Cyprus has now adopted Action 5 of the OECD in the action against the “Base Erosion and Profit Shifting» (BEPS). This requires a clear link between the rights that generate income and activities that contribute to such income (Nexus modified approach). New changes will take effect on 1 July 2016. The companies that join the scheme before that date will benefit from the savings until the middle of 2021. The Cyprus Intellectual Property scheme provides for 80% exemption on income tax if intellectual property is owned by Cypriot resident company (net of any direct costs). Other Intellectual Property jurisdictions are less attractive as Intellectual Property are taxed at a much higher level and the definition of IP is not wide enough to cover software, trademarks and copyrights.
Tough years for Russians owners of foreign companies?
Russian companies operating abroad, including Cyprus, faced a much tougher regulatory environment, due to both international and Russian compliance rules. Greater disclosure required by EU directives and the new Russian tax rules, forced Russian business to increase economic substance abroad. According to the new Russian tax rules, foreign companies belonging to Russian tax residents and managed from Russia are now taxed in Russia. Also, Russian companies not resident in Russia, but earn income from Russia will not benefit from Double tax treaties that Russia has concluded with other countries unless the company demonstrates that it is the beneficial owner of the income. Given the current situation, Russian companies are now increasing their substance in Cyprus. Non domicile new Cyprus law will also encourage Russians to move to Cyprus. Russians will need to declare Cyprus as their taxable jurisdiction and receive an exemption from taxes on their worldwide dividends and interest. The new Cyprus citizenship rules have also increased Russian investment in Cyprus. Subject to certain criteria, non-Cypriots (Russians) who invest €5m in Cyprus are eligible for Cypriot citizenship.
Cyprus exits bailout programme
Cyprus is now experiencing its successful exit from its three-year international bailout programme and has now come back to a sustainable growth path. Jeroen Dijsselbloem, who chairs the eurogroup of finance ministers, admitted that Overall, the Cypriot authorities have delivered a very good job. Christine Lagarde, the IMF’s managing director, said the programme had delivered an impressive turnaround of the economy during the past three years. Cyprus banking system is on a much more solid footing, the fiscal position has been restored to a sustainable path and public debt is now firmly on a downward path. Cyprus exited its bailout having borrowed only about €7.5bn of the €10bn allocated in the programme. The economy returned to growth last year and it is outperforming on its budgetary targets
New Cyprus partnership law limited by shares
The new law on Cyprus partnerships now is in force and is similar with other EU countries such us UK and Poland. The number of partners can be up to 100. According to the new law there has to be at least one general partner and one limited partner who contributes capital by acquiring shares in the partnership but not authorized to manage the partnership. The Cyprus partnership still has no legal personality however is tax transparent (i.e. taxation arises at the level of partners)
Cyprus Limited Partnerships can now be a useful tool for investors who want to set up Alternative Investment Funds having the form of a Cyprus Limited Partnership
Granting Cyprus citizenship / passport to foreign investors
A non-Cypriot citizen, who meets certain economic criteria, either personally or through a Cyprus company/ companies in which he/ she participates as a shareholder – proportionally based on the percentage of participation, or even as a high-ranking senior manager of a company/ companies may apply for the acquisition of the Cyprus citizenship (Cyprus Passport) through Naturalization by exception. Read more…
Cyprus taxation incentives for high-net-worth individuals moving to Cyprus
The introduction of “Domicile” regime aims to exempt individuals moving to Cyprus from personal taxes. High-net worth non-domiciled individuals will need to declare Cyprus as their taxable jurisdiction and receive an exemption from Cyprus personal taxes on rents (3% on 75% on rent income), interest (30%) and dividends (17%) which are applicable to Cyprus domiciled individuals.The exemption will apply for 17 years as from the date of declaring Cyprus as their taxable jurisdiction. Read more…
New Cyprus taxation incentives for Cyprus Companies on new equity capital introduced after 1 January 2015
According to Cyprus new taxation laws, Cyprus companies financed by own funds shall be given notional Interest deduction (NID). This will mean a reduction of the overall effective tax rate of a Cyprus Company depending on the level of Cyprus Company capitalization. The notional Interest deduction (NID) will be granted annually for as long as capital is used in the Company. This will be applicable retrospectively as from 1 January 2015. Read more…
Further extension period granted by the Cyprus registrar of Companies for companies that have not complied with the Law
The Cyprus Registrar of Companies has granted a further extension until October 31, 2016 to companies that have filed an objection for deletion / de-registration until 9 November 2015.
According to the Cyprus Company Law Cap. 113 Cyprus Companies have to comply by submitting each year their annual returns together with the related financial statements.
Cyprus economic substance of Cyprus companies and beneficial ownership on dividends: The case of Cyprus
The viability of international tax planning and business structures has been affected by a coordinated effort by the G8 to address tax evasion of offshore companies. These changing regulatory requirements raise important questions for owners of Cypriot companies:…Read more
Why Cyprus company formation
Over the past twenty years, Cyprus has developed into one of the most favourable places for international business. A low tax regime combined with its excellent geographical position and infrastructure and its ability to offer sophisticated Cyprus tax planning opportunities, its ability to set up and manage Alternative Investment Funds (AIFs), the enactment of the Cyprus International Trusts Law which provided for the formation and administration of Cyprus International Trusts combined with its excellent geographical position and infrastructure where the key factors for its success. Read more…
Contact For more information please contact PKF Nicosia Cyprus on: Email: [email protected] Tel. No: +357-22-46-27-27
Disclaimer: 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 document. 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/ATCO Ltd is a member firm of the PKF International Limited network of legally independent firms and does not accept any responsibility or liability for the actions or inactions on the part of any other individual member firm or firms.
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