of the sales contract is advisable in order for the purchaser to exercise the defence of Specific performance against the developer / seller and benefit from the property tax excemptions. The purchaser has the right to deposit the sales contract within 6 months after signing of the contract.
Cyprus stamp duty is levied on ‘documents’ (i.e. written agreements/contracts) relating to assets located in Cyprus and/or matters or things taking place in Cyprus. Stamp duty is calculated on the value of the agreement at 0.15% for amounts exceeding EUR€5.000 but do not exceed EUR€170.000 and at 0.2% thereafter with a maximum cap of €20.000 per stampable agreement. The person legally liable to pay such stamp duty (unless otherwise stated on the agreement) is the purchaser. The due date for such stamp duty payment is within 30 days from the day of the ‘signing’ of a document which is considered to be subject to stamp duty.
In the event where the deadline lapses without payment of stamp duty penalties are imposed. The related penalties are depended on the amount of the contract and the time lapsed but in general, it is estimated at 10% for the first 6 months and around two times the 10% of the stamp duty charge following the lapse of the first 6 months. This means that the maximum exposure on top of the maximum stamp duty cap of €20.000 is an additional penalty which would not exceed €4.000.
For more information please refer to KPMG website www.kpmg.com.cy