Mr Philippos Aristotelous

Philippos Aristotelous

Updates

Corporate Tax

New double tax agreement between Cyprus and Saudi Arabia
Cyprus | January 19 2018

Cyprus and Saudi Arabia recently signed an agreement for the avoidance of double taxation with respect to taxes on income and the prevention of tax evasion. The agreement provides for the exchange of financial and other information in accordance with the relevant article of the Organisation for Economic Cooperation and Development Model Convention for the Avoidance of Double Taxation on Income and on Capital. It will take effect once formal ratification procedures have been completed.

Taxation of deemed benefits on loans and advances to directors and shareholders
Cyprus | January 12 2018

The Tax Department recently issued Interpretative Circular 14, which has clarified the application of the Income Tax Law regarding a deemed benefit which is to be assessed on any drawings, loan or other financial facilities granted by a company to a non-resident director or shareholder or their spouse or close relatives. The circular clarifies that the deemed benefit is taxable in full, regardless of the period of residence of the individual in question.

Treatment of additional taxes for deemed distribution purposes
Cyprus | January 05 2018

The Cyprus Tax Department recently clarified the treatment of additional taxes imposed under the Assessment and Collection of Taxes Law. The department has specified that any additional tax is to be treated as such, meaning that penalties and interest will be imposed if they are not paid on time. The taxes are included under the term 'corporation tax' and are deductible from accounting profits for the purpose of calculating the deemed distribution for special defence contribution tax.

Extension of country-by-country reporting deadlines
Cyprus | December 22 2017

The Tax Department recently extended the deadline for the submission of country-by-country reports to be filed by the end of 2017. The deadline for reporting entities to submit country-by-country reports for multinational groups for the fiscal year ending December 31 2016 has been extended by two months, while the deadline for Cyprus-resident constituent entities to file their notifications for the fiscal year ending December 31 2017 has been extended to January 15 2018.

Further reminder of instalment scheme for tax arrears
Cyprus | December 15 2017

With the extended deadline for the submission of applications for inclusion in the deferred settlement scheme for tax arrears established by Law 4(I)/2017 now less than one month away, the Tax Department has issued a further reminder of the scheme's main features. For example, all tax returns due must have been submitted and all tax liabilities for periods after December 31 2015 must have been settled or be in the process of being settled in accordance with an agreed payment schedule.

Extension of accelerated writing-down allowances for tax purposes
Cyprus | December 08 2017

The Income Tax Law was amended in 2012 to introduce accelerated capital allowances for tax purposes on assets purchased between 2012 and 2014, inclusive. For plant and machinery acquired up to the end of 2018, the annual writing-down allowance rate will be 20% or any higher rate applying to the category of assets concerned. For industrial buildings and hotels acquired up to the end of 2018, the annual writing-down allowance will be 7%.

Public consultation on proposed legislation to implement EU Anti-tax Avoidance Directive
Cyprus | November 24 2017

The Tax Department recently opened a public consultation on proposed legislation to implement the EU Anti-tax Avoidance Directive, which extends the rules to hybrid mismatches. The consultation period will last until December 8 2017. The consultation documents, which are in Greek, are available on the Tax Department's website.

Settlement of overdue tax liabilities under Process of Adjustment of Tax Arrears Law
Cyprus | November 10 2017

The Process of Adjustment of Tax Arrears Law 2017 established a procedure for settling tax arrears by monthly instalments, providing a waiver of up to 95% of interest and penalties and covering all nationally imposed taxes. The Tax Department recently issued an announcement informing taxpayers who have applied to participate in the scheme that strict compliance with the agreed terms is essential. In particular, payments must be made on or before the due date or penalties will be applied.

Process of Adjustment of Tax Arrears Law amended
Cyprus | October 13 2017

The Process of Adjustment of Tax Arrears Law 2017 established a procedure for settling tax arrears by monthly instalments and provided a waiver of interest and penalties of up to 95% for all nationally imposed taxes. The law was recently amended by Law 129(I)/2017, which has extended the deadline for submitting applications from three months after the law took effect to six months.

Reference rates for notional interest deduction for Greece, Italy and Kazakhstan
Cyprus | October 06 2017

The Income Tax Law provides for a notional interest deduction for tax purposes on new equity capital injected into companies and permanent establishments of foreign companies on or after January 1 2015 to finance business assets, calculated by applying a reference rate to the new equity. The Tax Department recently announced the bond yields for Greece, Italy and Kazakhstan which will be used to calculate the notional interest deduction for the 2016 and 2017 tax years.

New law for payment of tax arrears by instalments comes into effect
Cyprus | July 21 2017

The Process of Adjustment of Tax Arrears Law 2017 establishes a procedure for settling tax arrears by monthly instalments. The law covers all taxes assessed by the Tax Department for tax years up to and including 2015, as well as all amounts payable as a result of the submission of a self-assessment in respect of those tax years in which the tax returns for the relevant tax year have already been submitted but no tax payment has been made.

Cyprus formally signs multilateral instrument on base erosion and profit shifting
Cyprus | July 07 2017

Cyprus was among the first 68 jurisdictions to formally sign the Multilateral Convention to Implement Tax Treaty-Related Measures to Prevent Base Erosion and Profit Shifting. In order to qualify for the benefits of Cyprus's covered double tax treaties once the multilateral instrument is fully implemented, companies must demonstrate real economic substance in Cyprus.

Details of Cyprus-Luxembourg double tax agreement released
Cyprus | June 30 2017

Details of the double tax agreement between Cyprus and Luxembourg were recently published by the Luxembourg authorities. The agreement closely follows the latest Organisation for Economic Cooperation and Development (OECD) Model Tax Convention for the Avoidance of Double Taxation on Income and on Capital and the OECD Multilateral Convention to Implement Tax Treaty-Related Measures to Prevent Base Erosion and Profit Shifting.

Payment of 2016 income and corporate income tax
Cyprus | June 23 2017

​The Tax Department recently issued a reminder to taxpayers regarding the payment of any remaining income tax and corporate income tax due for 2016. Under Cyprus's self-assessment scheme taxpayers must pay the estimated tax for any year in two equal instalments during the year of assessment and pay any outstanding balance in the following year.

New double tax agreement between Cyprus and Luxembourg
Cyprus | June 16 2017

The new double tax agreement between Cyprus and Luxembourg was recently published on the Luxembourg tax administration's website. Under the agreement, the withholding tax on dividends is zero if the beneficial owner is a company that holds at least 10% of the share capital of the company paying the dividend, and is limited to 5% in other cases. In any event, Cyprus imposes no withholding tax on dividends paid to shareholders overseas.

Double tax agreements: new agreement signed and existing agreement amended
Cyprus | May 26 2017

The finance ministers of Cyprus and Luxembourg recently signed the first double tax agreement between the two countries. The agreement incorporates all of the required international standards regarding information exchange. Further, a protocol amending the double tax agreement between Cyprus and San Marino was recently signed. Details of the amendments, which will take effect only when the protocol has been ratified by both countries, have yet to be released.

Overview of Cyprus-Barbados double tax agreement
Cyprus | May 19 2017

The new double tax agreement between Cyprus and Barbados was recently published in the Official Gazette. The agreement will enter into force once each country has notified the other that its domestic ratification procedures have been completed and will have effect from the following January 1. The agreement closely follows the 2014 version of the Organisation for Economic Cooperation and Development Model Tax Convention.

Cyprus and Barbados sign double tax agreement
Cyprus | May 12 2017

After several years of negotiations, Cyprus and Barbados recently signed an agreement for the avoidance of double taxation. The agreement's text has not yet been published, but according to the Ministry of Finance, it follows the Organisation for Economic Cooperation and Development Model Tax Convention. The agreement will take effect after formal ratification procedures have been completed in both countries.

Double tax agreement between Cyprus and Iran enters into force
Cyprus | April 28 2017

The double tax agreement between Cyprus and Iran recently entered into force following completion of all of the requisite ratification procedures. Given Cyprus's geographical proximity to Iran, the Cyprus government hopes that the double tax agreement will help to establish Cyprus as the principal portal for investment between Iran and the European Union.

Reduced withholding tax under Cyprus-Russia double tax agreement
Cyprus | April 07 2017

Claims for the reduced rate of withholding tax on dividends have been the most common area of dispute under the Cyprus-Russia double tax agreement. Under the agreement, a reduced rate of withholding tax applies to dividends paid by a company resident in one contracting state if the dividends' beneficial owner is a resident of the other contracting state and has directly invested the equivalent of at least €100,000 in the company paying the dividends.

New law for payment of tax arrears by instalments
Cyprus | March 24 2017

The Process of Adjustment of Tax Arrears Law 2017 was recently published in the Official Gazette. It will take effect on a future date to be determined by the commissioner of taxation and establishes a procedure for settling tax arrears which arise before that date by monthly instalments. The new law does not affect existing arrangements for tax debts to be repaid by instalments, apart from giving the debtor the right to apply to have the balance of the debt dealt with under the new law.

Reference rates for notional interest deduction for 2017
Cyprus | March 10 2017

Article 9(B) of the Income Tax Law 2002 (as amended) provides for a notional interest deduction for tax purposes on new equity capital injected into companies and permanent establishments of foreign companies on or after January 1 2015 to finance business assets, calculated by applying a reference rate to the new equity. The Tax Department recently announced the 10-year government bond yields for December 31 2016, which will be used as the basis for the notional interest deduction for 2017.

Cyprus-Russia double tax agreement – importance of proper structuring
Cyprus | March 03 2017

Proper structuring is important to ensure that the Cyprus-Russia double tax agreement's strict requirements are observed. This was illustrated by the denial of the preferential 5% rate on dividends paid by Severstal PJSC to its four Cyprus-resident shareholders. The Russian tax authorities successfully argued that the Cyprus-resident companies, which were owned by BVI-resident companies, were conduit companies established with the main objective of ensuring a favourable tax regime.

Exchange of information with Austria
Cyprus | February 24 2017

The Tax Department recently issued guidance relating to the exchange of information with Austria under the EU Directive on the Mandatory Exchange of Information (2014/107/EC). As of January 1 2016, Cyprus must provide information on payments that fall within the scope of the directive made to Austrian residents in the same way that it does for payments made to residents of other EU member states.

New law on payment of tax arrears approved
Cyprus | February 17 2017

Parliament recently approved a new law which provides for the payment of overdue taxes by monthly instalments. The scheme covers a wide range of taxes, the most relevant of which for companies are income tax, value added tax, special defence contributions, immovable property tax, capital gains tax, stamp duties and special contributions for employees. The new law also gives the tax commissioner discretion to grant discounts on interest and penalties on a case-by-case basis.

Cyprus implements country-by-country reporting
Cyprus | February 10 2017

After approval by the Council of Ministers at its September 28 2016 meeting, Cyprus signed the Organisation for Economic Cooperation and Development's Multilateral Competent Authority Agreement for the Automatic Exchange of Country-by-Country Reports on November 1 2016. Following publication in the Official Gazette on December 30 2016, the agreement is now binding on Cyprus in accordance with Article 169.3 of the Constitution.

Deferral of source-based taxation of gains on disposal of shares in property-rich companies
Cyprus | February 03 2017

The Ministry of Finance recently announced that the Russian government has agreed to defer the introduction of source-based taxation of capital gains on disposals of shares in so-called 'property-rich' Russian companies, which was due to take place on January 1 2017. Disposals of shares in property-rich companies will continue to be taxable only in the country of residence of the person disposing of the shares, in the same way as other shares.

New tax relief for investors in small and medium-sized innovative enterprises
Cyprus | January 27 2017

The Income Tax (Amendment) (No 2) Law 2016 introduces new tax relief for investors in qualifying small and medium-sized innovative enterprises. The amendment law adds a new Section 9A to the Income Tax Law 2002, allowing independent investors in such enterprises to deduct the cost of the investment from their taxable income for the year in which the investment was made. The deduction is limited to 50% of the investor's taxable income for the year or €150,000, whichever is less.

Application of Article 33 of Income Tax Law
Cyprus | January 13 2017

The Tax Department recently clarified the application of Article 33 of the Income Tax Law 2002 following the amendments made by Law 187(I)/2015. Article 33 allows the tax authorities to adjust transactions between related parties on terms which, in the opinion of the authorities, deviate from those which would apply in similar transactions between independent enterprises on an arm's-length basis.

Revised double tax agreement between Cyprus and India published
Cyprus | January 06 2017

The revised double tax agreement between Cyprus and India marks a significant milestone in the restoration of tax relations between the two countries and provides new opportunities for trade and investment. The new agreement closely follows the 2010 Organisation for Economic Cooperation and Development Model Tax Convention, with only minor modifications, and the protocol to the agreement clarifies a number of provisions.

Taxation of betting companies
Cyprus | December 16 2016

The Tax Department recently issued Circular 2016/14, which clarifies the taxation arrangements for companies that provide betting services under a licence issued by the National Betting Authority in accordance with the Gambling Law 2012. The circular clarifies that, despite the tax exemption, Article 5A of the Assessment and Collection of Taxes Law 1978, as amended, continues to apply to such companies.

Amendment to tax law serves to clarify rather than change
Cyprus | December 09 2016

A recent amendment to the Capital Gains Tax Law was implemented with immediate effect in order to clarify and confirm existing practice. Although the amendment made no substantial changes to the law, it has amended Articles 6, 9 and 10 regarding allowable deductions, disposal proceeds and certain transactions, respectively.

Revised double tax agreement between Cyprus and India signed
Cyprus | December 02 2016

The revised double tax agreement between Cyprus and India was recently signed in Nicosia. As was widely expected following similar changes to India's double tax agreements with Mauritius and Singapore, the agreement provides for source-based taxation of gains from the alienation of shares. However, investments undertaken before April 1 2017 are grandfathered, with taxation rights over gains on the disposal of these shares at any future date remaining solely with the seller's state of residence.

Exemption from tax on interest derived from qualifying international shipping activities
Cyprus | November 11 2016

The Tax Department recently issued a circular clarifying the exemption from tax on interest received by owners, charterers or managers of ships that opt to be taxed under the Merchant Shipping (Fees and Taxing Provisions) Law of 2010. According to the circular, the tonnage tax law exempts from all taxes interest received by or credited to eligible owners, charterers and managers of ships in qualifying bank accounts.

Changes to IP box scheme proposed
Cyprus | November 04 2016

Parliament recently amended the Income Tax Law to bring its provisions on the taxation of income from the use or sale of intangible assets into line with the 'modified nexus' approach. While the assets and categories of expenditure that qualify for relief are now more restricted, Cyprus's IP box still represents an attractive option for taxpayers, with an effective tax rate of less than 2.5% on qualifying income.

Notional interest deduction rates for new capital used to finance assets in Russia revised
Cyprus | October 07 2016

The Tax Department recently revised the reference rates used to calculate the notional interest deduction under Article 9B of the Income Tax Law for new capital used to finance assets employed in Russia. In a revised announcement published on the department's website, the reference rates for Russian government 10-year bonds for capital introduced in 2015 and 2016 were reduced to 6.58% and 6.60%, respectively.

Practical guidance on calculating notional interest deduction
Cyprus | September 16 2016

The Tax Department has issued guidance on the application of the provisions introduced in 2015 for a notional interest deduction. The guidance sets out the legal basis for the notional interest deduction and explains the underlying concepts, definitions and basic principles of calculating the deduction and its application in practice.

Further progress on ratification of new Cyprus-India double tax agreement
Cyprus | September 09 2016

A further step towards implementation of the renegotiated double tax avoidance agreement between Cyprus and India has taken place with the announcement that the Indian Cabinet has approved the document. As was widely expected, the revised agreement provides for source-based taxation of gains from the alienation of shares.

Details of double tax agreement between Cyprus and Jersey
Cyprus | August 26 2016

Cyprus and Jersey recently signed their first comprehensive double tax agreement, which closely follows the 2010 Organisation for Economic Cooperation and Development Model Tax Convention. As Jersey is an important financial centre and the double tax agreement will be a valuable addition to Cyprus's extensive treaty network, it is hoped that the remaining steps required to bring it into effect can be completed quickly.

Cyprus and Latvia sign double tax agreement
Cyprus | August 12 2016

Cyprus and Latvia recently signed a double tax agreement which includes provisions regarding permanent establishment, dividends, interest and royalties, capital gains, offshore activities, the elimination of double taxation and the exchange of information. The agreement will enter into force once each country has notified the other through diplomatic channels that the relevant constitutional procedures have been completed.

Signature of double tax agreement between Cyprus and Jersey
Cyprus | August 05 2016

Cyprus has further extended its network of double tax agreements by signing a new agreement with Jersey. As a crown dependency of the United Kingdom, Jersey is an important financial centre with financial services accounting for one-quarter of all jobs and two-fifths of the country's economic activity. The agreement is expected to enhance Cyprus's trade and economic ties with Jersey, as well as with other countries.

Negotiations to amend Cyprus-India double tax agreement concluded
Cyprus | July 22 2016

The Ministry of Finance recently announced that the negotiations on the double tax agreement between Cyprus and India have been concluded. The agreement provides for source-based taxation of gains from the alienation of shares. However, investments undertaken before April 1 2017 are grandfathered, with taxation rights over gains on the disposal of these shares at any future date remaining solely with the state of residence of the seller.

Cyprus-India double tax agreement concluded in principle
Cyprus | June 24 2016

According to reports in the Indian media, the Cyprus Foreign Ministry has confirmed that the Cyprus authorities have informed their Indian counterparts that they are ready to finalise the new double tax agreement between the two countries, having accepted in principle the Indian government's proposed changes regarding the taxation of capital gains.

Double tax agreement between Cyprus and Bahrain enters into force
Cyprus | June 17 2016

The Tax Department has announced that the double tax agreement with Bahrain, which was signed in 2015, recently entered into force following the completion of ratification procedures in both countries. Its provisions will have effect for the tax years beginning on or after January 1 2017 and for taxes withheld at source on or after that date.

Additional rates for calculating notional interest deduction for new equity capital announced
Cyprus | June 10 2016

The Tax Department recently announced government bond rates at December 31 2015 for the Czech Republic, Latvia, Poland and the United Arab Emirates, on which the notional interest deduction on capital introduced in 2016 will be based. The notional interest deduction for capital introduced during 2015 to finance assets used in any of these countries or in Ukraine will be based on the rate for Cyprus.

Fees for issuance of advance tax rulings
Cyprus | June 03 2016

In October 2015 the Tax Department introduced a new formal procedure for obtaining advance tax rulings. The government recently issued a statutory order under Article 44 of the Income Tax Law setting the fee for obtaining advance rulings at €1,000. The taxpayer may request an expedited ruling, guaranteeing a response in 21 working days, provided that all the necessary information is supplied. In this case the fee is €2,000.

Ministry of Finance announces commitment to country-by-country reporting
Cyprus | May 27 2016

The Ministry of Finance recently announced that it intends to make the amendments required to domestic law to introduce country-by-country reporting in line with the draft EU directive amending the directive on administrative cooperation in the field of taxation. The draft directive requires member states to amend domestic legislation by the end of 2016 and apply the relevant provisions from the start of 2017.

New rates for calculating notional interest deduction for new equity capital
Cyprus | May 20 2016

In July 2015 the government introduced a notional interest deduction on new equity capital injected into companies and permanent establishments of foreign companies on or after January 1 2015 for the purpose of financing business assets. The Tax Department recently announced the 10-year government bond rates which will be used to calculate the notional interest deduction on capital introduced in 2016.

Progress on ratification of protocol to Cyprus-Ukraine double tax agreement
Cyprus | April 29 2016

The protocol amending the Cyprus-Ukraine double tax agreement recently took another step towards ratification after Ukraine's Cabinet of Ministers approved it and forwarded it to Parliament for ratification. The protocol includes a 'most-favoured nation' commitment, whereby if Ukraine enters into another double tax agreement with more favourable provisions, the Cyprus-Ukraine agreement will be amended to match them.

New double tax agreement between Cyprus and Ethiopia
Cyprus | March 18 2016

Cyprus and Ethiopia recently signed a double tax agreement. It limits withholding tax on dividends, interest and royalties paid by a resident of one contracting state to a resident of the other to no more than 5%. Either contracting state may terminate the agreement by giving six months' written notice no earlier than five years after the agreement enters into force.

Rates for calculating notional interest deduction for new equity capital
Cyprus | February 19 2016

In July 2015 the government introduced a notional interest deduction on new equity capital injected into companies and permanent establishments of foreign companies on or after January 1 2015 for the purpose of financing business assets. The Tax Department recently announced the 10-year government bond rates on which the notional interest deduction for the 2015 tax year will be based for a number of countries.

Proposed changes to IP box scheme
Cyprus | February 12 2016

Following opposition to IP box regimes, G20 leaders agreed on a 'modified nexus' approach that allows a taxpayer to benefit from an IP regime only to the extent that it can show material relevant activity, including a clear connection between the rights which create the IP income and the activity which contributes to that income. The Ministry of Finance recently announced plans to amend the Cyprus IP box regime in line with this approach.

Amendments to tax laws to promote restructuring
Cyprus | February 05 2016

Tax laws were recently amended to temporarily exempt loan restructuring from tax in order to facilitate and encourage the restructuring of non-performing loans. Following the amendments, any benefit, profit or gain arising in the context of restructuring is exempt from income tax and any gain arising from the disposal of property in the context of a restructuring is exempt from capital gains tax.

Implementation of OECD Common Reporting Standard
Cyprus | January 22 2016

The Ministry of Finance recently issued a decree implementing the Organisation for Economic Cooperation and Development Common Reporting Standard. The decree sets out the framework for financial institutions operating in Cyprus to collect and review customer and investor information regarding tax residence, and to forward prescribed information to the national tax authorities for disclosure to relevant overseas tax authorities.

Second instalment of amendments to tax laws enacted
Cyprus | January 15 2016

The government recently passed the second instalment of tax incentives aimed at simplifying the tax regime to make it more attractive, effective and equitable, with the aim of stimulating economic activity and attracting direct investment. The latest amendments include provisions to simplify the taxation of offshore hydrocarbon activities, the extension of group relief to overseas companies and the introduction of tax neutrality for foreign exchange gains and losses.

Protocol to double tax agreement between Cyprus and Ukraine signed
Cyprus | January 08 2016

The Ministry of Finance has recently announced that the protocol to the double tax agreement between Cyprus and Ukraine has been formally signed. A most-favoured nation clause has been agreed for taxes on interest, dividends, royalties and capital gains, which ensures that Cyprus will be treated no less favourably than any of Ukraine's other double tax agreement counterparties.

Double tax agreement between Switzerland and Cyprus enters into force
Cyprus | November 20 2015

The Tax Department recently announced that the new double tax agreement with Switzerland, signed on July 25 2014, entered into force on October 15 2015. It will therefore have effect regarding taxes withheld at source on amounts paid or credited on or after January 1 2016. For other taxes it will have effect for tax years beginning on or after that date.

OECD revises Cyprus Phase 2 rating to 'largely compliant'
Cyprus | November 13 2015

The Organisation for Economic Cooperation and Development Global Forum on Transparency and Exchange of Information for Tax Purposes has revised its Phase 2 rating for Cyprus to 'largely compliant'. Cyprus was found to have dealt satisfactorily with all of the deficiencies that were identified in the initial Phase 2 assessment and to be fully compliant or largely compliant with the required standards of the 10 assessment areas.

Changes to tax rulings procedure
Cyprus | October 30 2015

The Tax Department provides written replies to requests on the interpretation of tax law. In anticipation of changes at the EU level on the automatic exchange of cross-border rulings, and recognising the usefulness of tax rulings in eliminating uncertainty, the department has issued a circular formalising the procedures for obtaining advance tax rulings and setting out the terms on which they are binding.

Details of double tax agreement between Cyprus and Iran
Cyprus | October 09 2015

Cyprus and Iran recently signed a double tax agreement which closely follows the 2010 Organisation for Economic Cooperation and Development Model Tax Convention. The agreement covers income tax in Iran and Cyprus and corporate income tax, the special contribution for defence and capital gains tax in Cyprus. It also provides opportunities for investments into Iran to be channelled via Cyprus.

Protocol amending double tax agreement between Cyprus and Ukraine agreed
Cyprus | September 25 2015

The Ministry of Finance has announced an agreement with its Ukraine counterpart on a protocol that will amend the existing double tax agreement between the two countries. A most-favoured nation clause has been agreed for taxes on interest, dividends, royalties and capital gains, ensuring that Cyprus will be treated no less favourably than any of Ukraine's other double tax agreement counterparties.

Amendments to tax laws
Cyprus | September 11 2015

The government recently submitted a package of amendments to the tax laws to the House of Representatives with the aim of encouraging economic activity, attracting inward direct investment and simplifying the tax regime to make it more attractive, effective and equitable. The amendments will affect income tax, special defence contribution and capital gains tax.

Protocol amending Cyprus-South Africa double tax agreement signed
Cyprus | August 28 2015

Cyprus and South Africa recently signed a protocol amending their double tax agreement. The protocol amends the definition of 'residence', withholding taxes on dividends and the exchange of information, but does not change the highly beneficial arrangements regarding the taxation of capital gains. The protocol will enter into force when both countries complete their ratification procedures.

New double tax agreement between Cyprus and Iran
Cyprus | August 14 2015

Cyprus and Iran recently signed a double tax agreement following several years of negotiations. The agreement is the latest step in the Cypriot government's programme of expanding its network of double tax agreements and opens up new opportunities for trade and cooperation between the two countries following the lifting of international sanctions against Iran.

New double tax agreement with Georgia
Cyprus | August 07 2015

Cyprus and Georgia recently signed a double tax agreement. It closely follows the 2010 Organisation for Economic Cooperation and Development Model Tax Convention, with minor modifications, and the protocol to the agreement clarifies the information exchange provisions. The agreement will come into force once it has been ratified in accordance with both countries' domestic legal procedures.

Proposed amendments to tax laws
Cyprus | July 17 2015

The Cyprus government has announced a number of proposed tax incentives aimed at encouraging economic activity and attracting inward direct investment. It has also submitted a number of draft laws to the House of Representatives to implement the new provisions of the EU Parent-Subsidiary Directive to simplify the tax regime and make it more attractive, objective and effective.

IP box – a limited opportunity
Cyprus | June 05 2015

Cyprus's package of incentives and tax exemptions relating to investment in IP rights, commonly known as the IP box, will be closed to new entrants from June 2016. The scheme provides for a maximum tax rate of 2.5% on income earned from IP assets. Any business with significant IP assets or income should consider availing of Cyprus's IP box while the opportunity lasts.

Proposed information exchange amendments
Cyprus | May 22 2015

The government recently published a draft law which amends the Assessment and Collection of Taxes Law to facilitate the implementation of agreements for automatic exchange of information with other countries. Under the law, the tax commissioner may provide information to implement agreements for automatic exchange of information between Cyprus and other countries.

Double tax agreement signed with Bahrain
Cyprus | April 24 2015

Cyprus recently signed a new double tax agreement with Bahrain. Together with other agreements between the two countries signed at the same time, the double tax agreement should boost trade between them, which has hitherto been modest. Investment flows between Cyprus and Bahrain are more substantial and the new agreement should also encourage these.

Negotiations in progress for double tax agreement with Barbados
Cyprus | April 10 2015

The Barbados Government Information Service has announced that negotiations are in progress for a double tax agreement between Cyprus and Barbados, as well as for cooperation in other areas, such as tourism. The conclusion of a double tax agreement between the two countries will assist cooperation in other fields and extend Cyprus's treaty network into the Caribbean.

Cyprus formally removed from Spanish tax haven blacklist
Cyprus | February 13 2015

Cyprus has been formally removed from the Spanish tax authorities' blacklist of countries regarded as tax havens following the recent entry into force of the double tax agreement between Spain and Cyprus. Formal removal from the blacklist eliminates any doubts regarding the entitlement of Cyprus-resident companies to certain deductions and concessions contained in Spanish tax regulations.

New double tax agreement between Cyprus and Iceland
Cyprus | February 06 2015

The new double tax agreement between Cyprus and Iceland recently entered into force. The agreement is based on the Organisation for Economic Cooperation and Development Model Convention for the Avoidance of Double Taxation on Income and extends Cyprus's network of double tax agreements to cover 53 countries. The agreement includes provisions on dividends, interest, royalties, capital gains and information exchange.

Cyprus-Lithuania double tax agreement takes effect
Cyprus | January 16 2015

The double tax agreement between Cyprus and Lithuania recently took effect. Under its terms there is no withholding tax on dividends paid by a company resident in Lithuania to a company (but not a partnership) resident in Cyprus, provided that the recipient is the beneficial owner of at least 10% of shares in the company paying the dividend.

Cyprus signs agreement with United States under FATCA
Cyprus | December 19 2014

Cyprus and the United States recently signed an agreement under the Foreign Account Tax Compliance Act (FATCA). As the reporting authority under the agreement, the Inland Revenue Department will issue guidelines for interpreting the agreement in due course. In addition, the Assessment and Collection of Taxes Law will be amended to include the collection and automatic exchange of information in line with FATCA.

Cyprus among first signatories to new OECD/G20 standard
Cyprus | November 28 2014

Cyprus recently became one of the 51 jurisdictions to sign the new Organisation for Economic Cooperation and Development /G20 Standard for Automatic Exchange of Financial Account Information in Tax Matters at the annual meeting of the Global Forum on Transparency and Exchange of Information for Tax Purposes. The new standard provides for the automatic exchange of all financial information on an annual basis.

Implications of latest Russian 'de-offshorisation' proposals
Cyprus | November 07 2014

The Russian Ministry of Finance recently published the third version of the draft law on the package of tax initiatives generally referred to as 'de-offshorisation'. Users of Cyprus structures for investment into Russia should analyse the companies and other entities involved in order to assess the possible implications in terms of future tax costs and develop strategies for mitigating them.

New double tax agreement between Cyprus and Guernsey
Cyprus | September 05 2014

Cyprus recently signed a new double tax agreement with Guernsey. Guernsey is among the world's most important financial centres and the double tax agreement will be a valuable addition to Cyprus's extensive treaty network. The new agreement closely follows the 2010 Organisation for Economic Cooperation and Development Model Convention and the protocol to the agreement clarifies the information exchange provisions.

New double tax agreement between Cyprus and Switzerland
Cyprus | August 22 2014

Switzerland and Cyprus recently signed a new agreement for the avoidance of double taxation. It is the first double tax agreement between the two countries and will contribute to the development of bilateral economic relations. The agreement will come into force once it has been ratified by both countries.

Cyprus signs Council of Europe-OECD tax convention
Cyprus | July 25 2014

Cyprus has signed the Council of Europe-Organisation for Economic Cooperation and Development (OECD) Convention on Mutual Administrative Assistance in Tax Matters and its Protocol. The convention seeks to strengthen international cooperation among member states of the Council of Europe and the OECD with a view to combating and countering tax avoidance and evasion.

New decision on wording of Cyprus-India double tax agreement
Cyprus | July 11 2014

The Indian Income Tax Appellate Tribunal recently confirmed that the wording of the double tax agreement between Cyprus and India concerning taxing rights in relation to international shipping activities is unambiguous and not open to further interpretation. This meant that the company concerned was subject to tax in Cyprus rather than in India, resulting in considerable savings.

New double taxation agreement between Cyprus and Spain enters into force
Cyprus | June 13 2014

The Spanish government has announced that the double tax agreement between Cyprus and Spain, which was signed in February 2013, recently entered into force. The Cypriot tax authorities have indicated that they will allow the benefits included in the new agreement with effect from January 1 2014.

Capital Gains Tax Law amended
Cyprus | June 13 2014

The Capital Gains Tax Law provides for capital gains tax at a rate of 20% to be charged on gains arising from the sale or transfer of real estate in Cyprus, including gains from the sale of shares in unlisted companies that own real estate in Cyprus, to the extent that the gain derives from the company's real estate assets. Law 119(I)/2013 and Law 120(I)/2013 have made detailed amendments to the Capital Gains Tax Law.

New Cyprus-UAE double tax agreement takes effect
Cyprus | June 06 2014

The new double tax agreement between Cyprus and the United Arab Emirates recently took effect. For the most part, the agreement reproduces the corresponding provisions of the latest Organisation for Economic Cooperation and Development Model Tax Convention verbatim, with a few exceptions. The new agreement is a valuable addition to Cyprus's network of more than 50 double tax agreements.

Amendments to Cyprus-India double tax agreement to be finalised shortly
Cyprus | May 09 2014

Press reports indicate that Cyprus and India will finalise the amendments to their double tax avoidance agreement in the coming weeks. A team from the Indian Ministry of Finance is expected to visit Cyprus shortly to carry forward negotiations to finalise the revised agreement and the matter is being followed at the highest level in the Cyprus government.

Entry into force of new Cyprus-Spain double tax agreement imminent
Cyprus | April 17 2014

The new double tax agreement between Spain and Cyprus provides that the agreement will enter into force three months after the exchange of official notifications between the governments concerned stating that all ratification procedures have been completed. Notifications were exchanged in March 2014, which means that the new agreement should enter into force during June 2014.

What qualifies as direct investment under Cyprus-Russia double tax agreement?
Cyprus | April 11 2014

In a recent case involving a Cyprus company that had received a dividend from a Russian company in which it held a shareholding, the tax authorities addressed the determination of direct investment under the Cyprus-Russia double tax agreement. The decision will serve as a valuable precedent for the sizeable number of organisations that have structured their investments in a similar way.

Cyprus and Norway sign double tax avoidance agreement
Cyprus | March 14 2014

The Cyprus government recently announced that it has signed a new double tax agreement with Norway. The government attaches great importance to maintaining, updating and expanding Cyprus's network of double tax treaties. It has expressed confidence that the new agreement will contribute to the further development of trade and economic relations between Cyprus and Norway.

Eligibility for benefits under Cyprus-US double tax convention
Cyprus | January 31 2014

After consideration of the article setting out the limitations on benefits in the Cyprus-US double taxation convention, the US authorities have accepted that a Cyprus-resident holding company qualified for benefits under the convention, and the reduced rate of tax payable on dividends from qualified foreign corporations, despite not meeting the share ownership requirements stipulated therein.

New double taxation agreements take effect
Cyprus | January 24 2014

Five new agreements for the avoidance of double taxation between Cyprus and other countries recently came into effect. The new agreements are with Estonia, Finland, Portugal, Spain and Ukraine. The first four are entirely new agreements, extending Cyprus's network of double tax agreements, while the agreement with Ukraine replaces the agreement between Cyprus and the former Soviet Union.

Proposals to provide tax relief for bail-in losses announced
Cyprus | January 17 2014

Proposals have been submitted to Parliament to amend the Income Tax Law to regulate the tax treatment of losses resulting from the bail-in of unsecured depositors which took place in March 2013. The current proposals provide that losses incurred due to the bail-in will be considered a tax-deductible expense with an upper limit of 10% of the taxable profit for the year.

Reduction in SDC tax rate on dividends
Cyprus | January 17 2014

The rate of special contribution for defence (SDC) tax on dividends paid by Cyprus companies has reverted to 17%, after having been temporarily increased to 20% for 2012 and 2013. SDC tax applies only to Cyprus-resident shareholders. Dividends paid to non-resident shareholders are exempt, as are those paid by one Cyprus-resident company to another, unless paid more than four years after the underlying profit was earned.

Government responds to OECD assessment of non-compliance
Cyprus | December 13 2013

There has been considerable publicity in the financial media over the fact that Cyprus has been assessed as non-compliant with international information exchange standards by the Organisation for Economic Cooperation and Development Global Forum on Transparency and Exchange of Information for Tax Purposes. However, it is important to put this issue into context.

New double taxation agreement between Cyprus and Estonia
Cyprus | October 11 2013

The double taxation agreement between Cyprus and Estonia took another step towards ratification with its recent approval by the Estonian Parliament. The agreement will enter into force when the Cyprus and Estonian governments have exchanged formal notifications that the relevant constitutional requirements have been complied with. This is the first double tax treaty ever concluded between the two countries.

Further step towards ratification of Cyprus-Spain double tax agreement
Cyprus | September 06 2013

The double tax agreement between Cyprus and Spain, which was signed in early 2013, has moved another step closer to ratification. The Spanish Cabinet recently approved the agreement and forwarded it to the Spanish Parliament for consideration. The new agreement follows the latest Organisation for Economic Cooperation and Development Model Tax Convention and applies to taxes on capital and income.

Double tax agreement between Cyprus and Portugal enters into force
Cyprus | August 30 2013

The double tax agreement between Cyprus and Portugal recently entered into force, following the completion of ratification procedures by the two countries and the exchange of notifications of ratification. The new agreement mirrors the latest Organisation for Economic Cooperation and Development Model Agreement and provides for a maximum withholding tax rate of 10% on dividends, interest and royalties.

Certificates of residence under Cyprus-Russia double tax agreement
Cyprus | August 02 2013

Cyprus finance structures are widely used for Russian operations. A recent case in a Russian provincial court gives important guidance on the stance taken by the Russian tax authorities regarding the evidence required for a taxpayer to demonstrate Cyprus residence in the context of the Cyprus-Russia double tax agreement, and thereby qualify for the benefits available under it.

Department clarifies five-year restriction on carry-forward of losses
Cyprus | July 26 2013

The Inland Revenue Department recently issued a circular clarifying the practical application of the new five-year limit for carrying forward losses for relief against future profits. For the 2012 tax year and subsequent years, only losses incurred in the 2007 tax year and later years are available for relief against taxable income. Relief is no longer available for unutilised losses relating to 2006 and earlier years.

New double tax agreement between Cyprus and Ukraine finally ratified
Cyprus | July 19 2013

Cyprus and Ukraine have finally signed a new double tax agreement to replace the 1982 agreement between Cyprus and the Soviet Union. The new agreement retains the beneficial features of its predecessor, especially regarding the taxation of capital gains on disposal of shares, and maintains Cyprus's status as among the most favourable of Ukraine's treaty partners.

Delay in ratification of new Cyprus-Ukraine double tax agreement
Cyprus | July 12 2013

A draft law to ratify the new Cyprus-Ukraine double tax agreement was recently registered with the Ukrainian Parliament, but the government failed to secure the requisite majority for approval of ratification. A new draft law must therefore be registered and passed in order to ratify the new agreement. In the meantime, the agreement between Cyprus and the Soviet Union will remain in force.

New Cyprus-Ukraine double tax agreement moves closer to ratification
Cyprus | June 21 2013

The Ukrainian government recently submitted a draft law to Parliament to ratify the new double tax agreement and protocol between Cyprus and Ukraine. The new agreement will enter into force once formal notices of completion have been exchanged. It provides for higher rates of withholding tax than the existing agreement between Cyprus and the Union of Soviet Socialist Republics in relation to dividends, interest and royalties.

Real Estate

Immovable property tax rates for 2016
Cyprus | August 19 2016

Immovable property tax is payable annually and calculated by reference to the market value as at January 1 1980 of immovable property owned by the taxpayer at the beginning of the calendar year. For 2016 liability will continue to be calculated by reference to 1980 values, but immovable property tax will be abolished with effect from the beginning of 2017.

Shipping & Transport

Exemption from tax on interest derived from qualifying international shipping activities
Cyprus | November 16 2016

The Tax Department recently issued a circular clarifying the exemption from tax on interest received by owners, charterers or managers of ships that opt to be taxed under the Merchant Shipping (Fees and Taxing Provisions) Law of 2010. According to the circular, the tonnage tax law exempts from all taxes interest received by or credited to eligible owners, charterers and managers of ships in qualifying bank accounts.