Special Yacht Scheme
The guidelines issued by the Cypriot VAT authorities with regards to the registration of yachts, simple to comprehend and apply, make Cyprus one of the most attractive jurisdictions in the EU in this area, now reducing the effective VAT rate for yacht registration to as low as 2.42%, through the use of the Yacht Leasing scheme.
This special regime applies to yachts owned by a Cyprus company which are leased to physical or legal persons. The purpose of this scheme is to determine the percentage of time a yacht spends within the EU based on the yacht size and type and apply VAT according to this percentage.
The Merchant Shipping (Taxation and Other Matters relating to Shipping Organisations) Regulations as amended by Legal Notice 83 of 2010 (the “Law”) provides full exemption to Maltese registered vessels owned, chartered or managed by a Maltese Shipping Organization from all income tax due on or in relation to the ownership, operation or management of the said vessel. The Maltese owner, charterer or manager would be liable to pay a pre-established annual “tonnage tax” due to the Authority calculated with reference to the net registered tonnage of the vessel, independent of actual earnings.
Cyprus, by virtue of its exceptionally advantageous tax system, has emerged into one of the most attractive holding regimes worldwide. It offers one of the lowest corporate tax rate in the EU at 10% and ensures compliance with EU requirements as an EU Member State which is also committed to the OECD requirements against harmful tax practice. Featured with a substantial number of Double Tax Treaties with other States and enhanced with one of the most business-friendly legislative frameworks, Cyprus justifies for an ideal holding and investment destination.
This Guide is created to provide a detailed overview of the Cyprus Tax System for 2015.
The following is covered:
- CORPORATION TAX
- SPECIAL CONTRIBUTION FOR DEFENCE FUND
- CAPITAL GAINS TAX
- PERSONAL INCOME TAX
- SOCIAL INSURANCE
- VALUE ADDED TAX
- IMMOVABLE PROPERTY TAX
- TRANSFER FEES BY THE LAND REGISTRY DEPARTMENT
- STAMP DUTIES
- DOUBLE TAXATION AGREEMENT
- TAX CALENDAR
- PENALTY NOTES
Cyprus Tax Facts 2015
The recently introduced Malta Individual Investor Programme (‘MIIP’) is governed by the Maltese Citizenship Act, precisely by Legal Notice 47 of 2014. In order to be able to qualify for Maltese Citizenship under the MIIP, an applicant will need to have resided in Malta for a continuous period of at least 12 months before submitting his application. It is not necessary for the applicant to have physically resided in Malta, as long as the applicant can show proof of residence by:
Companies which are tax residents of Cyprus are taxed on all income accrued or derived from all sources in Cyprus and abroad. A company must register with the Inland Revenue Department within 60 days of incorporation.
As far as one can remember and for as long as tax laws have been in existence, there has been a lot of speculation about and examination of structures asking how these can best be implemented to provide its users with the best possible tax planning solutions, thus mitigating their tax liabilities while still remaining commercially feasible and plausible structures.
The Law does not provide a comprehensive definition of ‘trusts’. Trusts law was largely developed by the courts on a case-by-case basis, and it is through the development of case law which has provided us with a better understanding of what a trust arrangement entails. The basic structure is as follows:
Malta is an ideal location for multinationals seeking cost and tax-efficient jurisdictions within the European Union. The legal, regulatory and fiscal framework in Malta, the use of English as business language, its qualified work force including the professionals in the legal, tax and financial services fields, and the relatively low operating costs are some of the ingredients that have contributed to the Malta being ranked among the top financial centers.
In May 2010 the Cyprus Parliament enacted The Merchant Shipping (Fees and Taxing Provisions) Law of 2010 (the “Law”) which applies retrospectively from 1st January 2010 and which introduces the new Tonnage Tax (TT) Regime. This Law has extended the favourable benefits applicable to owners of Cyprus flag vessels and ship managers, to also include owners of foreign flag vessels and charterers.