Gold Issue 42

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ISSUE 42 SEPTEMBER 14 - OCTOBER 13, 2014 PRICE â‚Ź4.95 powered by:

the international investment, finance & professional services magazine of cyprus EVGENIOS C. EVGENIOU CEO, PwC Cyprus (Platinum Sponsor)

Nicos Anastasiades President of the Republic of Cyprus

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Christodoulos Angastiniotis Chairman, CIPA (Co-organiser)

Michalis louis CEO, Eurobank Cyprus (Gold Sponsor)

CIPA awards Celebrating International

INTERNATIONAL

INVESTMENT

Brought to you by

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Investment in Cyprus

WINDSOR BROKERS LTD. PROVIDING FOR MANY GENERATIONS AHEAD

LOUCAS MARANGOS CEO, TFI Markets Ltd. (Silver Sponsor)

G4S CYPRUS SECURING YOUR WORLD

KIRILL ZIMARIN CEO, RCB Bank Ltd.

JOHNY ABUAITAH CEO, Windsor Brokers Ltd.

ELENA LEONTIOU Head of Media, IMH (Co-organiser)

ASBIS

PREMIUM SERVICES & STRONG SUPPORT

MARLOW NAVIGATION CO. LTD. TOTAL COMMITMENT

IBM CYPRUS

RCB BANK LTD.

COMMITTED TO INNOVATION

TRUST & RESPONSIBILITY

SOTOS ZACKHEOS Special Presidential Envoy to Russia SERHEI KOSTEVITCH CEO, ASBIS

HERMANN EDEN Chairman, Marlow Navigation Co. Ltd.

SPYROS POULIDAS General Manager, IBM Greece & Cyprus

PHILIP IVESON Head of Long Haul and Rest of World, Tui Travel PLC

ANDREAS PATERAKIS Regional Managing Director for Southern Europe, G4S

TUI TRAVEL PLC MAKING TRAVEL EXPERIENCES SPECIAL

Photo by Jo Michaelides The award winners, sponsors and organisers were photographed at the Presidential Palace.

THIS PRESTIGIOUS EVENT WOULD NOT HAVE BEEN POSSIBLE WITHOUT THE VALUABLE CONTRIBUTION OF OUR SPONSORS.

SILVER SPONSOR

ORGANISERS

GOLD SPONSOR

PLATINUM SPONSOR

UNDER THE AUSPICES OF H.E. THE PRESIDENT OF THE

presents

CIPA International Investment

Awards hosted by

MAGAZINE

www.pwc.com.cy

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We listen. We learn what you want to do and we help you create the value you are looking for. Value that is based on the knowledge that our more than 900 local professionals draw from 184.000 experts in 157 countries. We focus on the provision of Assurance, Advisory, Tax and Global Compliance Services.

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Issue 42 September 14 – October 13, 2014

8 EDITORIAL 10 UP FRONT 16 FIVE MINUTES WITH…

18

THE CEREMONY FOR THE 3RD

CIPA INTERNATIONAL INVESTMENT AWARDS,

COVER STORY

CIPA International Investment Awards 2014

HOSTED BY GOLD, TOOK PLACE AT THE PRESIDENTIAL PALACE IN NICOSIA ON 10 SEPTEMBER. WITH PHOTOS FROM THE GALA DINNER, THE SPEECHES AND PRESENTATIONS, WE BRING YOU ALL THE DETAILS OF THE AWARDS CEREMONY, TOGETHER WITH PROFILES OF THE 8 AWARD WINNERS, COMMENTS FROM THE EVENT’S SPONSORS AND MORE.

+ OPINION ON THE ROAD TO RECOVERY By John Patrick Hourican

72

BOOM AND BUST By George Mountis

78

ISLAMIC FINANCE By Nondas Cl. Metaxas

80

A NEW COLD WAR: IS CYPRUS PREPARED? By Dr Olga Kandinskaia

82

Insurance Solutions, on his ambitions for the company.

92 | DOCTOR! DOCTOR! Demetris Loizides on the island’s legal system.

74

96 | FUNDING THE RECOVERY The Cyprus investment funds industry has the potential to play a key role in creating economic growth.

98 | EMPLOYEES WOULD TRADE PERSONAL DATA FOR A BETTER WORK DEAL

56

FEATURE

44 | GET YOUR FATCA FACTS RIGHT! Everything you need to know about the US Foreign Account Tax Compliance Act.

48 | FINANCIAL INNOVATION Chelco VAT Ltd focuses exclusively on the complexities of Value Added Tax.

50 | ARBITRATION ADVOCATION

44 56 | CRYSTAL CLEAR Interview with Nicolas Nicolaides, Executive Manager of Transparency International - Cyprus.

74 | SHIPPING CONNECTS

Deutsche Post DHL study looks at how we will live and shop in 2025.

ADVERTISING SUPPLEMENT

59 | PROFESSIONAL QUALIFICATIONS AND SKILLS TRAINING COURSES IN CYPRUS 83 | LUXURY CARS

Cyprus hosts next month’s 2014 International AGM & Conference of the Women’s International Shipping & Trading Association (WISTA).

76 | A FAMILY AFFAIR As Zela Shipping starts its second half-century of business, its core values remain the same.

What needs to be done to promote Arbitration in Cyprus and to promote Cyprus 88 | STRIKE WHILE THE IRON’S HOT as a centre for Arbitration. How Israel and Cyprus may exploit the latest opportunities for cooperation.

54 | GLOBAL E-TAILING 2025

SPECIAL

90 | MAN WITH A PLAN Luke Benfield, Founder and CEO of Turnkey

6 Gold THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

102 {money} 106 {economy} 108 {tax & legal} 110 {lifestyle}

EDITORIAL

Celebrating Foreign Investment

O

n 10 September, the 3rd annual CIPA International Investment Awards ceremony, hosted by Gold, took place at the Presidential Palace in the presence of President Anastasiades and a large gathering of company executives, politicians, foreign investors, senior officials and others. The awards, which recognize foreign investment in Cyprus, are now seen as being among the most prestigious for foreign companies operating on the island. Last year, just six months after the near-collapse of the banking system and the bailout agreement with the Troika, the key message to emerge from the statements by the winning company CEOs was that they were committed to Cyprus and determined to stick by the country through thick and thin. A year later, with considerable progress having been made by the banks and the broader economy, the overall feeling was even more positive. While it might be expected that the President would tell his distinguished audience that he is confident that Cyprus will exit the Memorandum of Understanding with the Troika earlier than anticipated, the degree of optimism expressed by the representatives of the award-winning companies was impressive. From firms that have been active on the island for 50 years (IBM Cyprus) to more recent arrivals such as TUI Travel Plc, the message was the same: they are happy here, they have no intention of moving out and, indeed, in many instances, they are expanding their local operations. This is good news for Cyprus because, despite the positive reviews by the Troika of the Government’s implementation of the economic adjustment programme, the popular view continues to be that “the foreigners who destroyed us” are continuing with their diabolical plans with the approval of the Government. This is reinforced by the populist slogans of the opposition parties in the House of Representatives and by sections of the media. Luckily, the foreign companies operating out of Cyprus understand that the Government’s insistence on carrying out everything agreed with the Troika of international lenders is not a result of weakness but rather of a clear understanding of the importance of reform. It is regrettable that the opposition prefers to play political games rather than joining forces with the Government in order to ‘sell’ what are, in some cases, admittedly difficult but nonetheless essential policies if Cyprus is to regain and improve upon its past status as a thriving economy and a leading regional centre of professional and financial services. We at Gold are convinced that the sooner everyone accepts the need to improve the country’s infrastructure and, in some cases, change its very mentality, the faster the recovery will be. Those present at the CIPA International Investment Awards ceremony on 10 September indicated that they understand this very well and that they, at least, consider the Government’s approach to be the correct one. In this month’s issue, you can see and read all about the event and the companies that were honoured at this year’s ceremony, including views and opinions from the awardwinning companies’ and event sponsors’ representatives, but there is much more in the form of exclusive interviews, interesting and varied opinions on a broad range of issues. This is what Gold is all about. Enjoy this month’s magazine.

John Vickers, Chief Editor john@imhbusiness.com

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ISSUE 35 FEBRUARY 14 - MARCH 13, 2014 PRICE €4.95

THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

BANKING How Spain restructured its system

BITCOIN The Future of the Digital Currency

INTERVIEWS Peter Greenberg Matthew Kidd Alexis Tsielepis

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8 Gold THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

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Effy Pafitis, Chloe Panayides CONTRIBUTORS TO THIS ISSUE

John Patrick Hourican, Dr Olga Kandinskaia, Nondas Cl. Metaxas, George Mountis, ART DIRECTION

Anna Theodosiou SENIOR DESIGNER

Alexia Petrou PHOTOGRAPHY

Jo Michaelides MARKETING EXECUTIVE

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UP FRONT

DHL

NEW

becomes official platinum partner of FC Bayern Munich

D

HL is now an official platinum partner and the new international logistics and e-Commerce full-service partner of FC Bayern Munich. The six-year agreement running until 2020 was announced at the Allianz Arena in Munich. As logistics partner, DHL has been ensuring for years that FC Bayern Munich merchandise is reliably passed on to fans. The football club now also intends to profit from the international e-Commerce expertise of the logistics industry’s leading company. “FC Bayern Munich is now a global player whose fan base is constantly expanding in a large number of countries and on all continents,� said Karl-Heinz

MeritKapital Announces CSE Direct Clearing Membership Limassol-based 0U]LZ[TLU[ Ă„YT 4LYP[2HWP[HS 42 OHZ MVYTHSS` HUUV\UJLK P[Z HKTP[[HUJL PU[V [OL *`WY\Z :[VJR ,_JOHUNL HZ H Âş)YVRLY HUK *SLHYPUN TLTILY Ă„YTÂť ;OL KL]LSVWTLU[ ZOV\SK H[[YHJ[ JVUZPKLYHISL [YHKPUN PU[LYLZ[ HU VMĂ„JPHS WYLZZ YLSLHZL Z[H[LZ VUJL [OL UL^ )HUR VM *`WY\Z ZOHYLZ YLZ\TL [YHKPUN VU [OL L_JOHUNL L_WLJ[[LK PU [OL MV\Y[O X\HY[LY VM [OPZ `LHY ¸42 NHPULK JVUZPKLYHISL SVJHS L_WVZ\YL [OPZ WHZ[ `LHY š [OL YLSLHZL JVTTLU[Z ¸HZ P[ HJ[LK HZ [OL Ă„YZ[ IYVRLY VM )HUR VM *`WY\Z IHPSLK PU KLWVZP[Z HUK ZOHYLZ HUK OHZ ZPUJL ^VYRLK VU U\TLYV\Z V[OLY Z\JO KLHSZ VM SHYNL ^VY[O š 4LYP[2HWP[HS PZ H *`:,* SPJLUZLK PU]LZ[TLU[ Ă„YT [OH[ KLHSZ WYLKVTPUHU[S` ^P[O MVYLPNU JSPLU[Z HUK PZ WHY[PJ\SHYS` HJ[P]L PU -P_LK 0UJVTL HUK ,X\P[` [YHKPUN HZ ^LSS HZ *\Z[VKPHS HJ[P]P[PLZ ^P[OPU [OL ZWOLYL VM KLWVZP[HY` HUK ZL[[SLTLU[ ZLY]PJLZ 0[ OHZ LZ[HISPZOLK [YHKPUN SPULZ ^P[O U\TLYV\Z ^LZ[LYU JHWP[HS IHURZ HUK PU[LYKLHSLY IYVRLYZ I\[ HSZV ^P[O THQVY 9\ZZPHU WSH`LYZ

Rummenigge, Chairman of FC Bayern Munich’s Executive Board. “With DHL acting as our experienced, globally respected partner, we intend to further expand our online touchpoints with our fans around the world and thus our international merchandising.� “We are really looking forward to our strategic alliance with such a highly respected partner as FC Bayern Munich,� said Frank Appel, CEO of Deutsche Post DHL. “Our services will create a strong base that will enable the team to build on its business success both nationally and internationally. Two strong, internationally respected brands like FC Bayern Munich and DHL will also profit from each other in the sponsoring partnership they have set up.�

NEW AIRBUS A320S FOR AEGEAN AIRLINES

A

egean Airlines has announced that it has brought forward the delivery dates of five new Airbus A320s (ordered before the beginning of the economic crisis in Greece but later deferred) and has ordered two additional A320s in a new deal. Delivery of the 7 aircraft will begin in June 2015 and be completed by early 2016. The aircraft will be the first Α320s in Aegean’s fleet with an increased take-off weight capacity of up to 78 tons, allowing expansion of their flight range and offering new scope for enlargement of the Aegean network, even if the flights are operated from the most southern bases of the company (Heraklion, Rhodes, or Larnaca). Aegean Airlines, which operates daily flights from Larnaca to Athens, has expressed an interest in buying Cyprus Airways.

10 Gold THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

OPAP

CEO

D

emetris Aletraris has been named the new CEO of OPAP Cyprus, succeeding Michalis Himonas as head of the organisation, following the latter’s recent departure to continue his career in the pharmaceutical industry in Greece. Aletraris began his career in 1992 in KPMG Peat Marwick in London, later transferring to KPMG Cyprus. He has since held management positions in a range of companies. From 2004 to 2012 he served as General Manager of CP Reinsurance Co Ltd, and previously held the positions of Chief Financial Officer of General Insurance of Cyprus Pancyprian Insurance. He holds a Bachelor of Science in Economics from the London School of Economics and Political Science and is a Chartered Accountant. OPAP Cyprus is a subsidiary of OPAP Greece, with Himonas having spearheaded the foreign investment company since commencement of his contract on September 1, 2011. OPAP is a public company based in Athens, Greece that exclusively operates and manages numerical lottery and sports betting games in Greece. OPAP has five subsidiaries: OPAP Cyprus Ltd, which operates lottery agencies in Cyprus; OPAP SPORTS Ltd that operates sports betting agencies in Cyprus; OPAP International Ltd; OPAP Investment Ltd, and OPAP Services S.A

6TH STELIOS AWARDS NEXT MONTH

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PwC Cyprus Welcomes 70 Young University Graduates

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wC Cyprus recently welcomed 70 young university graduates who will join the firm’s training programmes to qualify as chartered accountants. Evgenios Evgeniou, CEO of PwC Cyprus and Philippos Soseilos, Head of Human Capital, welcomed the new members of PwC at an event during which they had the opportunity to learn more about the organisation and their training programme.

Evgeniou stressed that, “despite the challenging economic conditions, our organisation continues to invest in the future by recruiting talented young university graduates and investing in their training and professional development�. During the financial year ended on 30 June 2014, PwC recruited over 100 people, including 41 university graduates who embarked on PwC’s 2013 ACA and ACCA professional accounting training schemes.

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surpassing the previous record of $2.16 million set by another copy of the same comic in 2011. Stephen Fishler of Metropolis Comics said that the opportunity was “just too good to pass up. It’s hard to believe that a kid’s 10 cent comic could be worth that much money, but it is Superman.� The superhero was created by Cleveland writer Jerry Siegel and artist

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$3.2 million for Superman’s Debut ne of the bestpreserved copies of the first Superman comic sold for $3.2 million, a record price for a comic book, in August. Superman made his debut in Action Comics #1, which cost 10 cents in 1938. New York dealers Metropolis Comics parted with the impressive sum to acquire the mint-condition copy, far

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Π:MIT 1V\MTTMK\]IT 8ZWXMZ\a 0WTLQVO[ Joe Shuster. Around 200,000 copies of the first Action Comics were printed. One percent of the proceeds of the latest sale will go to the Christopher and Dana Reeve Foundation, the paralysis charity named after the late actor (who played the part of Superman in four movies) and his wife.

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UP FRONT

NEW AWARD FOR SAXO BANK

S

axo Bank, the online multi-asset trading and investment specialist, has been named Best White Label Solution Provider and Multi-Asset Liquidity Provider in the Global Banking and Finance Review Awards 2014. The awards recognise innovation, achievement and inspirational changes taking place within the global financial community. White label partnerships have become the cornerstone of Saxo Bank’s strategy with 10 banks adopting the service in 2013 alone, bringing the total number of partnerships to 115 across 50 countries. The firm pioneered FX white labelling for banks and brokers in 2001 and since then has continued to develop its offering, helping its partners to provide their end clients

access to trading in multiple asset classes, greater liquidity and risk management technology through a single account. Saxo Bank’s trading engine, Saxotrader, is available via desktop, web or mobile. Launched in 1998, Saxo was one of the first banks to offer online trading and has maintained its reputation of staying ahead of the curve through the ongoing development of its electronic offering. Saxo Bank was also the winner of the Global Banking and Finance Review Award for Best Mobile Trading Platform.

CITYWEALTH INTERNATIONAL

FINANCIAL CENTRE

AWARDS 2015

CYPRUS LAW FIRMS SHORTLISTED

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12 Gold THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

Arts in the Square

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Double tax agreement between Cyprus and Lithuania now in force

T

he double tax agreement between Cyprus and Lithuania, which was signed in June 2013, is now in force and will take effect from 1 January 2015. Under the agreement there is no withholding tax on dividends paid by a company resident in Lithuania to a company (but not a partnership) resident in Cyprus provided that the recipient is the beneficial owner of at least 10% of the shares in the company paying the dividend. Otherwise the maximum rate of withholding tax is 5%. There are no withholding taxes in Cyprus on dividends paid to nonresidents. Interest paid by a resident of one state to a resident of the other is taxable only in the state of residence of the recipient. The maximum withholding tax on royalties is limited to 5%. Gains derived by a resident of one contracting state from the alienation of immovable property situated in the other contracting state, or from the disposal of immovable or movable property associated with a permanent establishment situated in the other contracting state, may be taxed in the contracting state

in which the immovable property or the permanent establishment is situated. All other gains, including gains on disposal of shares in “propertyrichâ€? companies, are taxable only in the country of residence of the disponor. Meanwhile, Cyprus and Guernsey have signed a comprehensive double taxation agreement. The agreement will enter into force once the necessary ratification procedures have been completed and will have effect from the following 1 January. The agreement provides for dividends, interest and royalties paid by a resident of Guernsey to a recipient in Cyprus to be taxable only in Cyprus, and vice-versa. The 2004 agreement on taxation of savings income between Cyprus and Guernsey will continue in force, but the double taxation agreement will be much more beneficial to taxpayers once it takes effect.

UP FRONT

THE WORLD'S

RICHEST COUNTRIES

W

1

hen it comes to wealth, a country’s status in the world is best measured by its GDP per capita. The higher this is, the more disposable income its people have, allowing them access to more goods and services and a higher standard of living. Below is a list of the top 10 richest countries in the world, as analyzed recently by the International Monetary Fund (IMF) on the basis of GDP per capita. Cyprus ranks 31st on the list and 14th in the EU.

LUXEMBOURG GDP per capita: â‚Ź89,520

6HUYLFHV HVSHFLDOO\ EDQNLQJ DQG ÀQDQFH DFFRXQW IRU WKH PDMRULW\ RI HFRQRPLF RXWSXW /X[HPERXUJ LV WKH world’s second largest investment fund centre (after the United States), the most important private banking FHQWUH LQ WKH HXUR]RQH DQG (XURSHҋV OHDGLQJ FHQWUH IRU UHLQVXUDQFH FRPSDQLHV 6N\SH DQG $PD]RQ DUH MXVW WZR RI WKH PDQ\ LQWHUQHW FRPSDQLHV WKDW KDYH VKLIWHG WKHLU UHJLRQDO KHDGTXDUWHUV WR /X[HPERXUJ

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NORWAY GDP per capita: ₏75,576 1RUZD\ KDV REWDLQHG RQH RI WKH KLJKHVW VWDQGDUGV of living in the world, in part by having a large DPRXQW RI QDWXUDO UHVRXUFHV LQFOXGLQJ ÀVK IRUHVWV minerals but especially oil and natural gas, the discovery of which changed the country’s economy in the 1960s. An estimated 30% of state revenues are now generated from the petroleum industry.

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Its most important eco cialist chemicals, largely the production of spe RRGV VFLHQWLÀF DQG DO J XWLF KHDOWK DQG SKDUPDFH and musical ents precision measuring instrum H[SRUWV DUH ZLVV VW 6 JJH H EL 7K HQWV LQVWUXP s/electronics chemicals (34%), machine ruments/ (20.9%), and precision inst ices sector – watches (16.9%). The serv rance, tourism insu and king ban lly especia s – is also tion nisa orga l iona and internat important.

6

45

â‚Ź65,125

GDP per cap SWITZERLAND g, nomic sector is manufacturin

DENMARK GDP per capita: â‚Ź44,155

Once a predominantly agricultural country, Denmark KDV H[SDQGHG LWV LQGXVWULDO EDVH RYHU WKH \HDUV ,WV PDLQ H[SRUWV DUH PDQXIDFWXUHG JRRGV IXels (oil, natural gas), chemicals, agricultural SURGXFWV PHDW DQG ÀVK SURGXFWV $FFRUGLQJ to the IMF, Denmark has the world’s highest minimum wage. Among its biggest companies are Carlsberg, Danske Bank, ECCO and the /HJR *URXS

SWEDEN GDP pe

â‚Ź40,268

r capita: Timber, hydropowe r and iron ore cons titute the resource base of the Swedish econ omy, while its engineering se ctor accounts for 50 % of RXWSXW DQG H[SRUWV 7HOHFRPPXQLFDWL RQV WKH automotive industry and the pharmaceu tical industries are also of great importanc e. Sweden LV WKH ZRUOGŇ‹V QLQWK O DUJHVW DUPV H[SRUW HU and the country ran ks among the highe st for telephone and Int ernet access pene tration.

9

14 Gold THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

3

QATAR GDP per capita: â‚Ź74,793

The economic growth of Qatar has been almost H[FOXVLYHO\ EDVHG RQ LWV SHWUROHXP DQG QDWXUDO gas industries, which began in 1940. It is WKH OHDGLQJ H[SRUWHU RI OLTXHĂ€HG QDWXUDO JDV /1* DQG LQ LW ZDV HVWLPDWHG that Qatar would invest over $120 billion LQ WKH HQHUJ\ VHFWRU LQ WKH QH[W WHQ years. The country has been a member of OPEC since 1961.

AUSTRALIA GDP per capita: â‚Ź48,387

The service sector of the economy, including tourism, HGXFDWLRQ DQG ÀQDQFLDO VHUYLFHV DFFRXQWV IRU about 70% of GDP. Rich in natural resources, $XVWUDOLD LV DOVR D PDMRU H[SRUWHU RI DJULFXOWXUDO SURGXFWV PLQHUDOV DQG /1* DQG FRDO $XVWUDOLD LV WKH ZRUOGҋV IRXUWK ODUJHVW H[SRUWHU RI wine, and the wine industry contributes $5.5 billion per year to the nation’s economy.

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SINGAPORE GDP per capita: â‚Ź40,861

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CANADA GDP per capita: â‚Ź40,283

$ QHW H[SRUWHU RI HQHUJ\ &DQDGD SRVVHVVHV of global oil reserves. It is one of the world’s largest VXSSOLHUV RI DJULFXOWXUDO SURGXFWV D OHDGLQJ H[SRUWHU RI gold, aluminium, steel and lead as well as being home to a QXPEHU RI JOREDO WHFKQRORJ\ ÀUPV ,W UDQNV WK LQ WKH ZRUOG IRU ,QWHUQHW users as a proportion of the population( 83%).

,388 USA GDP per capita: â‚Ź39 itutes 67.8% of GDP, the United States

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