KDV Payment

Mountain Edge



Joined: 23/02/2007
Posts: 199

Message Posted:
04/08/2008 12:20

I know this will have been asked before but I am looking for up to date advice.

Just had an email from my builder asking for payment of KDV. I can't remember what the previous advice was so I am just wanting to know, do we pay this? or is it a ploy by the builder to get money out of us.

simma



Joined: 03/02/2008
Posts: 346

Message Posted:
04/08/2008 13:25

hi mountain edge, as far as i'm aware kdv is payable on exchange of title deed. don't pay before. he wants it now because the property is valued at the time of title exchange and kdv will obviously be higher if there is a solution in the meantime. this means he will have to pay much more.

john.

rtddci


Joined: 29/12/2007
Posts: 842

Message Posted:
04/08/2008 13:42

See advice on Home buyers pressure group page



http://www.hbpg-trnc.net/documents/KDV_0708.html

Mountain Edge



Joined: 23/02/2007
Posts: 199

Message Posted:
04/08/2008 15:01

That link to HBP is saying that it does have to be paid. Or at least, that's how it reads to me.

simma



Joined: 03/02/2008
Posts: 346

Message Posted:
04/08/2008 15:07

By the link, i would agree. i must have been misled or it has changed recently.

Pipie


Joined: 05/01/2008
Posts: 5499

Message Posted:
04/08/2008 15:59

would be interesting to see who has paid this ?

saucyboy69


Joined: 09/02/2008
Posts: 111

Message Posted:
04/08/2008 17:19

We are in the process of paying now or we could not take possesion of the Apartment, we have paid half and will be paying the other half next week when we arrive and we will get an official reciept to prove we have paid.



As far as we were concerned it was payable on transfer of deeds but having contacted our Advocate we were told we had to pay it if we wanted to take possesion.]



Pete,

simma



Joined: 03/02/2008
Posts: 346

Message Posted:
04/08/2008 17:51

just checked our contract and doesn't say either way, it just mentions that we are responsible for it.

john.

bradus


Joined: 25/02/2007
Posts: 2641

Message Posted:
04/08/2008 18:04

Apparently this is a new Government introduction. I say introduction because I am told it is not law as yet. You did not have to pay in the past until you received your title deeds, now they are saying it must be paid before you take possession.



Problem with this is what happens if you do not get your PTP so therefore cannot get your title deeds? Will you have oaid VAT on property you don't own?

aslan


Joined: 23/06/2008
Posts: 757

Message Posted:
04/08/2008 18:06

As A Cypriot I am a little confused, i have seen on many a thread the term KDV used, can someone explain what it is and when i should use the term in blogs and forums like this. Is it a special code that you and your friends and guests to the island use? Or does it have any significance in the the day to day role of a person residing in the TRNC.



regards

Konfused

scruff


Joined: 15/07/2008
Posts: 1070

Message Posted:
04/08/2008 19:52

VAT or value added tax.

PtePike



Joined: 20/05/2008
Posts: 2334

Message Posted:
04/08/2008 20:49

bradus: "Will you have oaid VAT on property you don't own?"



It's not as bad as paying for property you will never own.

doughnuts40


Joined: 27/07/2008
Posts: 98

Message Posted:
04/08/2008 21:08

Aslan KDV translated is Katma Deger Vergisi (VAT). You should only pay the 5% KDV if your builder/developer is willing to give you an official receipt i.e. one that has been stamped by the VAT office. Your lawyer will know what this is so ensure you pay through your lawyer and NOT direct to the builder unless you get this receipt. This receipt will also need to be produced on transfer of title as proof of payment so a very important document.

trevor


Joined: 02/04/2008
Posts: 244

Message Posted:
04/08/2008 22:29

I have just read the HBPG regarding the KDV and it says payment should be made on possession, what do we construe as possession, is it when we get the keys, is this legally classed as in possession, or is possession when you actually have the deeds in your hand which seems the logical proof of possession. Also can anyone please tell me when we pay the 3% tax.

cyprusishome


Joined: 31/03/2007
Posts: 2381

Message Posted:
04/08/2008 22:55

Being simple, I will pay when asked.



The government changed the rules a few months back and is as on HBPG site. My view is why should we pay something that changed after we signed contracts?



As for aslan, I am begining to doubt if you live in North Cyprus as per many of your previous posts. KDV is charged on many goods in shops and on services provided. I alway give benefit of doubt but for an alleged citezen to wonder what one of the key taxes is in their own country begs a serious question.



Also aslan you say you are 38, so how did you buy property on an estate in the UK 20 years ago????



An Inquisitive Resident of TRNC

suntanman



Joined: 18/04/2007
Posts: 721

Message Posted:
04/08/2008 22:55

trevor,

We are just going through the final stages of our purchse.

We had to pay VAT before we took possion/got the keys.

We now have to pay the 3% land tax (for first time buyers) on the transfer of title deeds in to our names, some 3 months after we 'moved in'.

Hope this helps.

Andrew

trevor


Joined: 02/04/2008
Posts: 244

Message Posted:
04/08/2008 23:09

Cheers sunny, i will be contacting my solicitor asap regarding the payment, i takeit thats the best way to pay.

suntanman



Joined: 18/04/2007
Posts: 721

Message Posted:
04/08/2008 23:17

Very wise Trevor.

We have paid all our money via our solicitor, made a mistake on our very first (deposit) payment to selling agent, and were charged excessive transfer fees between them and the solicitor

Plus we have had the assurance that all payments were justified before being transfered to the developer.

Where are you buying?

trevor


Joined: 02/04/2008
Posts: 244

Message Posted:
04/08/2008 23:29

Hi Sunny, got a 3bed rainbow on chelsey village, just paid our final payment, for my sins married to ilmd, live in Armthorpe

kibrissibel


Joined: 18/02/2008
Posts: 562

Message Posted:
05/08/2008 08:57

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.

ebbern5


Joined: 03/06/2008
Posts: 79

Message Posted:
05/08/2008 12:02

we have been told by our solicitor :dont pay until the deeds are ready for transfer:

airbag


Joined: 21/06/2008
Posts: 50

Message Posted:
05/08/2008 15:18

Has anyone any idea if we should be paying VAT on the total amount we will be paying as we have a loan (over 20 years ) from the builder. He is asking that we pay %5 on the total amount (Capital plus interest) as this will be the total amount payable. But surely it should be on the purchase price?



Help!

elko2



Joined: 24/07/2007
Posts: 4400

Message Posted:
05/08/2008 17:08

Airbag,

VAT is payable on the total price of the house. Say you buy a house worth 50,000 quid but you do not have the money to pay the lot in one go. So you agree to pay 70,000 in installments. So the price is 70,000 and you have to pay VAT on 70,000. However, if you borrowed money from a bank or finance company, you pay 50,000 to the vendor plus VAT on 50,000. there is no VAT on interest payable to the bank. Thus many developers work with banks or they set up their own Finance Companies and save on VAT. This is how I see it but I am not an accountant, I am simply putting forward the way I see it.

ismet

airbag


Joined: 21/06/2008
Posts: 50

Message Posted:
05/08/2008 17:36

Many thanks for your reply, I have never heard of having to pay VAT on finance interest. The loan is with a North Cypriot Finance company. Can anyone point me in the right direction of someone who could clarify this point? We have purchased two villas so we are talking quite large sums. I Don't seem to get anywhere with the developer who interestingly is the finance company!

elko2



Joined: 24/07/2007
Posts: 4400

Message Posted:
06/08/2008 09:14

Airbag,

Did you have a separate Finance Agreement or was it just one Sale Agreement? It can make a big difference.

Final test: is the vendor paying the 6.25% Stoppage tax on the sale price or the whole lot? Of course that will be done jut before the transfer of title deeds, so you cannot tell now.

ismet

airbag


Joined: 21/06/2008
Posts: 50

Message Posted:
06/08/2008 12:08

I'm honestly not sure, I know the interest was fixed at 5% for twenty years and I did see a payment schedule showing the decreasing balance which would lead me to believe it is a seperate agreement. I will have to contact them but I'm never sure we are getting an honest answer. Thankyou for your comments.

elko2



Joined: 24/07/2007
Posts: 4400

Message Posted:
06/08/2008 12:49

Airbag,

It is absolutely impossible for any firm to charge an interest rate as low as 5% p.a. I have seen many crooks who quote a very low figure but in actually they charge much higher rate in their calculations. If you send me the figures privately I can calculate the exact interest rate they charged you. You should worry about this one rather than the one off 5% VAT.

ismet

airbag


Joined: 21/06/2008
Posts: 50

Message Posted:
06/08/2008 13:41

I have replied by email, many thanks