THE imposition of stamp duty is governed by the Stamp Duty Law and the official authorised to collect it is the Commissioner of Taxation. Agreements, mortgages and other documents drawn up and signed for loan restructuring purposes are exempted from the payment of stamp duty for a sum of up to the balance of the debt at the time of the restructuring.
The relevant exemption is applicable for a period of two years from the publication of the amending law. In the event that a document is not stamped within 30 days from its signing, but instead it is stamped within a period of six months, a penalty of 10 cents per euro is imposed, provided that the value of the document exceeds €35 and in the event that the value is lower, then the relevant penalty is reduced. In the event of failure to pay the stamp duty within the first six months from signing the relevant documents, an additional penalty is imposed.
When a transaction involves more than one document, only the main document is subject to the specified stamp duty and for each true copy of the agreement a penalty of two euros is imposed. As to the person obliged to pay the stamp duty to the Commissioner of Taxation, the Stamp Duty Law specifies that in the absence of an express agreement between the parties, the stamp duty shall be paid as follows:
(a) for bills, bills of exchange or letters of guarantee, the stamp duty is paid by the issuer or the signatory of the document,
(b) for insurance policies, the stamp duty is paid by the insured person,
(c) for the shares of a company or any other legal entity, the stamp duty is payable by the purchaser or the assignee,
(d) in the event that a charge is created against a company, the stamp duty is paid by the company,
(e) for construction or technical project agreements, the stamp duty is paid by the contractor,
(f) for sale contracts, the stamp duty is paid by the purchaser and
(g) in the event of leases, the s stamp duty is paid by the lessee.
In the event that a document subject to stamp duty needs to be produced as proof in an action or any other Court or arbitral proceeding, then the corresponding stamp duty needs to be paid before being deposited at the ourt together with any outstanding penalty. If such a document is admitted as proof prior to the payment of the stamp duty, the Court has the power to order the party on behalf of whom such a document was produced to pay the relevant stamp duty and any outstanding penalty, if any.
Nevertheless, a person who despite not having the obligation to pay stamp duty was obliged to do so, has the right to receive it back in certain instances and the Court may include the said sum in its order as to the costs of the proceeding. Annex One of the Stamp Duty Law specifies the sums of the stamp duty payable for any applicable transaction, which is calculated on the basis of the value of the relevant document. The Stamp Duty Law provides for an exemption from the payment of stamp duty for mortgage agreements and any other related documents which are imposed on the same day on the same land and for the same purpose upon the cancellation of existing mortgages, irrespective of whether it is imposed
for the benefit of the same creditor or any other creditor.
As to contracts of undefi ned value and agreements in which no provision is made for the payment of stamp duty, a general sum of €35 is payable, for leases of movable or immovable property, the sum of the rent and the lease period are taken into consideration, whereas when the lease is for an undefi ned period of time, the stamp duty payable is calculated on the basis of the total value of the rent for one hundred years.
George Coucounis is a lawyer specialising in the Immovable Property Law, based in Larnaca, Tel: 24 818288, [email protected], www.coucounislaw.com