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.
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By issuing this circular (No. 14), this dispensation is withdrawn.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.
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
The Republic of Cyprus has concluded a new Double Tax Treaty with United Kingdom. The treaty was signed on the 22nd of March 2018. The actual publication of the treaty in the Gazette took place on the 2nd of April 2018.
The new treaty shall enter into force upon both Cyprus and United Kingdom exchanging notifications that the formal ratification procedures have been completed. In Cyprus the provisions of the treaty with respect to taxes will have effect on or after 1 January post ratification.
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:
- History of Formal Peace and Conflict;
- The distinction between Domestic Arbitration and International Arbitration;
- The characteristics of the legal framework regulating International Arbitration;
- The application of ICAL legislation; and
- ADR role in Cyprus.
For the guide, please click here
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
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
Withholding tax rate on interest payments
Withholding tax rate on royalties payments
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
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:
- Bank accounts that are being used as working capital; or
- 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:
- Existing accounts of the eligible shipowners, charterers or ship managers;
- 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;
- 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;
- 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, 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:
- The Possibility of creating a brand from scratch
- Enhancing existing brand-value
- Tax-Motivated Crowdfunding – The BEPS 5 guidelines
- The move towards online value: is it more than a mere mirage?
For further analysis, please Read More
Christodoulos G. Vassiliades & Co LLC has published Cyprus: International Trusts 2016. The publication consists of:
- Cyprus Trust Law;
- Types of Trusts;
- International Trusts Law;
- 1976 Convention on Recognitions and Enforcement of Foreign Judgments (Foreign Judgments (Force Heirship);
- Advantages of a Cyprus Trust;
- Registration of Trusts.
For further details, read below full publication
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.