No payment of transfer fees for the registration of an immovable property title deed is prescribed in the Lands and Surveys law for transactions made by the government as well as in some other cases.
Specifically, no payment of transfer fees is imposed or collected for the registration of a property title deed where it is acquired by a lawful heir, through intestate succession or a will, or by way of gift, or sale from a foster parent to a child, or from a foster child after the death of his foster parent pursuant to a will. Moreover, no transfer fees are prescribed in the transfer of an immovable property, which was previously compulsory acquired and returned from the acquiring authority to its former owner. This also applies when an immovable property is transferred from company to company due to reorganisation. According to the table of fees and charges of the law no transfer fees are prescribed in case of donation from parent to child, or an exchange of immovable properties or when the immovable property transferred is situated in an occupied area and the successor is a Greek Cypriot.
The imposition of transfer fees on a public interest organisation was examined by the Supreme Court whereby a sewerage board instituted against the decision of the Department of Lands and Surveys which asked it to pay transfer fees for the registration of immovable properties purchased. The board paid the fees but demanded their return through a letter, invoking the provisions of the law regarding a public interest organisation that does not exercise financial activity. During the case the term ‘financial activity’ was examined and the Supreme Court held that the determining factor of ‘financial activity’ is not the development of the competition in the market with other business but whether the board collects sewerage fees irrespective of the structure of the relevant market or the state interest in the provision of such services. Having in mind the opinion of the Commissioner for State Aid Control was asked, the Supreme Court decided he correctly replied that he could not answer how the purposes of the law could have been achieved or were being implemented and the sole competent body to do so was the Department of Lands and Surveys.
The Supreme Court added that the guidelines of caselaw of the European Court of Justice (ECJ) could have been considered regarding the meaning of the term financial activity but the Commissioner was not authorised to confirm or interpret legislation for the imposition of transfer fees or taxes and to involve himself in the procedure. The Department of Lands and Surveys was obliged to decide in concreto for each transfer, if it fell into the framework of the exercise of financial activity, ie whether such financial activity concerned the offering of goods or services in a given market, which at least in principle, might be exercised by a legal person of private law making profit. Additionally, the Supreme Court held the Commissioner correctly replied the handling of a central sewerage system for the collection of sewerage fees constitutes in principle, financial activity. However, the Commissioner does not reply whether in a given Cypriot market it might at least, in principle, be considered to have been exercised by a legal person or private company making profit. The reply, based on the criteria derived from the ECJ’s caselaw, is not clear and the answer should have been given by the Department of Lands and Surveys following a relevant search. It is not the court that should answer this question, therefore decided that the recourses were succeeded and the relevant decisions were annulled due to lack of proper search and error of the law.
George Coucounis is a lawyer specialising in the Immovable Property Law, based in Larnaca, Tel: 24 818288, [email protected], www.coucounislaw.com