Date: 26 August 2020 

According to circular 45 issued by the Tax Department on 22 July 2020, it is clarified that the transfer of real estate by a guarantor’s related person in the context of loan restructuring, does not fall under the tax relief in relation to the restructuring of a bank loan.

Therefore, in the event of such a transfer, either to the original lender or to a related person of the original lender or even to a third party, the provisions of Article 11D of the VAT Act do not apply. Consequently, the guarantor’s related person, provided that the property being transferred is taxable, is required to register with the Cyprus VAT Register and account for VAT at the applicable standard rate.

How can KPMG assist?

Should you like to further discuss the content and potential impact of the Circular to your business, please contact one of our trusted advisors from the Indirect Tax Department at KPMG Cyprus.

KPMG’s Indirect Tax team provides advice and assistance at the Cyprus and international level. We structure our effort to dovetail with your business issues and strategy. Our focus is on supplying value adding and pragmatic advice rather than just a list of recommendations.

Our tax professionals are able to review your company’s current tax position and provide relevant advice and planning on a range of indirect taxes, including VAT, customs duties and excise taxes (such as tax audits, reorganizations and acquisitions, etc.). Furthermore, we can help your company with its administrative obligations and contacts with administrative bodies.