In December 2015 the Cyprus tax laws were amended to temporarily exempt loan restructurings from tax in order to facilitate and encourage the restructuring of non-performing loans. The amendments affected the Income Tax Law, the Capital Gains Tax Law, the Special Defence Contribution Law, the Stamp Duty Law, the VAT Law, the Collection of Taxes Law and the Department of Lands and Surveys (Fees and Charges) Law. The amendments, which were effected by Laws 208(I)/2015 to 215(I)/2015, took effect on 31 December 2015.
In all of the laws a new definition of the term "restructuring" was introduced, referring to the direct or indirect sale and transfer of immovable property and transfer of rights under a sale contract deposited with the Department of Lands and Surveys, between one or more borrowers, debtors or guarantors regarding the same credit facility or debt and one or more creditors, in order to reduce or repay credit facilities or loans or debts granted to borrowers with one or more licensed credit institutions operating in Cyprus.
The exemptions introduced in 2015 were intended to be valid for two years from the date the various amending laws entered into force, and therefore would have expired on 31 December 2017.
However, Laws 131(I) of 2017 to 137(I) of 2017 inclusive, which were published in the government gazette on 6 October 2017, extend the exemptions for a further two years, until 31 December 2019.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
