Innovation and entrepreneurship are heavily sought after by countries looking to ameliorate and modernise their economies. Cyprus is no different in this respect and has prioritised creating a vibrant landscape which addresses the needs of start-ups and their investors. The defining features of the Cypriot system are its IP box regime, notional interest deduction, alternative investment funds and various tax incentives which can be coupled with research and development and innovation.
The House of Representatives recently approved legislation implementing the EU Anti-tax Avoidance Directive in Cyprus with the aim of improving the resilience of the internal market against cross-border tax avoidance practices. The new legislation has once again demonstrated the government's commitment to supporting international efforts to tackle tax avoidance practices.
The Cyprus Tax Department recently issued a circular giving guidance on the tax residence provisions for individuals introduced by Law 119(I)/2017. The circular makes clear that an individual who holds office as a director of a Cyprus tax-resident company and delegates this office to an alternate or nominee director at any time during the tax year does not qualify for Cyprus tax residence under the 60-day rule.
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 1 January 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 31 December 2018, which will be used as the basis for the notional interest deduction for the 2019 tax year.
The Ministry of Finance recently announced that the double tax agreement with Saudi Arabia – which was signed on 3 January 2018 – will enter into force on 1 March 2019. The agreement will apply to amounts paid or credited on or after 1 January 2020 with regard to taxes withheld at source and to tax years beginning on or after 1 January 2020 with regard to other taxes.
The Supreme Court recently rejected a Greek appellant's request for the annulment of a European arrest warrant (EAW) which had been issued against him in order to investigate alleged criminal offences. Although the court erroneously accepted the appellant's appeal of the ne bis in idem principle (ie, the prohibition of double jeopardy), it rightly concluded that Cyprus was not prevented from executing the EAW by investigating the case against the appellant.
In a recent appeal case, the Supreme Court ruled that the wording of a guarantee signed in respect of a tenancy lease agreement did not fall within the context of an explicit commitment to cover the statutory tenancy as well. Therefore, it could not be concluded that the parties intended to extend the guarantee to this form of tenancy and that the guarantor was committed to pay the rent during said period.
An interim or interlocutory injunction is a court order effectively ordering a party to carry out or refrain from carrying out an action for a certain period. The general rule is that an injunction remains effective until a final judgment is rendered for the main action or until it is cancelled or modified by a subsequent court injunction. Nonetheless, in certain instances, the Cypriot courts have decided to uphold such injunctions in effect, even after the issuance of a judgment in the main proceedings, to facilitate execution.
The Supreme Court recently confirmed a first-instance decision which had annulled a transfer of shares by a debtor to his son. The Supreme Court found that the debtor had acted fraudulently to prevent his creditor from executing a court judgment which had been issued in the creditor's favour. The Supreme Court also found that the issuance of a decree on the sale of shares as a means of enforcing the decision against the debtor was possible.
The Supreme Court recently rejected an appeal against a detention order issued by the Larnaca Permanent Assize Court in a sexual assault case. The appellant claimed that the evidence placed before the first-instance court had speculated on his guilt and the risk of him absconding. However, the Supreme Court found that the accused's detention until trial was at the discretion of the first-instance court and that, based on the circumstances of the case, the court had exercised this power correctly.
The Shipping Deputy Ministry recently issued the Merchant Shipping (Fees and Dues with respect to Ocean Going Commercial Cyprus Ships) Regulations, which contain the new fees and charges payable for ocean-going commercial ships registered in Cyprus. In particular, the regulations cover fees concerning the registration of ships and other transactions with the shipping registry (eg, ship certificates and applications for the transfer of ownership or name change of a ship).
In an effort to minimise disruption to the shipping industry deriving from Brexit, the Shipping Deputy Ministry has undertaken a number of contingency measures. However, the ministry has emphasised that affected parties must also make their own preparations for the United Kingdom's withdrawal from the European Union and that where new authorisations, licences or certificates will be required post-Brexit, each party will be responsible for applying in good time.
The Deputy Ministry of Shipping recently updated its policy on the eligibility of ships to be registered under the Cyprus flag. The policy stipulates additional requirements beyond those set out in the Merchant Shipping Registration of Ships, Sales and Mortgages Law and should therefore be read in conjunction with the relevant legal provisions.
The admiralty jurisdiction of the Supreme Court recently ruled in a case concerning a marine accident which occurred when the bow of a sailing boat rammed the starboard side of a speedboat. It was highly disputed whether the sailing boat had been simultaneously using open sails and its engine. In reaching its conclusion, the court considered the evidence and the Rules of the Convention on the International Regulations for Preventing Collisions at Sea.
The Deputy Ministry of Shipping recently announced its decision to replace the International Safety Management Code Form and the International Ship and Port Facility Security Code Form with a new consolidated form in an effort to reduce paperwork and avoid the duplication of information. All interested entities are requested to use the new form to declare the particulars of companies or ships under the code and to comply with relevant circulars.