North Cyprus Legal advice (Sep/Oct 2009)
In: Legal Advice13 Oct 2009
This month on Lincguide Naomi answers some important questions on amongst others, income while living in Northern Cyprus, dealing with contract disputes, and purchase tax discounts in Northern Cyprus. Scroll down to read the answers or click the link to go directly to the question below.
1 Paying tax in Northern Cyprus on income from elsewhere >
“We are not tax specialists so I would advise you to speak to a financial adviser/accountant in Cyprus who is experienced in advising ex-pats on their tax and income in the TRNC. However, as far as I am aware, although there is no official double-taxation treaty between the TRNC and the UK, I believe that there is a tacit agreement that income received from the UK will not be taxed here in the TRNC.
In terms of savings, if you have a savings account here and earn interest on those savings, you will pay tax on the interest earned locally and this will be deducted at source by the bank so that you will receive the net interest into your account.”
2 Verbal agreements with builders in Northern Cyprus
Therefore, if the builder has not already installed the upgraded flooring, it would be difficult for you to argue that he is under an obligation to do so as this is not specifically stated in your Contract of Sale.
On the other hand, if the flooring has already been installed, as your email suggests, in order for the builder to try to argue that you owe him additional money for the flooring, he has to show that you agreed to the installation and the extra price for it, which will be difficult for him to do as he has no agreement in writing from you. You could therefore try to argue that you did not agree to any extras. If you argue this, however, the builder might try to counter this argument by saying that since you didn’t agree to any extras, he will remove the upgraded floor and replace it with the standard flooring. This may not be an argument which he would want to make lightly as this would cost him a significant amount of money.Further, if the matter goes to court, the court may take the view that if you try to argue that you didn’t agree to any extras being installed, you should have pointed this out when the upgraded flooring was being installed.
Alternatively, you could try to argue that the agreement to upgrade the floor was a separate Contract, rather than an amendment to the existing Contract of Sale, by arguing that it was a ‘Commission Agreement’ for the introduction of your friend to the builder, completely separate to the Contract of Sale and that the consideration for the introduction was flooring to be installed into your house. Although such a verbal agreement could be valid and binding, the difficulty with the fact that it was made in writing is proving its existence. If you do not have any proof that this agreement was made verbally between you, in the form of something in writing or other witness evidence, proving the matter in court could be difficult.
You may wish to ask your advocate, initially, to send the builder a legal notice or to hold a meeting with the builder to see whether this situation can be resolved through mediation. If this is unsuccessful, then your only options would be either to pay for the flooring in order to obtain title or to take legal action against the builder for breach of the verbal commission agreement, bearing in mind the difficulties pointed out above.
If the vendor refuses to transfer title, you should have a clause in your Contract of Sale putting an obligation on the vendor to transfer title within a certain period of time. If he fails to do so, you can take litigation for breach of Contract. He will probably claim, in his defence, that you still owe him money for the upgraded floor, which would then allow you to bring up the arguments above within this case.”
3 Northern Cyprus builder owes me £20,000
“If you have a valid and signed Contract under which the builder has agreed to pay you this money, but fails to do so, you could take the builder to court for breach of Contract. Often, where payments are made in instalments, failing to make payments on time will often cause the whole debt to become due. The difficulties with litigation are, however, as follows:
The builder would probably not make any payments while the litigation was continuing which would mean that you probably wouldn’t receive any payments during this time.
The case could take around 1 year to come to full trial.
If you win your case, the builder would be ordered to make payment to you and the judge would order the builder to pay costs in the case. However, you should note that the amount which the court awards for costs may not cover the actual costs of your legal fees as the amount awarded by the court is usually lower than what your actually legal fees are.
Once you have obtained judgment against the builder, if he still fails to make payment, you would then have to consider enforcement proceedings against him. This means that you would have to obtain a compulsory sale over any assets, movable or immovable belonging to the builder.
The builder could be ordered to make payment by instalments which could mean that you will not receive the whole judgment as a lump sum. However, the difference would between the failure of the builder to pay the instalments in those circumstances and the current failure of the builder to pay the instalments would be that failure to pay in those circumstances would then be breach of a Court order with serious consequences, including possible imprisonment, for the builder.”
4 Without electric for four years in Northern Cyprus
“Before I can advise you in any detail on this, we need to discover the reason why the electricity has not been connected.
If your property does have a building permit, it may be possible to apply for a temporary supply of electricity and in this case, the reason why the permanent electricity is not or cannot be connected will probably be because the builder has not completed the necessary infrastructure for the electricity in accordance with the requirements of the electricity board.
If your property does not have a building permit, it will not be possible to apply for even a temporary supply of electricity until the building permit has been obtained.
Given the fact that your builder is not being cooperative and given the length of time that this situation has continued, I think that you will have to consider other options.
If you do not have title and your builder refuses to transfer title to you, your only course of action would be to consider taking litigation against the builder for breach of Contract in order to try to obtain a full refund of all monies paid plus compensation.”
5 Extension to purchase tax discount in Northern Cyprus
“Currently the Government is offering a 75% reduction to the Land Registry transfer fees payable by purchasers on transfer of title. The usual rate for Land Registry fees is 6%. However, everyone has a once in a lifetime option to reduce this down to 3%. On top of this, there is a 75% discount being offered, brining the actual rate payable down to 0.75% of the sale price. Similar reductions are being applied to the capital gains tax (stopaj) payable by the vendors which has been reduced from 6.25% of the sale price to 4% of the sale price.
Many people are unable to take advantage of these reductions because they have not yet received their permission to purchase or because their vendors are not ready to transfer title as they are still waiting for separate deeds for properties on complexes to be issued by the relevant authorities.
Unfortunately, it is not possible for taxes to be paid until your permission to purchase has been granted and you are ready to transfer title as the full transfer forms have to be completed and submitted to the Land Registry and checked and then the taxes are paid.
I can confirm that the deadline for completing the transfers at the reduced rate of tax has been extended to 31st December 2009.”
Due to the sheer numbers of legal question asked this month regarding law in Northern Cyprus, we have not been able to answer every question. Many of the questions we receive have already been covered in previous months answers, so make sure you have a good look through the archives below.
If you have a question for Naomi click here, please give as much information as possible.>