Search Publications

Our Yacht Registration Center provides Cyprus Leasing Structures

Our Yacht Registration Center provides Cyprus Leasing Structures, which constitute a generally acceptable ownership solution.

Owners utilizing our structures will be compliant with their obligations to the Cypriot Government/EU as VAT is paid to them over the life of the structure, albeit at a reduced rate, and the yacht is in free circulation throughout the EU. Use of our Cypriot solution scheme would allow importation and setting of the yacht in free circulation within the EU. Through the use of our Cypriot Solution, a reduced effective tax on acquisition and importation of a yacht is achieved on the basis of the provisions of the EU VAT Directive which provide that the long-term hiring of a means of transport is subject to VAT within the EU only to the extend it is used and enjoyed within the EU. Specifically, when the lessor is a company registered in Cyprus the charge to VAT for the services rendered is subject to the extent the pleasure boat is used within the European Union.  This applies irrespective of the lessee origin, i.e. whether the lessee is a Cypriot or non-Cypriot physical person or company.

Our Cyprus Leasing Solution provides owners with a complete solution due to the following:

  • The Cyprus Tax Authorities will treat the long-term hiring of means of transport on the basis of the provisions of the EU VAT Directive, which provide that the lease of a means of transport is subject to VAT within the EU only to the extend it is used and enjoyed within the EU.
  • Owners are strongly recommended to obtain an official and indemnified tax opinion on the solution from a reputable source. We, YRC as well as our affiliated partners InterTaxAudit who assisted in the development of our Cyprus Leasing Solution will gladly provide its valuable advice.
  • Every Leasing Structure requires pre-approval from the Cyprus Tax Authorities. The Tax Authorities’ intention is to examine any advance ruling applications on a case by case basis. We note that the final approval of the above scheme is upon the discretion of the Tax Authorities.

ИНТЕРПРЕТАЦИЯ СТАТЬИ 5(2)(G) ЗАКОНА О ПОДОХОДНОМ НАЛОГЕ 118(I)2002, С ПОПРАВКАМИ

Налоговый департамент издал циркуляр от 14 ноября 2017 года, в целях разъяснения важной части закона.

Закон предусматривает, что всякий раз, когда компания предоставляет заем или любую другую финансовую помощь своим директорам или акционерам, являющимся физическими лицами, или их супругам или родственникам до второй степени родства, то считается, что у этого лица есть ежемесячное пособие равное девяти процентам (9%) годовых от суммы займа или любой другой финансовой услуги.

Согласно письменному сообщению Налогового комитета Института сертифицированных общественных бухгалтеров Кипра (ICPAC) членам Института сертифицированных общественных бухгалтеров Кипра (ICPAC) (от 04.10.2012), положения этого закона не будут применяться в отношении лиц, не посещающих Кипр, и для тех, кто будет посещать Кипр в течение нескольких дней, пособие будет ограничено пропорционально дням их присутствия на Кипре.

С выпуском данного циркуляра (№ 14), это эта диспенсация отзывается.

По сути, пособие, которое считается предоставленным директорам или акционерам, являющимся физическими лицами, или их супругам или родственникам до второй степени родства, которые не являются налоговыми резидентами в Республике, будет начисляться на весь год, независимо от их срока пребывания в Республике Кипр.

Однако по нашим данным, это относится к отчетным периодам, начинающимся только в 2018 году.

INTERPRETATION OF ARTICLE 5(2)(G) OF INCOME TAX LAW 118(I)2002, AS AMENDED

Tax Department issued a circular on 14 November 2017 to clarify an important part of the law.

The law stipulates that whenever a company grants a loan or any other financial facility to its directors or shareholders who are individuals, or their spouses or their relatives up to the second degree of kindred, then it will be deemed that this person has a monthly benefit equal to nine per cent (9%) per annum on the balance of such loan or any other financial facility.

According to a written communication by ICPAC Tax Committee to ICPAC members (dated 4/10/2012), the provisions of this law would not be applied in respect of individuals not visiting Cyprus and for those that would be visiting for a few days, the benefit would be restricted in proportion to the days of their presence in Cyprus.

By issuing this circular (No. 14), this dispensation is withdrawn.

In effect, the benefit, which is deemed to be granted to directors or shareholders who are individuals or their spouses or their relatives up to the second degree of kindred who are not tax residents in the Republic, will be calculated on the whole year, irrespective of their period of stay in the Republic of Cyprus.

However, we now understand that will come into effect for accounting periods commencing at 2018 onwards only.

International Comparative Legal Guide (ICLG) to Corporate Immigration 2018

Our Firm is pleased to announce that our Managing Director, Mr. Christodoulos G. Vassiliades, as well as our Head of Immigration, Ms. Marianna Pavlides, recently published an article in the ICLG Corporate Immigration Guide: A practical cross-border insight into corporate immigration law, 5th Edition.

To read the publication please click on the link below.

ICLG to Corporate Immigration 5th Edition

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

 

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.

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

READ PDF

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

Read Full Article

The Iranian opportunities post-sanctions: the Cyprus IP Box regime, the Cyprus-Iran Double Tax Treaty and the potentials that lay ahead

On the 14th of July 2015, Iran and the Permanent Members of the UN Security Council and Germany reached a historic agreement. The sanctions imposed on Iran for its nuclear activities were lifted after the agreement of Iran to gradually limit such activities.

Iran, the economy of which suffered its greater blow in the years following 2012, especially after the foreign direct investments in the country reached zero, is now able to return to the global markets.

The omens of an early financial recovery are, prima facie, impressive, whilst the impact on the global economy is anything but negligible. It is said that Iran will be able to recover in its pre-2012 position in less than two years-time.

Iran is one of the main oil-producing countries. Its production capabilities reach 1 billion barrels per day, whilst its stockpiles reserves are said to reach 30-40 million barrels on the day immediately following the lift of the sanctions. This effectively means that Iran will cause a reduction in the oil prices by 14%, i.e. USD 10, therefore large oil importers such as EU and US will be in a more advantageous position by having the capability to increase their petrochemical-related productions.

As oil-exports in Iran are reinstated, the country’s economic orbit will also start functioning again. This, in addition to the USD 107 billion worth of frozen assets and the USD 15 billion of revenue expected to be produced in Iran in the first year of sanction lift, will allow Iran to boost the sectors which were most profitable prior to 2012. Therefore, it is expected that Iran will boost its automobile, pharmaceuticals, manufacturing and tourism, banking and other services sectors. It has also been suggested that Iran should increase its competitiveness in high-technologies industries and the telecommunications sector, in an effort to modernise the same.

Cyprus – Iran cooperation: the cooperation potentials

The lift of the sanctions in Iran as well as the industries constituting the pillars of Iran’s economy, create important prospects of economic prosperity both for Iran as well as its’ trading partners. Cyprus, being in the forefront of this recent historic development, concluded, on the 4th of August 2015, an important cooperation agreement with Iran, namely the double tax treaty agreement (“DTT”).

The DTT effectively provides for favorable taxation of, inter alia, royalties and dividends.

Royalties are taxed at a fixed rate of 6% whilst the provisions on dividends distinguish between companies the beneficial owner of which holds at least 25% of the issued and allotted capital of the company that pays the dividends, and other cases. In relation to the former, the withholding tax rate is 5% whilst in all other cases is 10%.

Regarding dividends, it is important to note that, currently neither Iran nor Cyprus imposes withholding tax on dividends (the treaty rates will only apply in the event where the relevant legislation of either or both countries imposes such tax).

The provisions of the DTT constitute important incentives for the promotion of cooperation between the two countries, especially if viewed in light of the provisions of the Cyprus IP Box Regime, considered below.

The Cyprus IP Box Regime- the time is now

Intellectual property rights have already been widely recognised as the most valuable asset of a business. The same was recognised in a flamboyant manner by the Cyprus authorities in 2012, when the IP Box Regime was introduced. The IP Box Regime applies to all intellectual property rights and allows Cyprus companies which are the owners of intellectual property rights to be 80% exempted off withholding tax applying on the exploitation and disposition of such intellectual property rights as well as make use of a five year amortization period in respect of the acquisition of such rights.

Cyprus elected to opt for an IP Box the purpose of which was to attract new investments. Therefore the same does not restrict its application to companies that have borne the research and development costs. Nonetheless, the IP Box regime will be gradually forced to extinction, pursuant to the OECD Nexus Approach policy. Pursuant to the same IP Boxes should turn towards the promotion of research and development and not towards investment attraction. Therefore, the final call for applicants wishing to exploit the advantages of the IP Box regime is the 30th of June 2016. This date is considered as the lock down date, since no further entrants will be accepted whilst current entrants will not be allowed to exploit any additional intellectual property rights. The IP Box regime, as it currently stands, will continue to apply to existing entrants only, until the 30th of June 2021.

Geographical Proximity: a leap into Europe

It is no secret that Cyprus’ geopolitical position, the same being in the Mediterranean Sea and the crossroads of three continents, i.e. Europe, Asia and Africa, is a pole of attraction for many businesses around the globe.

Similarly, the island is expected to attract Iranian businesses as well as businesses wishing to do business in Iran. Apart from the many legislative and fiscal advantages some of which have already been mentioned above; the island is also a Member of the European Union as from the 1st of May 2004. This, in addition to the fact that Cyprus is in the center of some of the most important trade partners of Iran, namely Britain, Turkey and Saudi Arabia as well as in good terms with countries such as China (currently the most important trading partner of Iran) and India are expected to boost the potentials of the cooperation between Cyprus and Iran.

The Intellectual Property Rights Aspect

Iran provides for immense opportunities in the field of intellectual property, the reason being that Iran’s economy is based on sectors such as the automobile, pharmaceuticals, manufacturing and service provisions. Considering that the majority of its economy depends on exports into, inter alia, Europe and the US, it may be argued that the need for community and international trademarks, patents and pharmaceutical product certificates, copyrights and trade secret protection, branding, marketing and product advertising as well as corporate restructuring and fiscal advise is expected to be in high demand in the near future. Cyprus, offering the advantages already mentioned herewith, is undeniably ideal both in terms of geographical positions as well as in terms of legislative framework.

The DTT between Cyprus and Iran triggered the unfolding of the Cyprus legislative framework, jurisdictional advantages and the ability of the same to assist in Iran’s reinstatement in the global markets.

As far as intellectual property rights are concerned, the industrial activity of Iran, being export-depended, and the European flair of Cyprus, in conjunction with the recent advantages introduced by the DTT as well as the IP Box regime prove that the cooperation potentials between Iran and Cyprus are more than the wishful thinking of two Economy ministers.

EUROPEAN LONG-TERM INVESTMENT FUNDS: Investments In The Energy Infrastructure Of The Region And In Other Long-Term Projects Through Cyprus

The increasing public discourse, including political and diplomatic mobility, as to energy exploitation in the Mediterranean and subsequent energy distribution, also includes the construction of the necessary energy infrastructure projects. The proximity of Cyprus to the recently discovered sources of energy in the Mediterranean, renders Cyprus a potential candidate for the construction of energy infrastructure projects. At the same time Cyprus is also an international shipping centre, involved in financing the construction of vessels. However, the significant length and cost of such projects (energy infrastructure and shipping finance) automatically raise the question of their smooth and viable financing. Recently adopted European Union Law in the form of a Regulation, undertakes to provide a financing tool for such and other projects of long-term nature by introducing the ‘European Long-Term Investment Funds’. This way, a legal framework tailored to the needs of long-term investments is established, which interacts with the current local investment funds framework, adds value to Cyprus’ physical proximity to possible long-term projects and allows for Paneuropean fundraising possibilities from both professional and retail investors. ‘European Long-Term Investment Funds’ are also eligible applicants for financing from the European Investment Bank, whereby the relevant application is assessed by priority.

The present memo undertakes to provide a brief overview of this new legal framework and of its interaction with the investment funds legal framework currently applicable in Cyprus. The aim is to facilitate, through Cyprus, the financing of long-term projects in Cyprus, the European Union and in third countries.

Read More