Our firm successfully represented, The Provident Fund of Workers in the Construction Industry and Related Sectors of Cyprus (the “Appellants”), in a pivotal tax dispute concerning the classification of property sales for capital gains tax purposes. 

The case involved the decision of the Cyprus Tax Commissioner, which was upheld by the Tax Council, to impose capital gains tax of EUR 6,818,840.40 on the sale of four (4) properties in Larnaca in 2007. The Appellants contended that the transactions should be classified as business activities rather than investment liquidations, thereby qualifying for exemption from capital gains tax.

At First Instance, the appeal was dismissed by the Administrative Court. Our clients appealed against the First Instance Court’s decision, emphasising the history of frequent real estate transactions as indicative of business activity. 

The Supreme Constitutional Court, in its decision issued in February 2025, ruled in favour of the Appellants, concluding that the transactions closely resembled past cases classified as business activities. The Tax Authorities failed to provide adequate justification for treating this case differently. Consequently, the initial ruling was deemed incorrect, and the property sales were recognised as commercial transactions. Therefore, the decision that imposed the contested capital gains tax has been annulled.

The applicants were represented before the Supreme Constitutional Court by our associate, Riana Pasiourtidi.