Law 39(I) of 2018 amended the VAT Law to make VAT chargeable on the transfer of the effective right to dispose of real estate or immovable property as owner. With effect from 1 January 2019 a long-term assignment of the right of ownership of immovable property (long-term lease), or the transfer of such a right is deemed to be a taxable supply of goods subject to VAT at the standard rate or at a reduced rate of 5% depending [...]
Non-performing exposures (NPEs) in the Cyprus banking system dropped to €11.02 billion in September 2018 marking a €5.6 billion reduction since end-June 2018 as Hellenic Bank acquired the performing part of the state-owned Cyprus Cooperative Bank, which has been converted to an asset management company.
According to data released by the Central Bank of Cyprus, total NPEs dropped from €16.6 billion in end-June to €11.02 billion marking the lowest level since the 2013 financial crisis. From the beginning of 2018 NPEs [...]
CESMA Guidelines under MiFID II
The Cyprus Securities and Exchange Commission (“CySEC”) has notified Cyprus Investment Firms, of the guidelines published by the European Securities and Markets Authority on 2 October 2017 under Directive 2014/65/EU (“MiFID II”) and Regulation (EU) No 600/2014 (“MIFIR”).
The guidelines apply solely in relation to synchronisation of business clocks pursuant to article 50 of MiFID II and recording of orders and submission of transaction reports pursuant to articles 25 and 26 of MIFIR. They are designed to [...]
The EU Economic and Financial Affairs Council, which is made up of the economics and finance ministers of all member states, has approved the EU Commission’s recommendations on a unified EU list of non-cooperative jurisdictions in taxation matters, more familiarly referred to as a blacklist.
Inclusion in the list is based on three sets of agreed criteria regarding tax transparency, fairness of taxation and implementation of anti-base erosion and profit shifting measures. The list is intended to be continuously reviewed [...]
The new reciprocal Cyprus-India agreement on merchant shipping between Cyprus and India entered into force on 29 November 2017, replacing an earlier agreement dated 11 February 1997. The most significant provisions of the new agreement are summarised below.
Each country will treat the other country’s vessels in the same way as it treats its own vessels engaged in international voyages in respect of free access to ports, use of ports for loading and unloading of cargoes and for embarking and [...]
The Bank of Cyprus announced the establishment of a real estate fund which will be the first of its kind in Cyprus.
The fund will be regulated by CySEC and will be listed on the Cyprus Stock Exchange. The 190 Million Euros fund will be classified as an Alternative Investment Fund and will seek to obtain a diversified portfolio of high quality income yielding commercial real estate property. The properties offer a gross average rental yield of over 6% per [...]
The Cyprus Tax Department has issued guidance to professional bodies and other potential stakeholders about VAT registration issues and procedures affecting insolvency office-holders in companies in receivership, liquidation or other insolvency proceedings, taking account of the prohibition in the Insolvency Advisers Law of 2015 against companies acting as insolvency practitioners, and the fact that many licensed insolvency practitioners are employees of professional service firms rather than independent contractors.
Cysec proposed Reforms of Investment firms
The Cyprus Securities and Exchange Commission (“CySEC”) has published a consultation paper (CP 2017-01) setting out proposed reforms to the regulatory framework governing the provision of investment services in binary options by Cyprus Investment Firms (“CIFs”). The full text of the consultation paper is available on the CySEC website here .
According to CySEC, the proposed reforms aim to enhance the nature, characteristics and trading methodology of binary options offered to retail investors. New proposed standards [...]
On 27 January 2017, the Cyprus House of Representatives passed legislation affording people the opportunity to repay overdue taxes in monthly instalments.
The law concerns debts to:
- immovable property,
- income tax,
- temporary defence contribution,
- capital gains tax,
- inheritance tax,
- stamp duty, and
- the temporary contribution in the public and private sectors.
In particular, overdue taxes under EUR 100,000 can be paid in 54 monthly instalments, whereas those exceeding EUR 100,000 can be paid in 60 monthly instalments.
The law also allows the tax commissioner the authority to decide on discounts, [...]
The Cyprus parliament has passed a law amending the Income Tax Law to bring its provisions on taxation of income from the use or sale of intangible assets into line with the “modified nexus” approach.
This approach, which was agreed by G20 leaders towards the end of 2014 and adopted by the OECD and the EU, allows a taxpayer to benefit from an intellectual property taxation regime, commonly known as an IP box, only to the extent that it can [...]
The new Legislation
A. Title Deeds
The Cypriot Parliament has recently enacted new legislation with regards to the transfer and issue of separate title deeds of immovable properties purchased in Cyprus and the avoidance or reduction in the payment of transfer fees for the said properties.
The law applies to all cases where a contract of sale to purchase a property was deposited at the relevant District Land Registry Office on or before 31st December 2014. However, buyers who failed to deposit [...]
On 1 April 2015 Cyprus and South Africa signed a Protocol amending their existing double taxation agreement (“DTA”), which was signed in 1997 and has been in force since 8 December 1998.
The Protocol amends the 1997 DTA in three areas, namely the definition of residence, withholding taxes on dividends and exchange of information. Importantly, it does not change the existing, highly beneficial, arrangements regarding taxation of capital gains.
The Protocol aligns the definition of "resident of a Contracting State" with [...]
The Republic of Cyprus and the Islamic Republic of Iran have signed an agreement in Nicosia on the avoidance of double taxation and fiscal evasion with respect to taxes on income, after negotiations spanning several years. The agreement was signed on 4 August 2015 by the Cyprus Minister of Finance and the Iranian Deputy Economy Minister and Head of the Islamic Republic of Iran’s Tax Organisation, who was on an official visit to Cyprus.
The signature of the agreement is [...]
On 3 April 2015 the government announced the abolition of all the remaining currency controls and restrictions, so that funds are freely transferable as they were prior to the imposition of controls. The final abolition is a welcome confirmation of the progress that has been made in rehabilitating the banking sector and the real economy of Cyprus.
On 9 March 2015 Cyprus and Bahrain signed a new double taxation agreement which it closely follows the 2010 OECD Model Tax Convention. The agreement applies to taxes on income imposed by either country.
It is expected that the new agreement shall boost trade and investment flows between the two countries.
The Minister of Finance of Cyprus has issued a ministerial decree, which sets the interest percentage which applies on judgments issued by Cyprus Courts at 4%. The decree has been published in the Cyprus Gazette on 23 December 2014 and has come into effect on 1 January 2015. The new 4% rate supersedes the previously applicable rate of 5,5%, which applied since 2008.