Repayment of tax debts by instalments

by:MICHAEL KYPRIANOU & CO. LLC

The House of Representatives has passed a law whereby natural and legal persons who owe taxes can pay off their debt in instalments.

According to the new law, debtors who have debts below €100,000 can repay their debt in 54 monthly instalments, whereas debtors with debts of more than €00,000 can repay their debts in 60 monthly instalments. According to the instalments that will be made, as agreed to between the debtor and the Department of Taxation, the interest rate and other charges incurred will be stipulated. The fewer instalments there are, the greater the reduction will be in the interest rate and charges. Should the debtor, however, pay off the overdue amount in a lump sum, the Taxation Officer shall, by decree, rescind the maximum amount of interest and charges that would have been incurred.

The law will apply to debts that are in arrears with Income Tax, Capital Gains Tax, Inheritance Tax, Property Tax, the special contribution for Defence, and costs for revenue stamps.

Under the new law, whilst the debtor is under this monthly instalment plan, then debts may not be claimed via legal action.