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Maria Kozakou’s Article “Reflections on the ‘Culture’ of Arbitration in Cyprus” made front page on the Litigation & Dispute Resolution guide by Corporate LiveWire website

Maria Kozakou – Advocate, at Christodoulos G. Vassiliades & Co LLC investigates mechanisms of alternative dispute resolution (‘ADR’), and its increasing popularity in Cyprus arbitration scene.

The Article under the title “Reflections on the ‘Culture’ of Arbitration in Cyprus” made front page on the Corporate LiveWire Website Follow this Link

The Article consists of:

  1. History of Formal Peace and Conflict;
  2. The distinction between Domestic Arbitration and International Arbitration;
  3. The characteristics of the legal framework regulating International Arbitration;
  4. The application of ICAL legislation; and
  5. ADR role in Cyprus.

For the guide, please click here

CYPRUS SIGNS A TAX TREATY WITH JERSEY FOR THE AVOIDANCE OF DOUBLE TAXATION

The Republic of Cyprus has recently concluded a Double Tax Treaty with Jersey. The treaty was signed on 11th July 2016 and was published in the Official Cyprus Government Gazette on 5th August 2016. The Double Tax Treaty is expected to become effective as of 1st January 2017.

The treaty signed is based on the Organisation for Economic Co-operation and Development

(OECD) Model Tax Convention for the Avoidance of Double Taxation on Income and on Capital.

The new treaty, together with the treaty signed recently between Cyprus and Guernsey, will contribute to the further development of the trade and economic links between Cyprus and the Channel Islands, as well as with other countries.

Upgrading and expanding the network of Double Tax Conventions, is of high economic and political importance and aims to further strengthen and attract foreign investment in Cyprus as its standing as an international business centre is elevated.

The main provisions of the Double Tax Treaty

Permanent Establishment

The permanent establishment definition included in the treat y is in line with the meaning provided in the OECD model tax convention. In particular, any building site or construction or installation project constitutes a permanent establishment, only if it lasts more than 12 months.

Withholding tax rate on dividend payments

  • 0% withholding tax

Withholding tax rate on interest payments

  • 0% withholding tax

Withholding tax rate on royalties payments

  • 0% withholding tax

Capital Gains Tax

  • Gains from the disposal of immovable property are taxed in the country where the immovable property is situated.

• Gains from the disposal of shares are taxable in the countr y of which the seller is located, irrespective if the value is derived directly or indirectly from immovable property

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Circular 2016/12 – Tax Department: Exemption from the Special Contribution for the Defense Tax on bank accounts

On the 16th of September 2016, the Tax Department issued a circular with regards to the exception from Special Contribution for Defense tax, that is available to owners, charterers or managers of ships who are taxed by virtue of the Merchant Shipping (Fees and Taxing Provisions) Law of 2010 (the “Law).

Article 8(d) of the Law, which regulates the shipowner’s taxation, provides that “No tax shall be imposed or collected ….. (d) other than interest on moneys kept for investment, upon any interest earned on working capital and/or revenue earned by a qualifying owner from a relevant qualifying shipping activity on bank accounts , if such working capital or revenue is used to pay expenses for the financing and/ or the operation and/ or the maintenance of the ship.”

Identical exception is provided for charterers and managers under articles 20(d) and 30 (d).

As per the relevant Circular, the exemption deriving from the above-mentioned articles concerns all taxes, including income tax and special contribution for defense on interest received by or credited to eligible owners, charterers and ship managers in:

  1. Bank accounts that are being used as working capital; or
  2. Bank accounts whose deposited capital constitutes income which derives exclusively from eligible shipping activities,

provided that the relevant bank accounts are being used exclusively for the funding of the eligible shipping activity of the beneficiaries.

It is highlighted that no tax exemption is granted on interest of capital which is being used for investment or for any purpose other than the funding of the eligible shipping activity, even though the capital derives from income of the eligible shipping activity.

Furthermore, no tax exemption is applied on interest of bank accounts of which the beneficiary is not an eligible shipowner, charterer or ship manager.

The provisions of the Taxation of Income Law N.44(I)/2010, as amended, and of the Special Contribution for the Defense of the Republic Law N.117(I)/2002, as amended, is applicable to all other interest which does not fall within the scope of articles 8(d), 20(d) or 30(d).

The interest which is tax exempted under the abovementioned articles concerns interest of the following bank accounts:

  1. Existing accounts of the eligible shipowners, charterers or ship managers;
  2. Any bank account, including the accounts of the eligible shipowners, charterers or ship managers, in which the deposited capital constitutes income exclusively deriving from eligible shipping activity;
  3. Existing bank accounts in the name of Companies of Specific Purpose which are incorporated in order to facilitate the management of the eligible shipping income with the eligible shipowners, charterers or ship managers being the beneficiaries of them;
  4. Any bank account, including the accounts in the name of Companies of Specific Purpose which are incorporated in order to facilitate the management of the eligible shipping income, in which the deposited capital constitutes income exclusively deriving from eligible shipping activity, with the eligible shipowners, charterers or ship managers being the beneficiaries of the accounts.

The eligible shipowner, charterer or ship manager would have to submit a declaration to the bank in which he holds a bank account in order to benefit from the exemption from the special contribution for the defense tax. The relevant declaration shall make reference only to the bank accounts that are eligible to benefit from the tax exemption as provided above. In case that only a part of the funds of the account is eligible for tax exception, the shipowner, charterer or ship-manager may request return of the Special Contribution for the defense tax which corresponds to that amount.

 

Ourania Vrondou’s Article “Crowdfunding: The Move Towards Online Value” made front page on the Trademark Lawyer Website

Ourania Vrondou, Christodoulos G. Vassiliades & Co LLC investigates the process of crowd funding, and how it is an advantageous way to build and protect your brand in today’s technologically shrewd society.

The Article under the title “Crowdfunding: The move towards online value” made front page on the Trademark Lawyer Website Follow this Link

The Article consists of:

  1. The Possibility of creating a brand from scratch
  2. Enhancing existing brand-value
  3. Tax-Motivated Crowdfunding – The BEPS 5 guidelines
  4. The move towards online value: is it more than a mere mirage?
  5. Conclusion.

For further analysis, please Read More

 

Christodoulos G. Vasilliades & Co LLC publishes Cyprus: International Trusts 2016

Christodoulos G. Vassiliades & Co LLC has published Cyprus: International Trusts 2016. The publication consists of:

  1. Introduction;
  2. Cyprus Trust Law;
  3. Types of Trusts;
  4. Trustees;
  5. Beneficiaries;
  6. International Trusts Law;
  7. Shams;
  8. 1976 Convention on Recognitions and Enforcement of Foreign Judgments (Foreign Judgments (Force Heirship);
  9. Taxation;
  10. Advantages of a Cyprus Trust;
  11. Registration of Trusts.

For further details, read below full publication

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PDF_RUS

Anti-piracy law in Cyprus

As of the 15th June 2012 the Cypriot House of Representatives approved and enforced the Protection of Cyprus Flag Ships from Acts of Piracy and other Unlawful Acts Law 77(I) 2012, hereinafter referred to as “the Law”, which complements the ISPS Code, implemented through the addition of Chapter XI-2 of SOLAS which Cyprus ratified in 1984.

The ISPS Code

The ISPS Code applies to any ship on international waters of 500GT or more and also ports serving such ships. The main objectives of the ISPS Code are:

  • To detect security threats and implement security measures;
  • To establish roles and responsibilities concerning maritime security for governments, local administrations, ship and port industries at the national and international level;
  • To provide and promote security related information to concerned parties;
  • To provide a methodology for security assessments so as to have in place plans and procedures to react to changing security levels;

The effect of the Law

The Law provides the requisite legal guidelines for Shipowners, Bareboat charterers and Ship-managers with regards to measures they need to implement for a passage through the High Risk Areas ( “HRA”), how they can engage the services of a Private Ship Security Company, (“PSSC”) for a transit through the HRA as well as the procedure that a PSSC needs to adhere to prior to acquiring a licence to provide such services on board Cyprus flagged vessels.

The Law also provides that only PSSCs who are certified to provide security related services on board Cyprus flagged vessels are allowed to embark security guards and weapons for such transits through the HRA. A complete, updated, list of the approved PSSC’s can be found online at the Cyprus Department of Merchant Shipping website at: http://www.mcw.gov.cy.

Applicable geographical area

It is worth noting that the Law has a global geographical application and each person on board the vessel is bound by the laws of Cyprus regardless of the fact that the vessel might be transiting on International waters. For ease of reference the First Schedule of the Law provides the coordinates and defines the High Risk Areas.

Obligations to inform upon entering a HRA

It is an obligation of the master to register with the Maritime Security Centre for the Horn of Africa (MSCHOA) and report to the United Kingdome Marine Trade Operations (UKMTO) to be monitored regarding any incidents during a transit through the HRA. This means that any event which might be construed as an unlawful act or attempted unlawful act needs to be transmitted for further investigation. The Law also allows the master and crew to arrest any person who boards or attempts to board the vessel to commit any unlawful act.

Obligations regarding services of PSSC and weapons

The engagement of a PSSCs is effected through with a written agreement between Shipowner/Charterer or Manager and the PSSC. (usually with a GUARDCON or amended form of it) The Master has the obligation to supervise the implementation of the agreement. The storage of firearms must be done in such a way as no other person on board has access apart from the PSSC when that is deemed necessary and when in the HRA.

Approval of a PSSC under Cyprus flag

This can be done for any PSSC which is incorporated under the laws of Cyprus or has a legal representative in Cyprus. It is a criminal offence for a PSSC to embark guards or weapons on board a Cyprus flagged vessel without being authorised to do so. If the PSSC is a company that has its registered office central administration or principal place of business in another country an authorised representative must be appointed in Cyprus. An authorised representative can be a citizen or a resident of Cyprus as per the Income Tax Laws of 2002 to Law (No.2) of 2011. This encapsulates both partnerships or companies incorporated under the laws of Cyprus provided they conduct business operations in Cyprus and employ permanent personnel in Cyprus. The authorised representative is only required when the Private Ship Security Company has its registered office, central administration or its principal place of business is in another country.

Christodoulos G. Vasilliades & Co LLC publishes Tax Facts Cyprus 2016

Christodoulos G. Vassiliades & CO LLC has published Cyprus Tax Facts for 2016. The publication consists of:

  1. Corporation Tax;
  2. Special Contribution of Defence Fund;
  3. Capital Gains Tax;
  4. Personal Income Tax;
  5. Social Insurance;
  6. Value Added Tax;
  7. Immovable Property Tax;
  8. Transfer Fees by the Land Registry Department;
  9. Trusts;
  10. Stamp & Capital Duties;
  11. Double Taxation Agreement;
  12. Tax Calendar; and
  13. Penalty Notes.

For further details, read below full publication

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PDF RUS

 

 

Ship Management Companies under the Cyprus Tonnage Tax System

The growth in the Ship Management revenues to €464 million for the first half of 2015 demonstrates the enduring strength of this sector in Cyprus, corresponding to 5,4% of Cyprus’ GDP, as well as its global competiveness.

The simplicity in the procedures of the Cyprus Ship Registry, the strategic geographic location of the island, in combination with the world-class professional services available, and the Tonnage Tax system applicable, make Cyprus an ideal location for ship management companies.

Under the Tonnage Tax System a ship manager who opts to be taxed under the system and is accepted to be taxed as so, is subject to an annual tax calculated based on the net tonnage of the qualifying vessels managed by the said ship manager. The Cyprus TT system is the only one approved in the EU and is rightly considered the biggest advantage for ship management companies on the island. It is hence not without reason that 20% of the world’s ship management is taking place in Cyprus.  The number of ship management companies registered under the tonnage tax system demonstrates a constant yearly increase, noting 37 ship management companies under the TT system in 2015.

Qualification criteria:

Any Ship manager, who is Cyprus tax resident, who provides crew and/or technical ship management services to a qualifying ship[1] engaged in a qualifying activity[2], may opt to be taxed under the TT system, provided the following criteria are satisfied:

    • Maintenance of a fully fledged office in Cyprus;
    • Employment of a sufficient in number and qualification personnel, at least 51% being EU/ EEA citizens;
    • 2/3 of the management being carried out from EU/EEA territory;
    • Compliance with certain international standards (maritime security, safety, training, certification of seafarers, environmental issues, on-board working conditions, full implementation of the Maritime Labour Convention) etc;
    • At least 60% of the fleet managed, in terms of tonnage, comprising of Community ships (maintaining the said percentage for a period of three years, subject to further exceptions);
    • Tonnage Tax calculation:
    • Once opting to use the TT system, one must stay within the system for a period of ten years; if withdrawing prematurely, then the difference between the amount paid during the period the ship owner was under the TT system and the amount that would have been paid had it been subject to corporation tax during that period, will need to be paid.
UNITS OF NET TONNAGE €TT PER 400 UNITS
0-1.000 36,50
1.001-10.000 31,03
10.001-25.000 20,08
25.001-40.000 12,78
>40.000 7,30

 

Exemption covers:

  • Profits from the provision of crew and/or technical ship management services to any qualifying ship
  • Dividend paid directly or indirectly from the above
  • Interest earned on funds used as working capital or for the payment of expenses arising related to the management of the ships, excluding interest on capital used for investments

 

Christodoulos G. Vassiliades & Co. LLC offers legal and administrative services to ship management companies wishing to bring their business to Cyprus from a – z ; from the searching, finding and setting up of an office, to the finding and hiring of the office personnel, to the application for the TT system; ensuring full compliance with the Cyprus legislation and regulations at all times.

 

[1] Meaning a sea going vessel (including vessels that transport humanitarian aid) has been certified in accordance with international principles and legislation of the flag country and that is registered in the register of a member country of the International Maritime Organization / the International Labour Organization.

[2] for ship managers, means services provided to a ship owner or bareboat charterer on the basis of a written agreement in relation to crew and/or technical management and/or both

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Maria Ch. Kyriacou of Christodoulos G. Vassiliades & Co. LLC contributed to the publication Cartels: Enforcement, Appeals & Damages Actions on Global Legal Insights

Maria Ch. Kyriacou of Christodoulos G. Vassiliades & Co. LLC contributed to the publication Cartels: Enforcement, Appeals & Damages Actions on Global Legal Insights.

The article deals with the following topics:

  1. Overview of the law and enforcement regime relating to cartels
  2. Overview of investigative powers in Cyprus
  3. Overview of cartel enforcement activity during the last 12 months
  4. Key issues in relation to enforcement policy
  5. Key issues in relation to investigation and decision-making procedures
  6. Leniency/amnesty regime
  7. Administrative settlement of cases
  8. Third party complaints
  9. Civil penalties and sanctions
  10. Right of appeal against civil liability and penalties
  11. Criminal sanctions
  12. Cross-border issues
  13. Developments in private enforcement of antitrust laws
  14. Reform proposals

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Retail Investment Funds: How the transposition of the UCITS V Directive will impact the UCITS depositary regime.

Undertakings for Collective Investment in Transferable Securities (UCITS) are (mainly) retail investment funds regulated at European Union (EU) level. Following the adoption of the first relevant EU (European Economic Community at that time) Directive in 1985, UCITS have established themselves during the course of time, as a reputed retail investment product both within as well as outside the EU. The first UCITS Directive of 1985 (85/611/EEC) has been repealed in 2009 by the so called UCITS IV Directive (2009/65/EC), whereas amendments had taken place in the meantime, e.g. as to the eligible assets, in which a UCITS may invest.

The UCITS IV Directive has been transposed into Cypriot Law by Law 78 of 2012 on Open Ended Undertakings for Collective Investment as amended (UCI Law). As to the current state of things, the UCI Law will have to undergo significant amendments by March 2016. The reason is that an EU Directive amending the UCITS IV Directive, the so called UCITS V Directive (2014/91/EU), will be entering into effect at that time and will subsequently have to be transposed into Cypriot law by then.

Regarding regulation and supervision of UCITS in Cyprus the competent authority therefore, including the imposition of administrative sanctions, is the Cyprus Securities and Exchange Commission (CySEC).

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