Tax Card 2014 Exemptional tax a dvice
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TA B L E O F C O N T E N T S
PERSONAL INCOME TAX
CORPORATE TAX
.................. ..............................................................................................
3-5
................................................................................................................................
6-8
SPECIAL CONTRIBUTION FOR DEFENCE CAPITAL GAINS TAX
...............................................................................
.........................................................................................................................
IMMOVABLE PROPERTY TAX
......................................................................................................
LAND REGISTRY TRANSFER FEES VALUE ADDED TAX (VAT)
9-11 12-13 14-15
.............................................................................................
16-17
..............................................................................................................
18-22
SOCIAL SECURITY CONTRIBUTIONS
.......................................................................................
23-24
DOUBLE TAXATION TREATIES (DTT)
........................................................................................
25-28
..................................................................................................................................
29-30
2014 TAX DIARY
INTEREST AND PENALTIES
...........................................................................................................
31
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F O R E WA R D
With great pleasure, we have published our Tax Card 2014 which provides valuable information about the Cyprus tax system. Cyprus is a diversified, open-market economy with a high-educated workforce and a commitment to facilitating business in an easy and cost-effective manner. Cyprus, with a business friendly environment, is strategically located between Europe, Middle East, Africa and Asia at the crossroads of global economy. As a member of the European Union with a modern telecommunications network and tested infrastructure, Cyprus is a gateway to the world of international business. Cyprus can be your next business international destination, provided that you appoint the right, qualified Cyprus business partner. Cyprus maintains one of the most business-friendly corporate tax regimes in the EU. Cyprus offers many key benefits that contribute to the success of business and investments and PHS can ensure to this success. PHS is known for its commitment to offering quality and excellence of services to all our clients through professionalism, integrity and continues improvement. PHS team consists of distinguished qualified professionals who are proudly characterized as trusted tax advisors. We would like to contribute towards your personal and corporate business success.
Philippos Hadjizacharias Managing Director
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PERSONAL INCOME TAX All Cyprus tax resident individuals are taxed on all chargeable income accrued or derived from all sources in Cyprus and overseas. Individuals who are not tax residents of Cyprus are taxed on income accrued or derived from sources in Cyprus.
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Personal Tax rates Tax Band € 0 - 19.500
Taxable Amount €
Tax Rate %
Tax Amount €
Cumulative Tax €
19.500
0
-
-
19.501 - 28.000
8.500
20
1.700
1.700
28.001 - 36.300
8.300
25
2.075
3.775
36.301 - 60.000
23.700
30
7.110
10.885
60.001 +
35
Foreign pension is taxed at the rate of 5%. An annual exemption of €3.420 is granted. The taxpayer has the option to elect to be taxed at the normal personal tax rates as set out above. This is a choice which can be made year-on-year basis.
Imposition of Tax Individuals who are resident in the Republic of Cyprus are liable to pay income tax on their income accruing or arising from worldwide sources. Individuals, who are not resident in the Republic of Cyprus, are liable to pay income tax only on income accruing or arising from sources within the Republic of Cyprus. Individual Residency status: an individual who is present in the Republic of Cyprus for a period exceeding 183 days in a tax year, including the day of arrival into the Republic of Cyprus and excluding the day of departure from the Republic of Cyprus. Foreign taxes paid can be credited against the personal income tax liability.
Exemptions Interest, except for interest arising from the ordinary business activities or closely related to the ordinary business activities of an individual. The whole amount is exempt from personal income tax but is subject to Defence Tax Dividends The whole amount is exempt from personal income tax but is subject to Defence Tax Remuneration from any office or employment exercised in Cyprus by an individual who was not a resident of Cyprus before the commencement of his employment, for a period of 5 years for employments commencing as from 1 January 2012 if the annual remuneration exceeds €100.000 50% of remuneration is exempt from personal income tax Remuneration from any office or employment exercised in Cyprus by an individual who was not a resident of Cyprus before the commencement of his employment, for a period of 3 years commencing from 1st January following the year of commencement of the employment. 20% of remuneration with a maximum amount of €8.550 annually is exempt from personal income tax
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Remuneration from salaried services rendered outside Cyprus for more than 90 days in a tax year to a non-Cyprus resident employer or to a foreign permanent establishment of a Cyprus resident employer. The whole remuneration is exempt from personal income tax Profits of a permanent establishment abroad under certain conditions The whole amount is exempt from personal income tax Lump sum received by way of retiring gratuity, commutation of pension or compensation for death or injuries The whole amount is exempt from personal income tax Capital sums accruing to individuals from any payments to approved funds (e.g. provident funds) The whole amount is exempt from personal income tax Profits from the sale of securities The whole amount is exempt from personal income tax
Tax deductions from Income Contributions to trade unions or professional bodies The whole amount is deducted form income Rental income 20% of rental is deducted from income Donations to approved charities (with receipts) The whole amount is deducted from income Special contribution The whole amount is deducted from income Social Insurance, provident fund, medical fund (maximum1% of remuneration), pension fund contributions and life insurance premiums (maximum 7% of the insured amount) Up to 1/6 of chargeable income is deducted from total income
Special Contribution Gross monthly remuneration € First 1.500
Government and Semi-Gov. Employees
Private Sector Employees
(services rendered in Cyprus) ( 50:50 Employer & Employee)
0
0
1.501 – 2.500
2,5%
2,5% (min. €10)
2.501 – 3.500
3,0%
3,0%
3.500 +
3,5%
3,5%
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CORPORATION TAX All Cyprus tax resident Companies are taxed on their income accrued or derived from all sources in Cyprus and overseas. 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. A Company is resident of Cyprus if Management & Control criteria are met
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Company Tax rate Corporation Tax
12.5%
Company Residency status: a company whose management and control is exercised in the Republic of Cyprus. Foreign taxes paid can be credited against the corporation tax liability. Tax year is 1st of January to 31st December.
Exemptions from Corporation Tax Source of Income
Exemption
Income from Dividends
100%
Income from Interest other than interest arising in the ordinary course of business.
100%
Gains from disposal of securities*
100%
Profits from permanent establishment situated outside Cyprus (subject to certain conditions)
100%
*Securities are defined as ‘shares, bonds, debentures, founders’ shares and other securities of companies or other legal person, incorporated under a law in Cyprus or abroad, including options thereon.
Deductions from Corporation Tax Source of Deduction
Deduction
Interest expense incurred for the direct or indirect acquisition of 100% of the share capital of a subsidiary company will be treated as deductible for income tax purposes provided that the 100% subsidiary company does not own any assets that are not used in the business, otherwise interest expense is restricted to the amount which relates to assets used in the business.
100% or Restricted amount
80% of the net royalty income, including the net income emanating from the disposal of the intangible assets owned by a Cyprus tax resident company would be deemed as a deductible expense.
80%
Donations to approved charitable organizations (with receipts)
100%
Expenses incurred for the maintenance of buildings under preservation order (approval from the Ministry of the Interior required) Employer’s contributions to social insurance, providend fund and medical funds All expenses incurred wholly & exclusively for the production of income Entertainment expenses for business purposes
€700, €1.100 or €1.200 per square meter 100% 100% Lower of €17,086 or 1% of the gross income of the business
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Non-deductible Expenses from Corporation Tax Source of Deduction Expenses of a private motor vehicle Interest payable in relation to the purchase of a private motor vehicle either used or not used in the business and other asset not used in the business. Cost of goods taken out of the business for private use
Company 100% 100% for 7 years from the purchase date 100%
Tax Losses Carry forward of losses The tax loss incurred during a tax year and which cannot be set off against other income is carried forward subject to conditions and set off against the profits of the next 5 years. The current year loss of one company can be set off against the profit of another subject to conditions provided the companies are Cyprus tax resident companies of a group. Group is defined as:
• One company holding at least 75% of the voting shares of the other company • Both of the companies are at least 75% (voting shares) held by another third company
A sole trader or a partnership transferring a business into a company can carry forward tax losses into the company.
Loss incurred outside the Republic of Cyprus Losses from a permanent establishment abroad can be set off with profits of the company in Cyprus. Subsequent profits of an exempt permanent establishment abroad are taxable up to the amount of losses allowed.
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SPECIAL CONTRIBUTION FOR DEFENCE Special contribution for defence is imposed on the sources of income received or derived to have been received by any person resident in Republic of Cyprus. Non-tax residents are not subject to defence contribution.
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Rates Source of Income
Individual
Company
Dividends received from a Cyprus company
17%
Dividends received from non-Cyprus company (overseas)
17%
Nil (a) Nil (b)
Interest income arising from the ordinary business activities
Nil (c)
Nil (c)
30% (d)
30%
3%
3%
3% (e)
3% (e)
Any Other Interest Income Interest Income from Cyprus Government bonds and Provident Fund Rental income (reduced by 25% rather than actual expenses)
(a) (b)
Dividends received by a Cyprus Company from other Cyprus Company are excluded from special contribution for defence. After the lapse of 4 years from the end of the year in which the profits were generated, the Cyprus Company will be subject to special contribution for defence at 17%. Dividends received by a company are exempt from the payment of special contribution for defence unless:
(c) It is subject to personal income tax or corporation tax.
(d) If the total income of an individual (including interest) does not exceed â‚Ź12.000 in a tax year, then the rate on interest income is reduced to 3% (not 30%).
(e) If the tenant is a Cyprus Company or partnership, the special contribution for defence is withheld at source and is payable at the end of the month following the month that it is withheld. Rental income is also subject to personal income tax or corporation tax.
•
the company paying the dividend engages more than 50% in activities leading to investment income; and
•
the foreign tax burden on the income of the company paying the dividend is substantially lower (i.e. 6,25%) than the tax burden of the Cyprus tax resident company.
Dividends Deemed Distribution A Company resident in the Republic of Cyprus is deemed to distribute 70% of profits after tax and before set off of any losses brought forward in the form of dividends. The deemed distribution is effective at the end of the two years from the end of the tax year in which the profits arise. Such a deemed dividend distribution is reduced with payments of actual dividends distibuted during the relevant year the profits were generated or paid during the two following years. If no actual dividends are paid, special contribution for defence is imposed at 17%. In order to calculate the accounting profit required for deemed distribution purposes, the cost of any plant and machinery or buildings (excluding private motor vehicles) acquired for business purposes should be deducted against the accounting profits. Deemed distribution or actual distribution do not apply in respect of profits attributable to shareholders non resident in the Republic of Cyprus.
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Tax credit for foreigh tax paid Any tax paid abroad on income subject to special contribution will be credited against the special contribution payable on such income, irrespective of the existence of a double taxation treaty with foreign country.
Disposal of assets to shareholder at less than market value When a company disposes of an asset to an individual shareholder or a relative of his up to second degree or his spouse for a consideration less than its market value, the difference between the consideration and the market value will be deemed to have been distributed as a dividend to the shareholder. This provision, does not apply for assets originally gifted to the company by an individual shareholder or a relative of his up to second degree or his spouse.
Company dissolution The cumulative profits of the last five years prior to the company’s 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%. This provision does not apply in the case of dissolution under a Reorganisation.
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% after deducting any amounts which have been deemed as distributable profits. The above provisions apply only in cases where the shareholders are Cyprus tax resident individuals.
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CAPITAL GAINS TAX Capital Gains Tax (CGT) is imposed on gains from disposal of immovable property situated in the Republic of Cyprus, or shares in companies (not listed on Stock Exchange) which own immovable property in the Republic of Cyprus.
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Capital Gains Tax (CGT) rate
20%
CGT method of calculation The tax is imposed on the net gain from the disposal after deducting the greater of the cost or market value on 1 January 1980 including indexation allowance, using the official Retail Price Index.
GCT Exemptions
• transfer on death • gifts to spouses, parents, children and relatives up to third degree of kindred • gift to company whose shareholders are members of the same family and continue to be members of the family for a period of five years from the date of the gift • gift by a company whose shareholders are members of the same family, if the company had also acquired the immovable as a gift. The immovable must remain in hands of done for a period of at least three years • gift to charitable organisation or the Republic of Cyprus or educational institution • exchange or sale in accordance with the Agricultural Land (Consolidation) Laws • exchange of immovables where the values of the immovable properties being exchanged are equal • gain from transfer of ownership or shares in the course of company reorganisation
Expenses that are related to the acquisition and disposal of immovable property are also deducted, subject to certain conditions e.g. transfer fees, legal expenses etc.
Individual Lifetime Deductions Disposal
€
Private residence
85.430
Agricultural land by a farmer
25.629
Other
17.086
The above exemptions are lifetime exemptions subject to an overall lifetime maximum of €85.430
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IMMOVABLE PROPERTY TAX The immovable property tax is imposed on the market value of the immovable property on 1 January 1980 and is calculated on 1 January of every year. The immovable property is payable by 30 September of each year.
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Rates Value of property (as at 01/01/1980) €
Taxable Amount €
Rate
Tax Amount
Cumulative Tax
€
€
0 – 40.000
40.000
0,006
240
240
40.001 – 120.000
80.000
0,008
640
880
120.001 – 170.000
50.000
0,009
450
1.330
170.001 – 300.000
130.000
0,011
1.430
2.760
300.001 – 500.000
200.000
0,013
2.600
5.360
500.001 – 800.000
300.000
0,015
4.500
9.860
2.200.000
0,017
37.400
47.260
800.001 – 3.000.000 Over 3.000.000
0,019
Exemptions No immovable property tax payable for: • • • • • • • • •
Churches and other religious buildings Public hospitals Schools Public cemeteries Foreign Embassies and Consulates Common use and Public places Charitable Organisations buildings Property under Turkish occupation Agricultural land used in farming by farmer
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LAND REGISTRY TRANSFER FEES Transfer fees are paid on transfers of immovable properties calculated on the market value of the immovable property as estimated by the Land Registry Office.
16
Rates Market Value €
Net Amount €
Rate %
0 – 85.000
85.000
3
2.550
2.550
85.001 – 170.000
85.000
5
4.250
6.800
Over 170.000 •
Fees €
Cumulative Fees €
8
In an effort to revive the real estate market, for sale/purchase agreements signed between 2 December 2011 to 31 December 2016, a transfer subject to VAT will be exempt from the above transfer fees and a transfer not subject to VAT will be eligible for a 50% exemption from the above transfer fees.
• Transfer fees paid on the transfer of property to a family company are refunded in five years provided that there have not been any changes to the company’s shareholders and the company still owns the property. • Transfer of immovable property by a company to another company due to reorganisation is exempt from transfer fees. •
Transfer of immovable property from a family company whose shareholders are spouses and/or their children, to the spouce, or their children or relatives up to third degree of kindred, transfer fees are calculated on the estimated value of the immovable property appearing on the title deed at the rates of: Transfer to
%
Spouse
8
Children
4
Relative up to third degree of kindred
8
• Free transfers rates:
Transfer to
%
Children
0,2
Spouses or third degree of kindred
0,4
Trustee
€50
17
VALUE ADDED TAX (VAT) VAT is imposed on the taxable supply of goods or services within the Republic of Cyprus, on the acquisition of goods from other EU Member State and on the importation of goods into Republic of Cyprus.
18
Rates VAT Rate
%
Standard Rate All supplies of goods and services in Cyprus except those taxed at zero rate, reduced rate or are exempt.
19
Reduced Rate • Restaurant and catering services for food but excluding the supply of alcoholic beverages. • Accommodation in hotels • Transportation of passengers including luggages by taxi
9
Reduced Rate • Supply of live animals used for the preparation of food • Supply food for birds and fish • Supply of coffins and fertilizers • Services of road cleaning • Refuse collection • Services of writers and artists • Services of hairdressers • Supplies of water, manufactured juices • Newspapers, books, magazines • Supplies of ice cream, chips and salted nuts • Supplies of certain medicines • Entry fees at sport events, theatres, luna parks, museums, zoos, cinemas
5
Zero Rate • Exports • Supplies of foods • Supplies of medicines • Commissions from abroad for imports/exports • International air and sea transportation of persons • Ship management services Exempt Supply • Rental of immovable property • Disposal of immovable property where application for building permission has been submitted prior to 1 May 2004 • Postal services • Educational services • Medical services • Insurance services • Banking services • Lottery tickets and betting coupons for football and horse racing
0
Exempt
EU and Cyprus VAT Legislation changes as from 1 January 2010 and 1 January 2011 • • •
Changes in the country of taxation of services provided between businesses established in two different EU Member States (B2B) Changes in the country of taxation of services, supplied to consumers (B2C) Changes in the time of supply of services for which VAT is due by the recipient
• Procedure for refund of VAT paid in another EU Member State As from 1 Janaury 2011, such supplies are subject to VAT in the country where the activities are physically carried out.
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VAT Registration Registration for VAT is obligatory: • • • •
if turnover, subject to VAT, is in excess of €15.600 during the 12 proceeding moths; or at any point, if there are reasonable expectations that the value of the taxable supplies in the next 30 days will exceed €15.600. An obligation for VAT registration arises for businesses which make acquisition of goods from other EU Member States in excess of €10.251,61 during a calendar year. An obligation also arises for businesses engaged in the supply of intra-community services for which the recipient must account for VAT under the reverse charge provisions.
VAT Voluntary Registration • •
Businesses with turnover of less than the threshold VAT amount of €15.600 can be registered voluntarily. A person (or legal entity) who has trading activities outside the Republic of Cyprus, in either goods and/or services which would have been chargeable if made within the Republic of Cyprus, is entitled to voluntary registration.
VAT Refund Immediate refund of excess input VAT can be obtained in the following cases: • • • • • •
a period of two years has elapsed from the date the VAT became refundable 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 zero rated transactions 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 the input VAT relates to exempt financial and insurance services provided to non EU resident clients (services for which the right to recover the related input VAT is granted)
For intra-community acquisition of goods (with the exception of goods subject to excise duty) the trader does not pay VAT on receipt of the goods in Cyprus but instead accounts for VAT using the acquisition accounting method. This involves a simple accounting entry in the books of the business whereby it selfcharges VAT and at the same time claims it back, provided it relates to supplies for which the right to recover input VAT is granted, thereby creating no cost to the business. In cases the acquisition relates to a transaction for which the right to recover the input VAT is not granted, the trader must pay the VAT that corresponds to the acquisition. VAT persons who make a claim for VAT refund will be entitled to repayment of the principal amounts together with interest at 4,75%, in the event that the repayment is delayed for a period exceeding 4 months from the date of the submission of the VAT refund.
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Imposition of the reduced rate of 5% on the acquisition and/or construction of residences for use as the primary and permanent place of residence. The reduced rate of 5% applies to contracts that have been concluded from 1 October 2011 onwards provided they relate to the acquisition and/or construction of residences to be used as the primary and permanent place of residence for the next 10 years. For contracts concluded up to 30 September 2011 for the acquisition and/or construction of residences for use as the primary and permanent place of residence, the eligible person must apply for a grant. The reduced rate of 5% applies for the first 200 square meters of residences of total covered area of up to 275 square meters. In the case of families with more than 3 children the allowable total covered area increases by 15 square meters per additional child beyond the three children. The reduced rate is imposed only after obtaining a certified confirmation from the VAT Commissioner. The eligible person must submit an application on a special form, issued by the VAT Commissioner, which will state that the house will be used as the primary and permanent place of residence. The applicant must attach a number of documents supporting the ownership rights on the property and evidencing the fact that the property will be used as the primary and permanent place of residence. As from 8 June 2012 eligible persons include residents of non EU Member States, provided that the residence will be used as their primary and permanent place of residence in the Republic. The documents supporting the ownership of the property must be submitted together with the application. The documents supporting the fact that the residence will be used as the primary and permanent place of residence (copy of telephone, water supply or electricity bill or of municipal taxes) must be submitted within six months from the date on which the eligible person acquires possession of the residence. A person who ceases to use the residence as his primary and permanent place of residence before the lapse of the 10 year period must notify the VAT Commissioner, within thirty days of ceasing to use the residence,and pay the difference resulting from the application of the reduced and the standard rate of VAT attributable to the remaining period of 10 years for which the property will not be used as the main and primary place of residence.
VAT declaration VAT declaration must be submitted on quarterly basis and the VAT payment (if any) must be made by the 10th day of the second month following the month in which the tax period ends. VAT registered persons have the right to request for a different filing period, providing that approval is granted by the VAT Commissioner.
21
VAT Registration Thresholds Registration threshold (taxable supplies in Cyprus)
€15.600
Registration threshold for distance sales (sale of goods to persons not subject to VAT registration in Cyprus, by suppliers resident in another EU Member State)
€35.000
€10.251,61
Registration threshold for intra-community supply of services
no threshold
Registration threshold for receipt of services from abroad for which the recipient must account for VAT under the reverse charge provisions
€15.600
Registration threshold for acquisition of goods in Cyprus from suppliers resident in another EU Member States
VAT Penalties
€51 for each return
Penalty for omission to keep books and records for a period of 6 years
€341
Penalty for late submission of VIES return
€50 for each return
Penalty for late submission of corrective VIES return
€15 for each return
Omission to submit the VIES return constitutes a criminal offence with a maximum penalty of
€850
Penalty for late registration with the VAT authorities
€85 per month
Penalty for late submission of VAT return
22
SOCIAL SECURITY CONTRIBUTIONS Social Insurance Contributions are 7,8% for the Employer and 7,8% for the Employee restricted to the maximum amount.
23
Contribution Rates Type of contribution
Employer %
Employee %
Self Employed %
Social Insurance
7,8
7,8
14,6
Industrial Training
0,5
-
-
Redundancy Fund
1,2
-
-
Social Cohesion Fund
2,0
-
-
Holiday Fund (if is not exempt)
8,0
Contributions Payments The employer’s contributions are payable every end of the calendar month following the month that the contributions relate.
24
DOUBLE TAXATION TREATY The Double Tax Treaty (DTT) is essentially bilateral agreements entered into between two countries, in our case, between Cyprus and another foreign state. The basic objective is to avoid, taxation of income in both the countries (i.e. Double taxation of same income) and to promote and foster economic trade and investment between the two countries. Cyprus has signed 44 DTT with such countries.
25
Cyprus has signed DTT with the following countries:
Country Paid from
Received in Cyprus Dividends %
Interest %
Royalties %
Armenia
0(30)
5
5
Austria
10
0
0
Belarus
5
5
5
Belgium
10(8)
10(6,18)
0
Bulgaria
5
7
Canada
15
15
China
10
10
10
Czech Republic
0
0
0(29)
Denmark
0(6,32)
0
0
Egypt
15
15
10
Estonia
0
0
0
(17)
(22)
(28)
(6,23) (4)
10(23) 10(5)
Finland
5
0
0
France
10(36)
10(10)
0(3)
Germany
5(36)
0
0
Greece
25
10
0(11)
Hungary
5(8)
10(6)
0
India
(35)
10
(37)
10
15(14)
(10)
Ireland
0
0
0(11)
Italy
15
10
0
Kuwait
10
10
Lebanon
5
5
0
Malta
0
10
10
Mauritius
0
0
0
Moldova
5(26)
5
5
Montenegro(25)
10
10
10
Norway
0(12)
0
0
Poland
0
5
5
Portugal
10
10
10
Qatar
0
0
5(27)
Romania
10
10
5(7)
Russia
5(16)
0
(34)
(6)
(6)
(6)
5(7)
0
San Marino
0
0
0
Serbia(25)
10
10
10
Seychelles
0
0
5
0 10
10(6)
5(7)
Slovenia
5(31)
5
5
0
0
0
Sweden
5(8)
10(6)
0
Syria
0
10
10
Thailand
10
15(20)
5(21)
Ukraine
5(19)
2
5(33)
United Kingdom
15
10
0(3)
10(10)
0
South Africa
United States of America
(8)
(13)
5(9)
10
10
Singapore Slovakia
(6,24)
(4)
26
According to Cyprus Tax Legislation, there is no withholding tax on dividends and interest paid to non-residents of Cyprus at all time. Country paid to Non-treaty countries
Paid from Cyprus Dividends(1) %
Interest(1) %
Royalties %
0
0
0(2)
Armenia
0
5
5
Austria
10
0
0
5
5
10(6,18)
0
(30)
Belarus
5
Belgium
10(8)
Bulgaria
5
7
Canada
15
15(4)
10(5)
China
10
10
10
Czech Republic
0
0
0(29)
Denmark
0(6,32)
0
0
Egypt
15
15
10
Estonia
0
0
0
Finland
5(35)
0
0
France
0
10(10)
0(3)
Germany
5(36)
0
0
Greece
25
10
0(11)
Hungary
0
(17)
(22)
(28)
(6)
10
(6)
10
0
10(37)
10(10)
10(15)
Ireland
0
0
0(11)
Italy
0
10
0
Kuwait
10
India
10
(6)
5(7)
Lebanon
5
5
0
Malta
15
10
10
Mauritius
0
0
0
Moldova
5(26)
5
5
Montenegro(25)
10
10
10
Norway
0
0
0
Poland
0(34)
5(6)
5
Portugal
10
10
10
Qatar
0
0
5(27)
Romania
10
10(6)
5(7)
Russia
5
0
0
(16)
San Marino
0
0
0
Serbia(25)
10
10
10
Seychelles
0
0
5
0 10
10(6)
5(7)
Slovenia
5(31)
5
5
0
0
0
Sweden
5(8)
10(6)
0
Syria
0
10
10
Thailand
10
15(20)
5(21)
Ukraine
5(19)
2
5(33)
United Kingdom
0
10
0(3)
United States of America
0
10(10)
0
South Africa
(8)
10
10
Singapore Slovakia
(6,24)
(4)
27
Notes 1.
Under Cyprus legislation there is never any WHT on dividends and interest paid to non- residents of Cyprus.
2.
Royalties earned on rights used within Cyprus are subject to WHT of 10%.
3.
A rate of 5% on film and TV royalties.
4.
Nil if paid to a government/Central Bank/ Public Authority or for export guarantee.
5.
Nil on literary, dramatic, musical, or artistic work.
6.
Nil if paid to the government/Central Bank/Public Authority of the other state.
7.
This rate applies for patents, trademarks, designs or models, plans, secret formulas, or processes, or any industrial, commercial, or scientific equipment, or for information
concerning industrial, commercial, or scientific experience.
8.
A rate of 15% if received by a company holding less than 25% of the share capital of the paying company and in all cases if received by an individual.
9.
A rate of 15% if received by a person controlling less than 10% of the voting power of the paying company and all cases if received by an individual. If a company controls
at least 10% of the voting power of the paying company in order to benefit from the WHT rate of 5% other conditions relating to the income of the paying company
need to be satisfied, otherwise a WHT rate of 15%.
10.
Nil if paid to a government, bank or financial institution.
11.
A rate of 5% on film royalties.
12.
A rate of 5% if received by a company controlling less than 50% of the voting power and in all cases if received by an individual.
13.
This rate applies to individual shareholders regardless of their % of shareholding. Companies controlling less than 10% of the voting shares are also entitled to this rate.
Companies controlling at least 10% of the voting shares are entitled to 0 WHT.
14.
A rate of 10% of payments of a technical, managerial, or consulting nature.
15.
Treaty rate is 15%. However, the maximum WHT as per Cyprus Tax Legislation is 10% (refer to note 2 above).
16.
A rate of 10% if a dividend is paid by a company in which the beneficial owner has invested less than €100.000 in the share capital of the company paying the dividend.
17.
If investment is less than €200.000, dividends are subject to 15% WHT which is reduced to10% if the recipient company controls 25% or more of the paying company.
18.
No WHT for interest on deposits with banking institutions.
19.
A rate of 15% if a dividend is paid by a company in which the beneficial owner holds less than 20% of the share capital of the paying company and the beneficial owner
has invested less than €100.000.
20.
A rate of 10% on interest received by a financial institution or when it relates to sale on credit of any industrial, commercial or scientific equipment or of merchandise.
21.
This rate applies for any copyright of literary, dramatic, musical, artistic, or scientific work. A 10% rate applies for industrial, commercial, or scientific equipment.
A 15% rate applies for patents, trade marks, designs or models, plans, secret formulas, or processes.
22.
This rate applies to companies holding directly at least 25% of the share capital of the company paying the dividend. In all other cases the WHT is 10%.
23.
This rate does not apply if the payment is made to a Cyprus international business entity by a resident of Bulgaria owning directly or indirectly at least 25%
of the share capital of the Cyprus entity.
24.
A rate of 7% if paid to a bank or financial institution.
25.
Serbia and Montenegro apply the Yogoslavia/Cyprus treaty.
26.
This rate applies if received by a company (excluding partnerships) that holds directly 25% of the shares. A rate of 10% applies in all other cases.
27.
Applies to any consideration for the use of, or the right to use, any copyright of literary, artistic, or scientific work (including cinematograph films and films, tapes or discs for
radio or television broadcasting), computer software, any patent, trademark, design or model, plan, secret formula or process, or for information concerning industrial,
commercial, or scientific experience.
28.
This rate applies if received by a company (excluding partnership) which holds directly at least 10% of the shares for an uninterrupted period of no less than one year.
5% applies in all other cases.
29.
10% for patent, trademark, design or model, plan, secret formula or process, computer software or industrial, commercial, or scientific equipment, or for information concerning
industrial, commercial, or scientific experience.
30.
A rate of 5% if a dividend is paid by a company in which the beneficial owner has invested less than €150.000.
31.
The provisions of the Parent-Subsidiary EU directive are applicable.
32.
A rate of 15% if received by a company controlling less than 10% of the share capital of the paying company or the duration of any holding is less than one uninterrupted year.
A rate of 15% also applies if received by an individual.
33.
A 5% WHT will be levied on payment of royalties in respect of any copyright of scientific work, any patent, trade mark, secret formula, process or information concerning industrial,
commercial or scientific experience. 10% WHT will be levied in all other cases.
34.
This rate applies if the recipient company (partnership is excluded) holds directly 10% of the share capital of the paying company for an uninterrupted period of at least 2 years.
5% in all other cases.
35.
A rate of 15% applies if received by a company controlling less than 10% of the voting power in the paying company and in all cases if received by an individual.
36.
A rate of 15% if received by a company holding less than 10% of the share capital of the paying company and in all other cases if received by an individual.
37.
A rate of 15% if received by a company holding less than 10% of the shares of the paying company and in all cases if received by an individual.
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TAX DIARY You should always remember when your tax due date is‌ Working with PHS tax professional team, you will never forget it, you will be reminded.
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End of each month
• Payment of tax deducted from employees salary (PAYE) in the preceding month.
•
Payment of special contribution for defence withheld on payments of dividends, interest or rents (when the tenant is a company, partnership, the state or local authority) made to Cyprus tax residents in the preceding month.
•
Payment of tax withheld in the preceding month on payments to non-Cyprus residents.
31 January
•
Submission of declaration of deemed dividend distribution (IR623) for the year ended 31 December 2011.
31 March
• Electronic submission of the 2012 corporation tax return (IR4) for accounting periods ending on 31 December 2012 (IR4).
• Electronic submission of the 2012 income tax return of physical persons preparing audited financial statements (Physical person is obliged to submit audited financial statements if his turnover exceeds €70.000 annually).
30 April
• Payment of premium tax for life insurance companies - first instalment for 2014.
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 for Cyprus Companies.
•
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 (Individuals are required to submit personal tax return only when their gross income exceeds €19.500).
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.
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 and payment of tax via the self-assessment method.
• Payment of immovable property tax for 2014.
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.
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INTEREST AND PENALTIES The official interest rate, as set by the Finance Minister, is 4,75% per annum for all amounts due after 1 January 2013 (5% for years 2011 and 2012, 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.
Your trusted advisor
The scope of this Tax Card publication is to inform the reader about the Cyprus Tax System. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors. For any specifc matter, reference should be made to PHS tax advisors. The information in this Tax Card is accurate as at the date of its publication. January 2014 31
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