Extension of the deadline for settlement  of Tax arrears

On 29 September 2017, the House of Representatives of Cyprus passed a law extending the deadline for submission of a claim for the payment of tax arrears from 3 October 2017 to 3 January 2018.  The new law limits the time by which tax returns up to the tax year 2015 which have not been filed, may be filed. Now all such tax returns must be filed by 30 June 2018 in order to benefit from the provisions of the law.

The regulation relates to the following tax liabilities:

  • All tax arrears up to and including 31 December 2015, which at the date of the application have been assessed by the Tax Department  and appear as payable, irrespective of the manner in which they are repaid, whether by agreement with the Tax Department or pursuant to a court order.
  • Amounts which become payable as a result of the submission of a self-assessment in respect of tax years up to 31 December 2015, where the tax returns for the relevant tax year have already been submitted by 3 July 2017, but without payment of the tax due.
  • Tax liabilities which are assessed after 3 July 2017 by the Tax Commissioner for the tax years to 31 December 2015, as long as these tax returns [are filed] by 30 June 2018. In such cases, an application for regulation[?] shall be made within three months from the date on which the tax becomes payable, on the basis of the tax assessment which has been issued.

For further information please contact our Financial Controller

Andreas Avgousti
Andreas.Avgousti@aretilaw.com

The Income Tax Law has been amended so that an individual who does not remain in any state for one or more periods which together exceed 183 days in the same tax year and who is not tax resident in any other state for the same tax year, be considered to be a tax resident of Cyprus, provided that they meet the following conditions:

  1. Remain in Cyprus for at least 60 days during the tax year;
  2. Pursue a business in Cyprus and/or work in Cyprus and/or are a director of a company which is tax resident in Cyprus, at any time during the tax year;
  3. Maintain a permanent residence in Cyprus, which can be either owned or rented.

To be considered as Cyprus tax resident in the tax year, the taxable person’s involvement in the business and/or employment in Cyprus and/ or the holding of a post in Cyprus must not have not have ceased.

For the purposes of calculating the days of stay in Cyprus the following rules apply:

  1. the day of departure from Cyprus is considered as a day outside Cyprus;
  2. the day of arrival in Cyprus is considered as a day in Cyprus;
  3. arrival in Cyprus and departure from Cyprus within the same day is counted as one day in Cyprus;
  4. departure from Cyprus and return to Cyprus within the same day is counted as one day outside Cyprus.

Thus, under the new provisions, an incentive is given to an individual who is not a tax resident in any other state for the same tax year to transfer his tax residence to Cyprus and to be taxed only on income from the activities the individual undertakes in Cyprus.

The revised European Union Markets in Financial Instruments Directive (MiFID II) has been transposed into Cyprus law, as published in the Official Gazette of Cyprus on 7 July 2017. The new law, which will apply in Cyprus from 3 January 2018, introduces significant changes to the Investment Services and Activities and Regulated Markets Law of 2007 to 2016.  It aims to increase transparency and afford investors greater protection through increased regulation and enhancement of powers of regulators

The Double Tax Agreement between Cyprus and Luxembourg has been signed, the first between the two countries.  It will enter into force once it is ratified by Cyprus and Luxemburg.

The Income Tax Law was amended in October 2016, in line with the “modified nexus” approach to the taxation of intellectual property assets.  Transitional arrangements were put in place for intellectual property developed prior to 30 June 2016 with new arrangements being applied for intellectual property developed from 1 July 2016, which follow the modified nexus approach.

Cyprus signed its first tax treaty with the Kingdom of Bahrain on 9 March 2015. Following the completion of the relevant ratification procedures, the Tax Treaty entered into force on 1st January 2017.