Immovable property and restructuring of non-performing loans

Where the transfer of immovable property is for loan restructuring purposes and the debt was a non-performing loan on or before 31 December 2015:

  • Any profits made during the restructuring are not subject to capital gains tax
  • Any profits made during the restructuring are not subject to income tax
  • The transfer and registration of real estate is not subject to transfer fees
  • Balancing statements do not arise for the purposes of calculating taxable income
  • The resulting accounting profits are ignored for the purposes of deemed distribution
  • Contracts concluded in the context of the restructuring or any future repurchase of mortgage collateral are exempt from the Cypriot stamp duty
  • Any encumbrances on the property acquired during the restructuring are transferred from the borrower to the lender together with the property

For tax purposes, the cost of real estate acquired during the restructuring is equal to the restructuring price and the proceeds from the disposal are reduced by any amount returned to the borrower under the restructuring agreement.

No Special Defense Contribution is imposed on the deemed dividend distribution in accounting profits arising from the write-off of a credit facility by a borrower reported on or before 31 December 2015.


Transactions in the context of loan restructuring are considered to be ordinary transactions for VAT purposes.

The VAT applicable to the sale of real estate to the lender in the event of loan restructuring or enforcement proceedings is accounted for by the lender under the reverse charge mechanism (Article 11D).

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