News from Cyprus

  • A faster way to a Cypriot Citizenship: are you eligible?
    In 2016, the Cypriot Government announced certain amendments on the criteria which must be met by investors who wish to apply for a ‘’fast track’’ citizenship scheme. The amendments have essentially made the Cypriot Citizenship-by-Investment program more beneficial for investors and families. The most important change features the reduction of the minimum amount of investments from 2.5 million to 2...
  • Notional Interest Deduction, BEPS and Tax Structuring
    In 2015, Cyprus introduced the Notional Interest Deduction (‘NID’) in its tax law. The NID is notional interest deduction on new equity which can be set against taxable income generated by the company as a result of the funds from the new equity. NID is equal to the interest yield of the 10-year government bond yield of the country in...
  • International Automatic Info Exchange to commence in 2017
    International automatic exchange of financial account information (AEoI) – an issue of global importance[1] closely discussed and analyzed by professionals and market players during the last year - is constantly evolving, and, thus, requires further analysis and attention. We have already provided the basics of AEoI and its global standard in previous articles while in this article we would like...
  • Cyprus: Startup Visa for Third Country Nationals
    On 15th of February 2017, Cyprus adopted the “Startup Visa” (Startup Permit Scheme) for third country nationals interested in residing and investing in innovative businesses in Cyprus. Specifically, it allows talented entrepreneurs from third countries (Non EU, Non EEA), be it individuals or group of investors, to reside in Cyprus and to establish and/or operate and develop their own innovative...
  • Goodbye back-to-back loans, welcome Transfer Pricing!
    The Cyprus Tax Authorities, taking into consideration the International developments (OECD/G20 initiative – BEPS) have decided to proceed with the alteration of the current tax regime in relation to profit margins on loans between related parties. Specifically, it is expected that as of 1st of July 2017, all loans between Cyprus Tax Resident Companies and their related companies, will now...
  • Cyprus introduces installment payments for overdue taxes
    The Cyprus House of Representatives approved on Friday 27th of January 2017 a bill which provides for the payment of overdue taxes by monthly installments. The scheme covers income tax, VAT, special defense contribution, immovable property tax, capital gains tax, stamp duties, special contribution for employees, pensioners and self-employed persons, and inheritance tax. According to this new law the repayment...
  • Cyprus: A new circular sheds light on Transfer Pricing adjustments
    In the new circular issued on 24 November 2016, Cyprus’ Tax Authorities clarify that they will also allow downwards or compensating Transfer Pricing (TP) adjustments. Circular 2016/15 issued by the Ministry of Finance clarifies the application of article 33 of the Income Tax Law. Article 33 - as amended in 2015 (L.187(I)/2015) - provides the definition of the arm’s length...
  • New Cypriot Law abolishes the Special Contribution
    On 1 January 2017, the Cypriot Special Contribution was abolished. The Special Contribution applied in the period between 1 January 2014 and 31 December 2016 as an anti-crisis measure. It was levied at progressive rates with the top one being 3.5% (for income exceeding EUR 3,501) on a tax base equal to the gross monthly salary or pension. Yianna Georgiou,...
  • Electronic filing of VAT returns
    As from 2nd of May 2017, the electronic (online) submission of VAT Returns will be compulsory in Cyprus, per an announcement published in the Cyprus Official Gazette dated 16 December 2016. All VAT registered companies and individuals will now be required to submit their returns online through the Taxisnet system. In order to be able to electronically submit VAT Returns,...
  • New Cyprus-India Double Tax Treaty
    On 18 November 2016 Cyprus and India signed a new agreement for the avoidance of double taxation and prevention of fiscal evasion with respect to taxes on income (DTT).  The new DTT replaces the previous double tax treaty concluded between the two countries in 1994. The new agreement was ratified by Cyprus and published in the Official Gazette of the...
  • What to expect from the Multilateral Competent Authority Agreement on automatic exchange of country-by-country reports signed by Cyprus
    Development and global implementation of the Base Erosion and Profits Shifting (“BEPS”) Action Plan, prepared by the Organization for Economic Co-operation and Development (“OECD”), have successfully continued in 2016. The Country-by-Country (“CbC”) reporting initiative, under Action 13 of the BEPS, has not been an exception. As of December 7th 2016, fifty jurisdictions have already signed the Multilateral Competent Authority Agreement...
  • Are you aware of a tax-free liquidation of the CFC?
    Since the State Duma in the Russian Federation has passed the rules on controlled-foreign companies (“CFC”), there is an existing trend among Russian taxpayers on liquidation of the CFCs. A tax-free liquidation of a CFC became possible after the President of the Russian Federation signed a Federal Law No. 32-FZ on February 15, 2016 on amendments to the Russian Federation...
  • New Russian arbitration court decision on beneficial owner of income: risks for all international business owners
    Owners of Cyprus companies acting as holding companies may soon need to think of restructuring their business operations. Recently, the Russian Arbitration court has taken a new decision regarding the beneficial ownership of dividends payment. The decision concerns PAO “Severstal” and the double treaty benefits typically available to the dividend recipients. In this case, those benefits have been denied since...
  • Top incentives for businesses and individuals who choose Cyprus
    Cyprus continues to be one of the most preferred jurisdictions for international businesses managing and holding investments. An attractive place to do business, it is also one of the best gateways to invest in the European Union (“EU”). The sunny island located in the Eastern Mediterranean is constantly winning hearts of individuals and multinational enterprises. The transparent legal system, preferential...
  • Income Tax Treaty between Cyprus and Latvia signed
    Signed on the 24th of May 2016, the first Cyprus – Latvia Double Tax Treaty was ratified on the 3rd of June 2016. Details of the treaty became available during August 2016. The Treaty is based on the OECD Model Convention for the Avoidance of Double Taxation on Income and on Capital (2010). The main withholding tax rates with respect...
  • Cyprus-Ukraine DTT: Application of the reduced WHT rate
    On October 6th 2016, the Ukrainian State Fiscal Service (“USFC”) released Guidance Letter № 21833/6/99-99-15-02-02-15 (“Letter”), which clarifies the terms of application of the reduced rate of withholding tax (“WHT”) on dividends, paid by an Ukrainian legal entity to a Cypriot legal entity according to the provisions of the effective double-tax treaty (“DTT”), signed between Cyprus and Ukraine in 2012....
  • The amended Cyprus IP Box Regime
    Following our last article on the expected amendments to the Cyprus IP Box Regime , on 14 October 2016, the Cyprus House of Representatives voted into law the revised IP Box Regime of Cyprus. The new IP Box Regime, defines what constitutes qualifying intangible assets, qualifying profits/income, overall income and qualifying expenditure, as well as guidelines for maintaining accounting records....
  • Exchange of financial account information: Today`s reality for Cypriot and Ukrainian taxpayers holding accounts abroad
    The various instances of information leaks (Falcian`s Swissleaks, Luxembourg Leaks, Swiss Leaks, Panama Leaks), as well as the requirements on information exchange between countries imposed by international organizations (FATF, OECD), the EU legislation and domestic laws, essentially eliminate the possibility of any individual or company keeping a bank account abroad to bypass the regulations. Since the OECD has passed its...
  • Cyprus Citizenship by Investment Programme
    On the 13th of September 2016, the Cabinet proceeded with the amendment of the provisions for the granting of Cypriot Citizenship. The amendments were enacted in order to encourage investments in Cyprus by foreign investors and consequently to assist the economy. The most important provisions that were amended include the following: The threshold for minimum investment has been reduced to...
  • Cyprus amends Property Taxes and Fees
    Despite global market challenges, the Cyprus real estate market has remained attractive to foreign investors. A number of legislative changes were introduced during 2015 and 2016, further adding to this attraction, including the reduction -and in some cases the abolition- of transfer fees as well as reduction of immovable property taxes which are described below. Immovable Property Tax Every owner...
  • New Cypriot Law amending the Law on Termination of Employment
    On 25 July 2016 the Termination of Employment Law has been amended. The new amendments include: • Extension (from 6 to 12 months) of the period of prohibition of a warning preceding termination of employment to an employee who was absent from work due to incapacity. Additionally, the law protects the employee from dismissal after the return to work for...
  • Investing into Ukraine through a Cyprus Alternative Investment Fund
    During the last 6 months, Cyprus has taken one of the top places among foreign direct investors into the Ukrainian economy. Thus, as of the 1st April 2016, the amount of Cyprus investments into the share capital of Ukrainian entities exceeds 25% of all foreign investments. Various factors are considered to have enhanced the increase of investments in Ukraine, including...
  • Cyprus aims to boost startup sector with new tax incentives
    During a period of intensive efforts towards attracting foreign investors and building a healthy and developed financial and business system, the Cypriot Council of Ministers has recently approved new attractive tax incentives. The incentives target the support of new and innovative businesses with a main goal being the promotion of entrepreneurship and innovation in Cyprus. Specifically, the incentives provide for...
  • BREXIT: Retain your EU presence through Cyprus
    The British voters on 23rd June 2016 passed a historical decision to exit the European Union, changing the landscape and making the ‘’BREXIT’’ a forthcoming reality. Inevitably, this decision will also affect the entire financial sector, including both local and international companies which are currently based in the UK. Cyprus, being a full member state of the EU since 2004, has...
  • Cyprus and Jersey sign a Double Taxation Agreement
    Officials of Jersey and Cyprus have signed a Double Taxation Agreement (DTA) on 11 July 2016 in London. The agreement – negotiations for which have lasted since 2013 - will come into force once all the necessary parliamentary procedures in both countries are completed. Senator Bailhache for the Government of Jersey said “[t]he signing of the DTA with Cyprus continues...
  • India removes Cyprus from Blacklist
    On 1st November 2013 India blacklisted Cyprus for not disclosing crucial information on money transferred by Indian citizens conducting business in Cyprus who were suspected for tax evasion. Based on the exchange of information provisions of the Double Tax Avoidance Treaty signed between the two countries, the Indian tax authorities decided to classify Cyprus as a notified jurisdictional area under...
  • Cyprus Immovable Property Tax Reform
    On June 1st, 2016, the Cyprus Council of Ministers approved the reduction of immovable property tax rates by 50% from 1 per mille (that had been initially proposed) to 0.5 per mille. The decision of the reduction of the immovable property tax rate came following the obligation by the EU to charge VAT (at the current rate of 19%) on...
  • CYPRUS – U.S.A.: FATCA Competent Authority Arrangement concluded
    The Government of the United States of America and the Government of the Republic of Cyprus have concluded an agreement aimed at improving tax compliance through mutual assistance in tax matters based on an effective infrastructure for the exchange of information. On April 20th, 2016, the Cyprus Ministry of Finance released the official text of the competent authority arrangement (CAA)...
  • Optimise your Cyprus taxes by acquiring residency
    Cyprus | March 2016 | Tax structuring has been a very complicated issue for many years with clients being continuously advised on methods of planning their taxes. With confidentiality eliminated to a great extent and the ability of authorities of each country to request information for all controlling persons in a company at any time, it is a good idea...
  • Important amendments to the Cyprus tax laws
    Cyprus | March 2016 On December 10th, 2015, the Cyprus House of Representatives voted into law numerous anticipated tax law amendments, which were published in the Government Gazette on December 17th, 2015. Amendments were made to: • The income tax law. • The capital gains tax law. • The assessment and collection of taxes law. The major rationale of these...
  • Recent developments in the Cyprus Intellectual Property tax field: Are you prepared for 30 June 2016 and 31 December 2016?
    If you already own an IP box company in Cyprus, or if engaging to one is of your interest, recent international developments at G20 / OECD / EU level, and the Cyprus Ministry of Finance (MoF) December 30th, 2015 announcement, requires your special attention. As per this announcement, amendments to the current Cyprus Intellectual Property tax regime will be promoted,...
  • Entry into force of the Cyprus – Georgia Double Tax Treaty
    On May 13th, 2015 the Finance Ministers of Cyprus and Georgia signed a Double Tax Treaty (DTT) in Tbilisi during the 24th annual meeting of the European Bank of Reconstruction and Development (EBRD). This is the first such agreement concluded between the two countries and is providing promising ground towards strengthening of the economic relations between the two nations. The...
  • Reduced Withholding Tax rate on dividends from Russia to Cyprus
    On October 9th, 2015, the Ministry of Finance (MoF) of Russia, issued Letter No. 03-08-13/57909 in order to provide further clarification on the application of the reduced withholding tax rate on dividends in accordance with Article 10 of the Double Tax Treaty between Russia and Cyprus. The letter relates to Letter No. 03-08-05/49439 issued on October 2nd, 2014 on the...
  • Cyprus: Extension of employment income tax exemptions of 20% and 50%
    Cyprus | February 2016 | Important amendments to the Cyprus Tax Legislation On December 10th, 2015, the Cyprus House of Representatives voted into law numerous anticipated tax law amendments, published with the Government Gazette on December 17th, 2015, amongst which are changes to the Taxation Scheme of Individuals, as follows: Extension of employment income tax exemptions of 20% and 50%...
  • New Types of Residence permits to third-country nationals
    Cyprus | February 2016 | The Civil Registry and Migration Department (CRMD) announced that as of Monday, February 8th, 2016, the article 18FZ (7) of the Aliens and Immigration Law (Cap.105) as well as article 4 of the Aliens and Immigration (Amending) (No.2) Law (Ν129(Ι)/2014, O.G. Annex.Ι(Ι) No. 4456 has entered into force and will be implemented for residence permits...