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.
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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.
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