Professional Documents
Culture Documents
cy
Table of contents
Foreword
Special contribution
10
Corporation tax
12
23
30
Estate duty
33
34
44
Trusts
46
48
Social insurance
50
Stamp duty
52
Capital duty
54
56
Tax diary
63
PwC in Cyprus
66
70
72
PwC Cyprus
Foreword
This publication provides valuable information about the
tax system in Cyprus, based on the current tax legislation
and practice.
The Tax, Facts & Figures 2014 - Cyprus publication which
provides a general description of our tax system represents
a rich source of general guidance that will enable you
to effectively proceed with your tax planning in a timely
manner.
However in no case a publication can substitute proper
professional advice. All of us in PwC are here to offer
you our knowledge and expertise and to support you in
achieving your personal and corporate tax goals. The
specialised solutions we offer to you are adjusted to your
own needs and will support you in structuring your tax
operations in an efficient way.
Please do not hesitate to contact us at any of the addresses
shown at the back of this publication.
PwC Cyprus
January 2014
PwC Cyprus
Foreign taxes paid can be credited against the personal income tax
liability.
First 19.500
From 19.501 - to 28.000
From 28.001 - to 36.300
From 36.301 - to 60.000
ver 60.000
Tax rate
Accumulated tax
%
Nil
20
25
30
35
Nil
1.700
3.775
10.885
Exemptions
The following are exempt from income tax:
Type of income
Exemption
Dividends
PwC Cyprus
Notes:
1. Such dividend and interest income is subject to Special Contribution
for Defence.
2. The term Securities is defined as shares, bonds, debentures,
founders shares and other securities of companies or other legal
persons, incorporated in Cyprus or abroad and options thereon.
A circular has been issued by the Tax Authorities in 2008 further
clarifying what is included in the term Securities. According to the
circular the term includes, among others, options on Securities,
short positions on Securities, futures/forwards on Securities, swaps
on Securities, depositary receipts on Securities (ADRs, GDRs),
rights of claim on bonds and debentures (rights on interest of these
instruments are not included), index participations only if they result
on Securities, repurchase agreements or Repos on Securities, units
in open-end or close-end collective investment schemes. The circular
also clarifies specific types of participation in foreign entities which
are considered as Securities.
Tax Facts & Figures 2014 - Cyprus
Tax deductions
The following are deducted from income:
Rental income
Up to 1.200, 1.100 or
700 per square meter
(depending on the size of
the building)
PwC Cyprus
70.620
5.000
Interest receivable
700
Dividend income
600
3.699
620
8.500
100.000
3.000
300
Tax computation
Salary
Rent receivable
Interest receivable (exempt)
Dividends receivable (exempt)
Total income
Less: deductions
Donations - (with receipts)
Special contribution
20% of rent income
Net total income
Life insurance premiums:
Restricted to 7% of the insured sum
(7% @ 100.000 = 7.000)
Provident fund, social insurance
contributions and life insurance premiums
restricted to 1/6 of net total income
(3.000 + 3.699 + 7.000 = 13.699
restricted to 1/6 of 75.000*)
Taxable income
70.620
5.000
-
75.620
300
620
1.000
1.920
73.700
(12.500)
61.200
PwC Cyprus
19.500
8.500
8.300
23.700
1.200
0
1.700
2.075
7.110
420
11.305
120
210
112
442
620
3.699
16.066
Special
Contribution
2013
First 2.500
From 2.501 - to 3.500
From 3.501 - to 4.500
Over 4.500
2014
First 1.500
From 1.501 to 2.500
From 2.501 to 3.500
Over 3.500
10
PwC Cyprus
Government and
semi-government
employees and
pensioners
Private sector
employees, selfemployed individuals
and private sector
pensioners (2) (3) (4)
Nil
2,5%(1)
3,0%(1)
Nil
2,5% (minimum 10)
3,0%
3,5%(1)
3,5%
il
2,5%(1)
3,0%(1)
3,5%(1)
Nil
2,5% (minimum 10)
3,0%
3,5%
Notes:
1. The Special Contribution rate becomes 3%, 3,5% and 4% respectively
for highly ranked civil service officials/ employees within their
respective scale.
2. In the case of private sector employed individuals and private sector
pensions the Special Contribution relates to services rendered
in Cyprus. In the case of self-employed individuals the Special
Contribution relates to any business carried on in Cyprus.
3. For private sector employed individuals the Special Contribution
does not apply, inter alia, on retirement gratuities, on payments from
approved provident funds, on remuneration of the crew of qualifying
ships and on reimbursements of business expenses.
4. In the case of private sector employed individuals the recipient of
the remuneration is liable for half the Special Contribution and the
employer for the other half.
11
Corporation tax
Basis of taxation
All Cyprus tax resident companies are taxed on their income accrued or
derived from all chargeable sources in Cyprus and abroad. A non- Cyprus
tax resident company is taxed on income accrued or derived from a
business activity which is carried out through a permanent establishment
in Cyprus and on certain income arising from sources in Cyprus.
A company is a resident of Cyprus if it is managed and controlled in
Cyprus.
Foreign taxes paid can be credited against the corporation tax liability.
12
PwC Cyprus
Tax rate
%
12,5
Type of income
Exemption limit
Notes:
1.
2.
3.
4.
13
Deduction limit
The whole
amount of interest
expense if the
subsidiary does
not own (directly
or indirectly) any
assets not used in
the business. A
restricted amount
of interest expense
if the subsidiary
owns (directly or
indirectly) assets
not used in the
business.
80%
14
PwC Cyprus
Notes:
1.
2.
15
One company holding at least 75% of the voting shares of the other
company
Reorganisations
Transfers of assets and liabilities between companies can be effected
without tax consequences within the framework of a reorganisation and
tax losses can be carried forward by the receiving entity.
Reorganisations include:
mergers
demergers
partial divisions
transfer of assets
exchange of shares
PwC Cyprus
Fixed assets
Plant and machinery
10
10
10
10
15
Buildings
Commercial buildings
Industrial, agricultural and hotel buildings (2)
Flats
Metallic greenhouse structures
Wooden greenhouse structures
%
3
4
3
10
33 1/3
17
Other
18
PwC Cyprus
20
20
25
20
20
8
8
4,5
6
6
12,5
8
6
Over their
useful lives
10
20
33 1/3
10
10
33 1/3
50
Notes
1.
2.
Plant and machinery acquired during the tax years 2012, 2013 and
2014 are eligible to accelerated tax depreciation at the rate of 20%
(excluding such assets which are already eligible for a higher annual
tax rate of tax depreciation).
In the case of industrial and hotel buildings which are acquired
during the tax years 2012, 2013 and 2014, an accelerated tax
depreciation at the rate of 7% per annum may be claimed.
19
Shipowners
The exemption applies to:
20
PwC Cyprus
Shipmanagers
The tax exemption covers:
21
Common Fund
Variable Capital Investment Company
ICISs and UCITs are liable to tax or not depending on their legal status.
Under certain conditions, management fees charged for the management
of ICISs and UCITs funds can be exempt from VAT.
22
PwC Cyprus
Special contribution
for defence
Tax rates
Individuals Legal entities
%
%
17(1)
Nil (1)
17
Nil (2)
Nil (3)
Nil (3)
30(4)
30(4)
3 (4)(5)
3 (4)(5)
23
Notes:
1.
2.
3.
4.
24
PwC Cyprus
Foreign taxes paid can also be credited against the Special contribution for
defence tax liability.
25
26
PwC Cyprus
Notes:
1.
27
Company dissolution
The cumulative profits of the last five years prior to the companys
dissolution, which have not been distributed or deemed to have been
distributed, will be considered as distributed on dissolution and will be
subject to Special contribution for defence at the rate of 17%, 20% for
2013, (3% for Collective Investment Schemes).
This provision does not apply in the case of dissolution under a
Reorganisation.
28
PwC Cyprus
Reduction of capital
In the case of a reduction of capital of a company, any amounts paid or due
to the shareholders over and above the paid up share capital
will be considered as dividends distributed subject to special
defence contribution at the rate of 17% (20% for 2013) after deducting
any amounts which have been deemed as distributable profits.
The above provisions apply only to the extent that the ultimate
shareholders (direct or indirect) are Cyprus tax resident individuals.
The redemption of units or shares in a Collective Investment Scheme is not
subject to the above provisons.
29
Exemptions
The following disposals of immovable property are not subject to
Capital Gains Tax:
30
PwC Cyprus
31
Example
500.000
(90.000)
(81.620)
328.380
(1.000)
327.380
Lifetime Exemptions
Individuals can deduct from the capital gain the following:
Disposal of private residence (subject to certain
conditions)
Disposal of agricultural land by a farmer
Any other disposal
85.430
25.629
17.086
32
PwC Cyprus
Estate duty
Estate duty has been
abolished since 1
January 2000.
The executor/
administrator of the
estate of the deceased,
is required by the
Deceased Persons Estate
Law, to submit to the tax
authorities a statement
of assets and liabilities
of the deceased within
six months from the
date of death.
33
34
PwC Cyprus
a period of three years has elapsed from the date the VAT became
refundable (reduced to two years as from 1/1/2014, one year as from
1/1/2015 and eight months as from 1/1/2016)
input VAT which cannot be set off against output VAT until the last
VAT period of the year which follows the year in which the VAT
period in which the credit was created falls
the input VAT relates to the purchase of capital assets of the company
the input VAT relates to transactions which are outside the scope of
VAT but would have been subject to VAT had they been carried out
within Cyprus
35
Changes in the time of supply of services for which VAT is due by the
recipient
Procedure for refund of VAT paid in another Member State
Additional compliance obligation for electronic submission of the
monthly VIES return for services subject to VAT in another EU
Member State through the reverse charge provisions
36
PwC Cyprus
VAT rates
The legislation provides for the following four tax rates:
lottery tickets and betting coupons for football and horse racing;
37
PwC Cyprus
39
PwC Cyprus
Registration
Registration is compulsory for businesses with (a) turnover subject to
VAT in excess of 15.600 during the 12 preceding months or (b) expected
turnover subject to VAT in excess of 15.600 within the next 30 days.
Businesses with turnover of less than 15.600 or with supplies that are
outside the scope of VAT but for which the right to claim the amount of
the related input VAT is granted, have the option to register on a voluntary
basis.
An obligation for registration also arises for businesses which make
acquisition of goods from other EU Member States in excess of 10.251,61
during any calendar year. In addition as from 1 January 2010 an obligation
for VAT registration arises for businesses engaged in the supply of
intra-community services for which the recipient must account for VAT
under the reverse charge provisions. Furthermore an obligation for VAT
registration arises for businesses carrying out economic activities from
the receipt of services from abroad for which an obligation to account
for Cyprus VAT under the reverse charge provision exists subject to the
registration threshold of 15.600 per any consecutive 12 month period. No
registration threshold exists for the provision of intra-community supplies
of services.
Exempted products and services, and disposals of items of capital nature
are not taken into account for determining annual turnover for registration
purposes. Registration is effected by completing the appropriate
application form.
41
42
PwC Cyprus
Amount
in Euro
()
15.600
35.000
no
threshold
15.600
50 for each
return
15 for each
return
10
11
10.251,61
51 for each
return
341
850
85 per
month of
delay
43
Immovable Property
Tax
44
PwC Cyprus
As from 1 January 2013, the bands and rates for Immovable Property Tax
for properties situated in Cyprus have been revised as per the table below
which apply per owner, not per property. Property owners whose property
has a total value of 12.500 or less (using values of 1.1.1980) are exempt
from Immovable Property Tax.
Tax rates
Property value (as at 1 January
1980)
First 40.000
From 40.001 to 120.000
From 120.001 to 170.000
From 170.001 to 300.000
From 300.001 to 500.000
From 500.001 to 800.000
From 800.001- to 3.000.000
Over 3.000.000
Rate
Accumulated tax
6
8
9
11
13
15
17
19
240
880
1.330
2.760
5.360
9.860
47.260
Exemptions
The following are not subject to Immovable Property Tax:
Public cemeteries
Churches and other religious buildings (partly exempt)
Public hospitals
Schools
Immovable property owned by the Republic
Foreign embassies and consulates
Common use and public places
Property under Turkish occupation
Buildings under a Preservation Order
Buildings of charitable organisations
Agricultural land used in farming or stock breeding, by farmer or
stock breeder residing in the area
Tax Facts & Figures 2014 - Cyprus
45
Trusts
46
PwC Cyprus
International Trusts
The Law defines an International Trust as being a trust in respect of
which: (a) The Settlor is not a tax resident in Cyprus during the calendar
year which precedes the year of creation of the trust; (b) At least one
of the Trustees from time to time is a tax resident in Cyprus during the
trust period; and (c) None of the Beneficiaries are tax residents in Cyprus
during the calendar year which precedes the year of creation of the trust.
According to applicable law: (i) Where the beneficiary is resident in
Cyprus, the income and profits of a Cyprus International Trust which are
earned or deemed to be earned from sources within and outside of Cyprus,
are subject to every form of taxation imposed in Cyprus. (ii) Where the
beneficiary is not a resident of Cyprus, the income and profits of a Cyprus
International Trust which are earned or deemed to be earned from sources
within Cyprus, are subject to every form or taxation imposed in Cyprus.
47
The fees charged by the Department of Land and Surveys to the acquirer
for transfers of immovable property are as follows:
Market Value
First 85.000
From 85.001 to 170.000
Over 170.000
Rate
%
3
5
8
Fee
2.550
4.250
Accumulated fee
2.550
6.800
PwC Cyprus
Also the following rates are applicable in the case of free transfers:
49
Social insurance
50
Contributions
Employer
7,8
Employee
7,8
PwC Cyprus
2,0*
Redundancy fund
1,2**
0,5**
51
Stamp duty
The following table gives the amount or rate of duty payable on certain
documents. Transactions which fall within the scope of reorganisations
are exempt from stamp duty. Also, documents relating to assets situated
outside Cyprus or business affairs that take place outside Cyprus are
exempt from stamp duty.
52
PwC Cyprus
Nature of documents
Receipts (if not exempt) - for sums of over 4
Cheques
Letters of credit
Letters of guarantee
Bills of exchange (payable within three days, on
demand or at sight)
Contracts with a fixed amount
As from 1 March 2013:
- the first 5.000
- between 5.001 - to 170.000
-above 170.000
Contracts without fixed sum
Customs declaration documents (depending on
document type)
Bills of lading
Charterparty
Powers of attorney
- general
- limited
Certified copies of contracts and
documents
* Capped at a maximum of 20.000 as from March 2013.
7 cents
5 cents
2
4
1
0
1.5
2*
35
18-35
4
18
6
2
2
53
Capital duty
Upon incorporation of a Cyprus company
Authorised share capital
54
PwC Cyprus
55
Tax treaties
withholding tax tables
The following tables give a summary of the withholding taxes (WHT)
provided by the double tax treaties entered into by Cyprus.
Paid to
Non-treaty
countries
Armenia
Austria
Belarus
Belgium
Bulgaria
Canada
China, P.R.
Czech Republic
Denmark
Egypt
Estonia
Finland
France
Germany
Greece
Hungary
56
PwC Cyprus
Royalties
%
Nil(30)
10
5 (17)
10 (8)
5 (22)
15
10
Nil (28)
Nil (6, 32)
15
Nil
5 (35)
Nil
5 (36)
25
Nil
5
Nil
5
Nil
10
10 (5)
10
Nil (29)
Nil
10
Nil
Nil
Nil (3)
Nil
Nil (11)
Nil
5
Nil
5
10 (6,18)
7 (6)
15 (4)
10
Nil
Nil
15
Nil
Nil
10 (10)
Nil
10
10 (6)
Nil (2)
Royalties
%
10 (15)
Nil (11)
Nil
5
Nil
10
Nil
5
10
Nil
5
10
5 (27)
5 (7)
Nil
Nil
10
5
10
5 (7)
5
Nil
Nil
Nil
10
5 (21)
5 (33)
Nil (3)
Nil
57
Paid from
Armenia
Austria
Belarus
Belgium
Bulgaria
Canada
China, P.R.
Czech Republic
Denmark
Egypt
Estonia
Finland
France
Germany
Greece
Hungary
India
Ireland, Rep. of
Italy
Kuwait
Lebanon
Malta
Mauritius
58
PwC Cyprus
Received in Cyprus
Dividends
Interest
%
%
Nil (30)
5
10
Nil
5 (17)
5
10 (8)
10 (6,18)
5 (22)
7 (6,23)
15
15 (4)
10
10
Nil (28)
Nil
Nil (6,32)
Nil
15
15
Nil
Nil
5(35)
Nil
10 (36)
10 (10)
5 (36)
Nil
25
10
5 (8)
10 (6)
10 (37)
10 (10)
Nil
Nil
15
10
0
0
5
5
Nil
10
Nil
Nil
Royalties
%
5
Nil
5
Nil
10 (23)
10 (5)
10
Nil (29)
Nil
10
Nil
Nil
Nil (3)
Nil
Nil (11)
Nil
15 (14)
Nil (11)
Nil
5
Nil
10
Nil
Paid from
Moldova
Montenegro (25)
Norway
Poland
Portugal
Qatar
Romania
Russia
San Marino
Serbia (25)
Seychelles
Singapore
Slovak Republic
Slovenia
South Africa
Spain (38)
Sweden
Syria
Thailand
Ukraine
United Kingdom
United States
Received in Cyprus
Dividends
Interest
%
%
5 (26)
5
10
10
Nil (12)
Nil
Nil(34)
5 (6)
10
10
Nil
Nil
10
10 (6)
5 (16)
Nil
Nil
Nil
10
10
Nil
Nil
Nil
10 (6,24)
10
10 (6)
5 (31)
5
Nil
Nil
Nil (39)
Nil
5 (8)
10 (6)
Nil (8)
10 (4)
10
15 (20)
5 (19)
2
15 (13)
10
5 (9)
10 (10)
Royalties
%
5
10
Nil
5
10
5 (27)
5 (7)
Nil
Nil
10
5
10
5 (7)
5
Nil
Nil
Nil
10
5 (21)
5 (33)
Nil (3)
Nil
59
Notes
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
60
PwC Cyprus
61
PwC Cyprus
63
30 June
-- Payment of special contribution for defence for the first six months of
2014 on rents and on dividends or interest from sources outside Cyprus.
31 July
-- Electronic submission by employers of the total 2013 payroll (Form IR7).
-- Submission of the 2014 provisional tax return and payment of the first
instalment.
-- Electronic submission of 2013 personal tax returns of individuals whose
incomes do not include income from a trade/business, rents, dividends,
interest, royalties nor income relating to trading goodwill (1).
1 August
-- Payment of 2013 final corporation tax under the self-assessment
method.
-- Payment of 2013 personal income tax under the self assessment method
by individuals preparing audited financial statements (2).
31 August
-- Payment of premium tax for life insurance companies - second
instalment for 2014.
30 September
-- Submission of 2013 personal tax returns of individuals not required to
prepare audited financial statements but whose incomes include income
from a trade/business, rents, dividends, interest, royalties or income
relating to trading goodwill (1) (2) and payment of tax via the selfassessment method.
-- Payment of immovable property tax for 2014.
64
PwC Cyprus
31 December
-- Payment of provisional tax - second and last instalment for 2014.
-- Payment of special contribution for defence for the last six months of
2014 on rents and on dividends or interest from sources outside Cyprus.
-- Payment of premium tax for life insurance companies - third and last
instalment for 2014.
Interest and Penalties
The official interest rate, as set by the Finance Minister, is 4,50% per
annum for all amounts due after 1 January 2014 (4,75% for 2013, 5% for
years 2012 and 2011, 5,35% for the year 2010, 8% for the years 2007-2009
and 9% up to 31 December 2006).
In addition to the interest, penalties are also charged depending on the
circumstances.
Notes:
1.
2.
65
PwC in Cyprus
We are striving to offer our clients the value they are looking for, value
that is based on the knowledge that our teams draw from 184,000 experts
in 157 countries and based on experience adapted to local needs. PwC
Cyprus focuses on two main areas: Assurance & Advisory Services and
Tax & Legal Services. We work closely with our clients. We ask questions.
We listen. We learn what they want to do, where they want to go. From
all our international knowledge we share with them the piece that is more
suitable for them and thus we support them on how to achieve their goals.
In the operation of the worlds capital markets we play an important
role and as business advisors we help our clients solve complex business
problems. We aim to improve their ability to manage risk and improve
performance. At the same time we take pride in our quality services which
help to improve transparency, trust and consistency of business processes.
Our position is strengthened with our more than 900 professionals and our
offices throughout Cyprus.
Some of our services are:
Assurance & Advisory Services
Our Financial Assurance services comprise of statutory and regulatory
audit services, which include evaluation of information systems, advisory
services for capital market transactions, accounting and regulatory issues
for all types of businesses through specialist industry divisions:
Financial Services (FS), Consumer and Industrial Products and Services
(CIPS) and Technology, Information, Communications, Entertainment
and Media (TICE).
66
PwC Cyprus
67
68
PwC Cyprus
Legal Services
The legal firm, full member of the PwC international network, offers
legal services that cover the whole spectrum of corporate and business
law, including advising and representing clients in M&A transactions, reorganizations, European Union law and Competition law, setting up and
regulating private companies, setting up joint ventures and other forms of
businesses and carrying out legal due diligence.
69
PwC offices in
Cyprus
Nicosia
Address:
Limassol
Address:
Larnaca
Address:
Paphos
Address:
70
PwC Cyprus
71
Directors
Senior Managers
72
PwC Cyprus
+357-22555000
Costas L Mavrocordatos
(Head of Tax & Legal)
Nicos P Chimarides
(In charge of Direct Tax Services)
Chrysilios K Pelekanos
(In charge of Indirect Tax Services)
Marios S Andreou
Antonis C Christodoulides
Eftychios G Eftychiou
Panicos Kaouris
Angelos M Loizou
Stelios A Violaris
Christos Charalambides
Constantinos Leontiou
Varnavas Nicolaou
Ioanna Stylianidou
Angela Eliophotou
Andreas Iosif
Michael Michael
Antonis Petrou
Charalambos Sergiou
Michalis Stavrides
Joanne Theodorides
Limassol
Board Members
+357-25555000
Cleo Papadopoulou
Constantinos L Kapsalis
Director
Martha Lambrou
Senior Manager
Maria Stephanou
Larnaca
Board Member
Constantinos L Kapsalis
+357-24555000
Paphos
+357-26555000
Board Member
Pantelis Evangelou
Senior Managers
Paris Chrysostomou
Thoula Yerasimou Stavrou