The Auditor General of Cyprus, Andreas Papaconstantinou, has expressed significant concerns regarding a notable property transaction that took place between 2015 and 2017. These concerns were highlighted in a Special Report by the Audit Office titled “Audit of the Tax Department in Relation to the Sale of Immovable Property,” which followed the submission of an anonymous complaint.
The initial sale agreement in 2015 set the property’s value at approximately €19.35 million. However, within six months, this agreement was cancelled and replaced with a new contract that slashed the sale price by €8.5 million — a dramatic 44% reduction. The report notes a lack of clear justification for this steep decline, raising red flags about the transaction’s transparency.
This price drop resulted in an accounting loss of €7.7 million, which was subsequently used to offset taxable profits in 2016. Comparatively, under the original terms, the company would have reported a profit rather than a loss. This discrepancy reveals potential tax-related consequences and subjects the transaction to closer scrutiny.
The Auditor General’s report also uncovered contradictions between reported costs and financial statements. In 2013, tax documents reflected costs of €9.3 million, whilst financial statements recorded these at €15.8 million. When the incomplete property sold in 2016, the total costs rose to €18.6 million, a figure that included capitalised interest during periods when construction activities were halted — an anomaly warranting further explanation.
The project was completed in 2018 at a reported total cost of €47.7 million. Interestingly, a similar but larger development nearby, completed in 2022, reportedly cost just €42.9 million. Most transaction parties involved were related entities, increasing the risk profile from a tax compliance perspective.
Additionally, around €62 million was raised through preference shares under the Cyprus Investment Programme. The audit highlighted that the valuation implied by these investments was inconsistent with the reported losses on the sale — another detail that complicates the overall financial picture.
The Auditor General criticized the Tax Department for apparently failing to identify or thoroughly examine these complex, high-value transactions. This lapse leaves unresolved questions about oversight and due diligence in Cyprus’s property market.
For those exploring property investments, it’s essential to understand the broader market and regulatory environment. Whether you’re searching for Cheap Houses and Villas for Sale Cyprus or considering different property categories, having clear, transparent information is crucial.
Learn more about current property listings and market insights to make well-informed decisions by visiting our listings on Cheap Apartments for Sale Cyprus.
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