kdv info

goldfish123


Joined: 03/09/2007
Posts: 13

Message Posted:
02/07/2008 10:49

has anyone heard more news on paying kdv?our developer said in march that we must pay within 3 weeks, since then have not received an invoice or had any further communication from them. we only took possession in april this year.has the law changed again and thats why we havent been contacted?

sunnyday


Joined: 14/03/2008
Posts: 269

Message Posted:
02/07/2008 11:01

Some people have been querying the change in the tax office approach, which is why a lot of developers have put off collecting it. But we have recently had it confirmed by our accountant that KDV should be paid when the keys are handed over. When you pay it make sure that you get a FATURA from your developer which has the official stamp on it.

kibrissibel


Joined: 18/02/2008
Posts: 562

Message Posted:
02/07/2008 20:27

The following is from some very helpful info that Ismet posted on Cyprus44:



"At the time of transfer of title deeds the buyer pays the 3% transfer tax to the DLO. Usually they give you a piece of paper and you go and pay it to a bank and bring back the receipt. You also have to pay 1% of the 3% as property tax but I am not sure exactly who pays it to whom.







The builder has to pay 6.25% "Stoppage" tax to the tax office and submit the receipt to DLO before transfer takes place. This is not a new tax but an advance payment towards the builders income tax. The buyer must never ever pay this tax but I know of occasions where this tax has been included in the contract.







5% KDV (VAT) is a very contentious issue. Until recently the vendor used to write an invoice for the sale of the house when ready to transfer the title deeds and thus pay the "stoppage" accordingly. Next month he would pay the 5% VAT on the invoice less the vat he already paid for obtaining materials and services. The Buyer would pay the VAT to the Vendor just before getting the title deeds.







Now the situation is very volatile. There are many finished houses but few transfer of title deeds, hence sale not finalized as far as the tax man was concerned and thus many builders had spent much more on VAT than what they collected from the sales. The building industry is not very healthy at the moment and thus they wanted the government to pay them the VAT owed to them. In response the tax Directorate have issued a directive saying that sale took place when keys were presented to the buyers and thus VAT payable. Thus the government would not owe them in VAT any longer and in fact the builders should start paying it.







The trouble is that the directive about the VAT is not based on sound legal grounds. It was based on law 47/1992, temporary paragraph 1(2) which had nothing to do with the issue in hand. Thus it is not a legally valid demand. The other argument is that according to the VAT law 47/1992, VAT is payable when goods are handed over. Of course normally ownership transfers to the buyer when they take charge of the goods but this is not the case with immovables. Ownership changes only with the transfer of title deeds and not occupation. Unless they draft an amendment to the existing law, they stand no chace of collecting the VAT on transfer of keys. This is my view.







The final position is that VAT is a matter between the builder and the tax office and the buyer is not directly involved. The tax office issues a receipt for the VAT paid by the builder but this receipt is not for the VAT of a particular house, it is a matter of ongoing calculations, VAT collected by builder and VAT paid to suppliers and only the difference is paid to the tax office. In my view buyers should pay the VAT to the builders when they get the invoice for the sale of the house and this is normally done just before the transfer of the title deeds. Indeed the "Stoppage" is paid in accordance with this invoice."









In our opinion why should you pay KDV on something that you don't actually own. We'll be happy to pay our taxes when we get our title deeds, but not before. It doesn't appear that they have changed the law, but if they have suddenly changed it then why can't they suddenly change the specific performance law to enable all of us to sue for our title deeds? Then everyone will be happy; the government will get their taxes straight away, we will get our kocans straight away, or at least will be able to do something about it if we don't. They should also amend it so that this money is paid by the purchaser direct to the tax office and not to your builder/developer who could potentially run off with these funds.



If anyone requires more advice or info you can also look at the Homebuyers Pressure Group website at: http://www.hbpg-trnc.net/

elko2



Joined: 24/07/2007
Posts: 4400

Message Posted:
02/07/2008 21:58

Thank you Sibelle. sometimes I can't bother any more but we should really keep repeating ourselves tirelessly until everything is clearly understood. I am pleased you have quoted me.

ismet

jock1



Joined: 06/01/2008
Posts: 3786

Message Posted:
02/07/2008 22:03

Well Done To The Both Of You.