Archive for April, 2019

Taxation of Long-Term Leasing of Yachts

In terms of the Guidelines issued by both the Cyprus Tax Department and the Maltese Revenue, the overall VAT liability incurred on the leasing of a yacht can be reduced substantially depending on the extent of the effective use and enjoyment of the yacht within EU territorial waters.

Introduction

In March 2019, on the strength of experience and knowledge acquired in the yachting industry, both the Cyprus Tax Department and the Maltese Revenue, issued a new set of Guidelines on the matter of yacht leasing services. Whilst still based on Article 59a of the EU VAT Directive, the new Guidelines reflect the recent EU VAT developments and practices.

In terms of the new Guidelines, VAT on leases that are deemed to take place in Cyprus or in Malta is calculated on the basis of the yacht’s effective use and enjoyment within EU territorial waters. Effectively, this means that no VAT is chargeable on the portion of the lease attributable to effective use and enjoyment of the yacht outside the EU territorial waters or within international waters. Hence, this supply of services by the lessor, is taxable at the basic VAT rate but only to the extent that the leased yacht is used within the territorial waters of the European Union (EU).

Rationale

The long-term yacht leases (i.e. leases covering more than 90 days’ of continuous possession or use of the yacht) is considered a supply of a service falling within scope of Cyprus or Maltese VAT when the yacht is put at the disposal of the lessee in Cyprus or in Malta, provided that the lessor is established in Cyprus or in Malta. Such rule applies provided that the lease contract does not include an “option to buy” clause and therefore there will be no transfer of ownership as per the lease agreement.

When leases fall within the scope of the Cyprus/Maltese VAT as aforesaid, in terms of the Cyprus/Maltese VAT Law and based on Article 59a of the EU VAT Directive, the Tax Authorities may consider the place of supply of such hiring of a means of transport to be outside Cyprus or Malta if effective use and enjoyment of the services takes place outside EU territorial waters.

LEGAL 500 – 2019 Ranking

Our Law Firm continues strengthening and securing its positions in the international legal rankings directory The Legal 500: Europe, Middle East & Africa.

We are pleased to announce that our Law Firm has once again been named and recommended as the as a TOP-TIER FIRM in Commercial, Corporate and M&A as well as Maritime and Admiralty.

Furthermore, our Law Firm has been recommended in the additional 3 practice areas:

  1. Dispute Resolution
  2. Intellectual Property
  3. Real Estate and Construction

We are proud to announce that our Commercial, Corporate and M&A Department received again Tier 1 recognition. Our firm is noted as one which has “a highly qualified team that finds solutions…has considerable skill in cross-border mergers and acquisitions. Koulla Demetriou is recommended along with the ‘very organised and competent’ Michalis Pittakis. Senior Associate Maria Taki is ‘smart and highly professional.”

Also, our Maritime and Admiralty Department team maintained Tier 1 recognition and has been characterized as“energetic and professional team adopts a very client-oriented approach to matters. The group serves as deputy registrar of the Belize-ship registry in Cyprus and Greece.”

Our Intellectual Property Department team received Tier 3 recognition and has been characterized as one which “gets the job done’ and advises on all forms of registered and unregistered intellectual property rights. Maria Kyriacou is at the helm”.

The Real Estate and Construction Department team received Tier 3 recognition and has been cited as following: “advises wealthy foreign clients on their real estate holdings in Cyprus. Savvas Georgiou and Marianna Pavlides have considerable experience in the space”.

And finally, Dispute Resolution Department team received Tier 4 recognition and was noted as a team which “works together as a cohesive unit to ensure that the client is consistently given the best legal advice. Phivos Zomenis is a key name and Christodoulos Clerides is a master tactician with superb negotiation skills”.

We are also very proud that 8 of our lawyers are recommended for their excellence:

  • In relation to our main area of practice, Commercial, Corporate and M&A, our Deputy Managing Director Koulla Demetriou and Senior Associate Lawyer Maria Taki were recommended.
  • Michalis Pittakis, Head of Corporate Department, was proclaimed as a Legal 500 “Next Generation Lawyer”.
  • For Dispute Resolution Phivos Zomenis is recommended.
  • Christodoulos Clerides is listed in the elite “Leading lawyers” list.
  • In relation to Intellectual Property, Maria Kyriacou is recommended.
  • Finally, in relation to Real Estate and Construction Marianna Pavlides and Savvas Georgiou are recommended.

In light of these achievements we would like to extend our sincere thanks to all our clients, without whom these recognitions would not have been possible.

For a complete view of our profile here.

Legal Update: Extension of Golden Visa Program to New Types of Investments

Law 4605/2019 which was published at the Greek Official Gazette on 01/04/2019, amended the Greek Immigration legislation and more particularly article 16 regarding Residence Permits for Investment Activity and introduced new types of investments (other than investment in real estate properties) qualifying for the “Golden Visa Program”.

According to the amended provisions of article 16:

– Within the framework of an investment scheme, there is no limitation on the number of investors, natural persons from non- EU countries, who may participate in the financing and receive a relevant residence permit, provided that each invests at least the minimum required amount, and

– It is heretofore possible to qualify for a residence permit when the investment is made through the participation of a foreign legal entity. In that case, the amended law provides for the possibility for up to 3 persons (shareholders or officers of the legal entity) to apply, depending on the amount of the investment.

Further to the amendments introduced, it also remains possible, in order to ensure the implementation and operation of the investment scheme, for up to 10 non- EU persons to apply for a residence permit in Greece, such number varying depending on the total amount of the investment.

In addition to the foregoing, new provisions are introduced in the aforementioned paragraph 16, operate an extension of the Golden Visa Program to new types of investments, by including also intangible investments to the investment activities pursuant to which a residence permit may be granted to non- EU citizens.

Such investments may be:

  • the contribution of capital for the acquisition of shares during the increase of share capital or bonds during the issue of bond loans in certain types of companies, for an amount of at least 400 000 euros,
  • the acquisition of Greek Public bonds for an amount of at least 400 000 euros,
  • a long term deposit of an amount of at least 400 000 euros,
  • the acquisition of shares, corporate bonds and bonds of the Greek Government, which are which are inserted to be listed or are listed in regulated markets in Greece, of an amount of at least 800 000 euros,
  • the acquisition of a share in an investment fund established in Greece or abroad, whose object is the investment exclusively in shares, corporate bonds and bonds of the Greek Government, of an amount of at least 400 000 euros.

For the aforementioned investments, the investor may be a natural person or a Greek legal entity wholly owned by the non- EU citizen or a foreign legal entity, in which case a residence permit may be granted to up to 3 persons, shareholders or officers, depending on the amount of the investment.

The non- EU investor meeting all the criteria required by law, must first apply and receive a visa for “investment in securities or bank deposit” and thereafter may apply for a 5- year residence permit for investment in securities or bank deposit, which may be renewed provided that the conditions are still fulfilled.

The aforementioned provisions shall enter into effect 3 months after its publication in the Official Gazette.

For more information please do not hesitate to contact us.


*This publication is intended only to provide general information and does not constitute personal advice. We do not accept or assume any responsibility towards readers of the present document for any loss resulting from acting on the basis of this publication.