This article will examine whether a document and/or contract drafted for a transaction to be carried out is dutiable or not, based on the law of the Republic of Cyprus. The general rule will be explained which is subject to exceptions and can be interpreted differently depending on the facts of each case and the terms of each document and/or contract.
The Law of 19/1963, as amended, (hereinafter called the “Law”), and more particularly Section 4(1), provides in a free translation and subject to exceptions, that any document appearing in Annex 1 of the Law is dutiable as per such Annex, if it relates to any asset situated in the Republic of Cyprus or to matters or things which shall be executed or done in the Republic of Cyprus, irrespective of the place such document was drafted.
The words drafted and drafting in relation to documents, mean signed and signing respectively, as explained in Section 2 of the Law.
Under the above section of the Law and despite the fact that Cyprus case law relating to the interpretation of this section is not in the least helpful on this matter, it follows from English case law that it is “documents” which are taxed and not the transactions operated under them. Therefore, it follows that the terms of the document itself will act as the decisive factor as to whether any, and if so what, stamp duty should be imposed/paid.
Thus, the key for the determination whether stamp duty should be paid regarding the document, namely the private agreement(s), is whether the said private agreement(s) relates (i) to “any assets situated within the Republic” or (ii) to “any matter or thing to be executed or to be done in the Republic”.
When found that the transaction in issue is dutiable, the stamp duty is obligatory irrespective of whether a person will seek the assistance or not of the Court, and in the event that such documents are not stamped and timely so, penalties are imposed in accordance with Section 20 (b) and (c) of the Law.
According to Section 19, in a free translation, all the dutiable documents and those which have been drafted within the Republic have to be stamped at or prior to their signing or according to Section 20, within 30 days from signing.
According to Section 21, in case a document was drafted outside the Republic and is subject to stamp duty under the provisions of the Law, it will be considered that it was signed on the date that it was received in the Republic and it should be stamped within 30 days from such date.
For any delay further to the 30 days, penalties shall be imposed in accordance with Section 20(b) or (c), depending on the delay duration.