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PKF Cyprus

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Directors’ and shareholders’ taxation when receiving loans or withdrawals from Cypriot companies

According to the Cyprus Income Tax Law, a Cyprus resident individual director or shareholder (including shareholder spouse of director or shareholder and relative up to the second degree of the director or shareholder) of a Cyprus company, receiving a loan, cash facility or withdrawal from a Cyprus company is deemed to have a benefit calculated on a monthly basis on the respective balance at an interest rate of 9% per annum. The benefit is added on the taxable income of the individual. If the benefit is under €19,500 and the individual has no other source of income then there is no tax liability. If the benefit together with any other source of income exceeds €19,500 such an excess is taxable and the company is required to calculate and pay the tax on behalf of the individual.

The practice followed by the Cypriot tax department for a Cyprus non-tax resident individual was that the benefit could be reduced according to the individual’s number of days spent outside Cyprus.

As of 14 of November 2017, the Cyprus Tax Department clarified that the benefit deemed to be calculated on a Cyprus non-tax resident individual, will be calculated throughout the year regardless of the number of days spent outside Cyprus.

PKF Nicosia Cyprus closely follows the new tax developments and informs its clients accordingly in case of further updates or interpretations

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December 2017

The authors expressly disclaim all and any liability and responsibility to any person, entity or corporation who acts or fails to act as a consequence of any reliance upon the whole or any part of the contents of this publication.

Accordingly no person, entity or corporation should act or rely upon any matter or information as contained or implied within this publication without first obtaining advice from an appropriately qualified professional person or firm of advisors, and ensuring that such advice specifically relates to their particular circumstances.

PKF Cyprus firms are member firms of the PKF International Limited network of legally independent firms and do not accept any responsibility or liability for the actions or inactions on the part of any other individual member firm or firms.