The person in whose name an immovable property is transferred pays transfer fees and in the case of a sale, if the property is subject to VAT, no fees are payable, otherwise they are reduced by 50 per cent.
The transfer fees are calculated on the market value of the property in accordance with the scales provided in the law and the Director of the Land Registry is not bound in his valuation by the sale price declared by the parties. If he is not satisfied that the sale price declared corresponds to the market value of the property on the date of the transfer or on the date of the sale contract, irrespective of the property being subject to VAT, he imposes transfer fees according to his valuation.
When a property is subject to VAT and the Director’s valuation is higher than the purchase price declared, transfer fees are imposed and calculated on the market value of the property after deducting the amount of the transfer fees which would have been payable according to the purchase price.
The imposition of reduced or no transfer fees is applicable despite the time of the transfer, provided the sale contract was deposited at the Land Registry or if the parties prove with sufficient documentation that the sale took place on an earlier date than the date of the transfer.
When the property to be transferred is a plot or a house, an apartment or another building without a separate title deed and it is part of a larger property, a share of the whole property is transferred and its market value is assessed by the Director based on the value of the property sold.
A purchaser who disagrees and does not accept the market value of the property assessed by the Director, pays the transfer fees as calculated at the time of the transfer with full reservation of his rights and within 45 days he is entitled to submit to the Director any information regarding the value of the property, including a valuation report.
The Director is obliged to assess the market value of the property within 3 months from the date of the transfer, taking into account all the information available to him and notifies the purchaser of his decision for the transfer fees payable, which may be more or less than the amount originally paid.
The aforesaid reservation of the purchaser’s rights must be in writing and it must be submitted at the time of the transfer and not at any other time later. The Administrative Court examined the issue in a case where a company filed a recourse against the decision of the Director of the Land Registry to impose transfer fees alleging that he acted unlawfully; the transfer fees had been paid as assessed by the Director without any contestation or reservation of rights and the company argued that they had filed an objection through their lawyers a month after the transfer.
The Director replied that their case did not fall under the provisions of the law for reduced or no transfer fees, after having obtained the advice of the Attorney General. The company filed the recourse against the reply letter of the Director 5 months after the transfer of the properties.
The Republic in their written objection raised two preliminary legal points, the first one being that the reply letter of the Director was not an executory act which could have been the subject matter of a recourse, but it only constituted confirmation of the decision of the Director to impose transfer fees at the time of the transfer.
Hence, the Republic argued that the recourse was unfounded, since it was not filed within the time limit of the 75 days set out in the law. The second point raised was that the company had no legitimate right to file the recourse, because they had paid the transfer fees without any reservation.
The Court decided in favour of the Republic, accepting the first preliminary objection, since it did not agree with the argument of the company that the material date and the only enforceable decision was the letter of the Director, through which they were informed that no amount would be refunded to them. It held that the Land Registry’s decision to impose and collect transfer fees was taken at the date of the transfer and it constituted the only executory act, which could have been the subject matter of the recourse.
The Director’s reply letter sent later to the lawyers of the company confirmed his initial decision regarding the imposition of transfer fees and it was not enforceable. Through this letter, the Director did not conduct any further search regarding the imposition of the transfer fees nor did he take any other decision, since he insisted on his initial one. The Court under the circumstances dismissed the recourse of the company without examining the second preliminary legal point.