News from Cyprus

  • Cyprus’ income tax exemptions: What you need to know!
    On 24 July 2017, the Cyprus Tax Department issued Interpretative Circular 2017/4 in relation to income tax exemptions, sections 8(21) and 8(23) of the Income Tax Law 118 (I)/02. The specific criteria of sections 8(21) and 8(23) are listed below: Exemption of section 8 (21):  Employees are exempt from income tax on 20% of their remuneration or €8,550 (whichever amount...
  • Cyprus: Introducing the new VAT appeal procedure
    The Cyprus VAT Act has been amended in relation to the procedure to be followed for an appeal against an assessment issued by the Tax Department. This amendment has come into force as of 7 July 2017. Specifically, the appeals should be submitted to the Tax Tribunal first and then to the Administrative Court, instead of to the Minister of...
  • Signature of the first double tax treaty between Luxembourg and Cyprus
    What will the impact be on cross border structuring? Introduction and background On 8 May 2017, Luxembourg and Cyprus signed their first double tax treaty (“Lux/Cyprus DTT”). Through this tax treaty, both countries aim to strengthen their economic and commercial relationship. While Cyprus broadens its tax treaty network as Luxembourg was one of the few EU countries with which it...
  • Cyprus Government to finance the implementation of Environmental Management Systems
    Within the framework of the State Grants Scheme for the year 2017 and as a result of the general framework of Eco-Management and Audit Scheme, the Cyprus Government announced a program of financial support to the organizations which will implement an Environmental Management System (EMAS). The Ministry responsible for the management and support of this particular project is the Ministry...
  • Cyprus rated safest country for young people
    According to the global youth mortality rates based on the World Health Organisation’s (“WHO”) data for 2015, Cyprus has been analysed to be the safest of 184 countries for young people, among a list of jurisdictions including the United Kingdom, Switzerland, Germany and many other respectable countries. The most dangerous country is considered to be Sierra Leone, where one youth...
  • 10 reasons a Cyprus citizenship can change your life
    No more Work Visa headaches Having a Cyprus citizenship broadens your professional opportunities and career growth, as only EU citizens have the freedom to move to an EU country and be easily employed without a work permit. Access to medical benefits, including free healthcare A European Health Insurance Card is free of charge for any EU citizen and allows one...
  • What makes Cyprus your future forever home?
    Cyprus is an undeniably attractive location for both business and pleasure. Recently, it was listed as one of the best places to relocate among a total of 23 countries worldwide. It ranked fifth on the Knight Frank Global Lifestyle Review. Cyprus was also ranked as 32nd place in the Forbes list for best destinations for business in 2017. Forbes evaluated...
  • Cyprus releases long-awaited Transfer Pricing guidelines on intra-group financing
    As of 1st July 2017, the tax treatment of intra-group financing arrangements has been amended in Cyprus.  Intra-group financing transactions refers to finance activities between related parties (as defined in Section 33 of the Income Tax Law), including permanent establishments in Cyprus. Based on the Interpretative Circular issued by the Cyprus Tax Department, intra-group financing arrangements must be taxed from...
  • To Petya or NotPetya; this is how to protect yourself!
    A new ransomware has risen and is spreading across Europe like wild fire. This new malware is creating chaos across businesses, from supermarkets to shipping ports, ad agencies and law firms. The new ransomware - code named “NotPateya” - shares some very similar characteristics to a very recent malware “Wannacry”. About NotPateya NotPateya gets its name from an older malware...
  • Cyprus tax residency in 60 days
    On 14th July 2017, the House of Representatives voted into law the revised criteria for determining the tax residency of individuals in Cyprus. Specifically, a second test is added in addition to the 183 day rule for individuals who do not spend more than 183 days in Cyprus or another jurisdiction.  As per the new test, all of the following...
  • Cyprus signs the Multilateral Instrument
    Cyprus - along other 67 countries and jurisdictions - formally signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (“MLI”) on 7 June 2017 in Paris. The MLI will implement a series of tax treaty measures to update the existing network of bilateral tax treaties and reduce opportunities for tax avoidance by...
  • Cypriot Permanent Residency and Citizenship by Investment
    Cyprus, one of the sunniest and safest locations in Europe, is an ideal location for both EU and non EU nationals looking for a high quality standard of living. The recently introduced simplified procedures for issuing Permanent Residency and Citizenship in Cyprus have made this relocation much easier and have increased the foreign investments into the island. Permanent Residency in...
  • Cypriot Work Permit for Non-EU Businessmen
    The recent increase in the interest of third-country (non-EU) nationals to temporarily or permanently reside in Cyprus is a direct result of the country’s attractive living and working conditions. Tax incentives, a solid legal system aligned with EU law, stability as well as safety, are all factors contributing to Cyprus becoming a strong business hub, as businessmen worldwide have identified...
  • 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...