All Cyprus companies have an obligation to file to the Registrar of Companies an Annual Return (HE32), which must be accompanied by the audited financial statements of the previous year.

The Annual Returns (HE32) are always accompanied by the audited financial statements of the previous year (e.g. the Annual Return (HE32) for the year 2019 will have to be submitted alongside with the audited financial statements of 2018).

Due to the new Law N. 149(I)/2018 the Annual Returns (HE32) for all the years up to and including 2018 need to be submitted until 18 December 2019.

In the case of default, the following administrative fines will be charged:

• For every delayed submission an initial fixed penalty of €50 (fifty euros) will be charged plus
• An additional charge of €1 (one euro) will be imposed for every day that passes the deadline for the first six months and €2 (two euros) for every day later, up to the maximum penalty charge of €500 (five hundred euros).

From 18 December 2019 onwards, Company Annual Returns for 2019 and future years must be submitted to the Registrar of Companies within 28 days from the date of their preparation in order to avoid the new penalties. For example, a 2019 Company Annual Return that has been prepared on 31 December 2019 must be submitted by 28 January 2020.

Submission deadline extension for the 2019 tax return 

We would like to inform you that in accordance with a Decree issued on 12 March 2021, the following deadlines are extended to 30 September 2021:

•     Electronic submission of the 2019 corporate income tax return (TD4), and
•     Electronic submission of the 2019 personal income tax return (TD1) of individuals preparing audited financial statements.

End of each month

Payment of tax deducted from employees salary (P.A.Y.E.) in the preceding month.

Payment of special contribution for defense 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.

From 01/09/2020 the Tax Department will no longer accept payments at the local tax district offices. From now on all the payments to the Tax department will be made electronically through JCC Smart or Online Banking.

Submission of declaration of deemed dividend distribution (IR623) for the year preceding the previous year.

Electronic submission of corporation tax return (IR4) for the year proceeding the previous year.

Electronic submission of the income tax return of physical persons preparing audited financial statements for the year preceding the previous year (2).

Payment of premium tax for life insurance companies – first installment for the current year.

Payment of special contribution for defense tax for the first six months of the current year on rents if such tax is not withheld at source by tenant and on dividends or interest from sources outside Cyprus.

Payment of personal income tax for the previous year under the self-assessment method by individuals not preparing audited financial statements (2).

On 30^th of June 2017, the Cypriot Tax Authorities issued a circular concerning the intra-group financing arrangements and which effectively abolished the previous regime concerning the margins (0,125% to 0,35%).

In essence, now companies which are involved in financing arrangements with related parties must prepare the necessary Transfer Pricing study in order to support the interest rates charged and received.

It should be noted that currently the Circular covers only loans provided to related parties which have been financed from any sources of finance (i.e. related party loans, bank loans, debentures etc.) but it does not cover loans receivable which have been financed from own funds/ equity of the company under consideration.

For this reason, kindly note that Anstia Investments Ltd is in a position to assist you to prepare the relevant Transfer Pricing study and adhere to the reporting obligations, through the use of specialized tools and databases. 

Electronic submission by employers of the total payroll (Form IR7) for the previous year.

Submission of provisional tax return and payment of the first installment for the current year.

Electronic submission of personal tax returns of individuals for the previous year whose incomes do not include income from a trade/business, rents, dividends, interest, royalties nor income relating to trading of goodwill (1).

Payment of the final corporation tax under the self-assessment method for the previous year.

Payment of personal income tax under the self-assessment method for the previous year by individuals preparing audited financial statements (2).

Payment of premium tax for life insurance companies – second installment for the current year.

Payment of provisional tax – second and last installment for the current year.   

Payment of special contribution for defense for the last six months of the current year on rents if such tax is not withheld at source by tenant individuals and on dividends or interest from sources outside Cyprus.

Payment of premium tax for life insurance companies – third and last installment for the current year.

Electronic submission of the Country by Country notification (CbC) report of the current year (for Multinational Enterprises (MNE) group companies).

Electronic submission of the Country by Country (CbC) report of the previous year (for Multinational Enterprises (MNE) group companies).

The official interest rate, as set by the Finance Minister, is 3,5% per annum for all amounts due after 1 January 2018 (3,5% for 2017,4% for 2015-2016, 4,5% for 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% before 31 December 2006).

In addition to the interest, penalties are also charged depending on the circumstances.

Notes:

Physical persons are required to submit personal tax returns only when their income exceeds €19.500.

A physical person is obligated to submit audited financial statements if his/her turnover exceeds €70.000 annually.

Following a recent amendment of Article 9B of the Income Tax Law on the application of the provisions of the Notional Interest Deduction (NID) on new share capital contributed into a company after 1 January 2015 we would like to inform you on the following:

• Reference interest rate: As from 1 January 2020 this will be increased to the 10- year government bond yield plus 5% instead of 3% as previously stated in the Income Tax Law.
• Reference interest rate: Up until 31 December 2019 the minimum rate which can be applied is the 10-year government bond yield of Cyprus as at 31 December of the year preceding the tax year plus 3%. As from 1 January 2020 the Cyprus government bond yield rate is no longer to be used as a minimum rate for the government bond yield part of the NID rate calculation.
• New equity: Prior to the relevant amendments new equity considered to be equity funds introduced to the company on or after 1 January 2015. As from 1 January 2021 new equity will also considered to be new equity resulted from the capitalization of retained earnings existed as at 31 December 2014.

The deadline for the electronic submission of the 2019 income tax return (TD1) and as well as the payment of the tax due has been extended to 31 October 2020.

The above mentioned deadline concerns all employees and self-employed persons whose annual income does not exceed the amount of €70.000. 

Information of the recent amendment of the Income Tax Law that provides for a tax credit to landlords for the reduction of their rental income.

More specifically landlords (companies and individuals) that fulfil the below mentioned criteria can claim a tax credit equal to 50% of the voluntary reduction of the monthly rental amount. To be eligible for the tax credit, the following conditions must be satisfied:

        i.           The reduction in the monthly rental income is both not higher than 50% and not lower than 30% of the monthly rental amount.

      ii.           The rent reduction applies for a period that does not exceed 3 months and falls within the tax year 2020, irrespective of the agreed months of such reduction.

     iii.           A written agreement between the landlord and the tenant should be in place regarding the aforementioned reduction in the rental income.

    iv.           The landlord and the tenant are not related parties as per the definition of the term in Article 33 of the Income Tax Law.

      v.           The tax credit could be utilized against the total income tax charge of the landlord for the tax year 2020.

The deadline for the payment of the 1^st and 2^nd installment of Temporary tax for 2020 is by 31 July 2020 and 31 December 2020 respectively. 

In case where a company fails to pay a provisional tax of a minimum 75% of the actual profits, an additional tax of 10% will be imposed on the actual tax payable amount.

It is noted that the final tax liability for the tax year 2020 should be settled by 1 August 2021.

We would like to inform all our clients that the deadline for the payment of the 2^nd installment of Temporary tax for 2020 is by 31 December 2020. 

In case where a company fails to pay a provisional tax of a minimum 75% of the actual profits, an additional tax of 10% will be imposed on the actual tax payable amount. 

If you have not declared any estimated profits in July of 2020 please inform us in writing of your estimated profits for the year the latest by December 11th, to ensure that the deadline will be met.

Based on the Special Defence Contribution (SDC) law, Cyprus Tax Resident companies must distribute 70% of their net profits after tax within two years from the tax year in which generated. If dividends are not declared the provisions of Deemed Distribution apply and the companies need to pay defence tax on 70% of their net profits after tax irrespective of the dividend declarations . (e.g. for the year 2018 the deemed distribution should be done on 31/12/2020)

Following the introduction of the National Health Insurance System and the obligation for contributions based on dividend income it is important to note that Deemed dividend distributions are subject to National Health as well.

These provisions for SDC and National Health contributions apply only to companies whose individual shareholders are Cyprus tax resident.  Shareholders who are Cyprus tax resident and non-domicile are exempt from the special defence contribution, however they are obliged to pay the national health contribution on the deemed dividends.

The resulting special contribution for defence of 17 % and National Health Contribution on 2.65% on deemed dividend distribution must be paid within two years from the tax year in which generated. In this case both payments for the profits of 2018 must me made by 31^st of January 2020.

Late payment of the special contribution for defence and national health contribution will be subject to interest and a penalty of €100 will also be imposed.

As of January 1st, 2021, United Kingdom (UK) has formally exited the European Union (EU) and will be a country outside the EU. Consequently, all the provisions of the Cyprus VAT Law will apply as they apply for any other country which is not a Member State of the EU.

A deal was made between UK & EU called: “Northern Ireland Protocol”, which keeps Northern Ireland in the EU’s single market for goods (EU customs apply at its ports).

A deal is in process between UK & Spain regarding Gibraltar (British Overseas Territory), which will join the EU's Schengen zone and will follow other EU rules, while remaining part of the UK.

Cross border supplies of Goods & Services (between UK & Cyprus)

Goods that will be received by taxable persons in Cyprus from the UK, will be considered as imports, and goods that will be sent to the UK from Cyprus will be treated as exports from Cyprus and all necessary customs procedures should be properly applied (there will be no obligation for submitting INTRASTAT declarations).

The place of supply rules in respect to services supplied and services received between taxable persons in Cyprus and companies based in the UK, does not change due to the exit of the UK from the EU. However, regarding the supply of services, there will be no obligation for submitting VIES declarations.

Note: Any movement of goods concluded during the transition period 01.02.2020 – 31.12.2020, or started during this period but will be concluded after, is considered to be an intra-community movement of goods according to the CY VAT Act. 

For any further details on any specific case feel free to contact out V.A.T. specialists.

Every company, registered in the Registrar of Companies, must pay an annual fee of three hundred and fifty euros (€350) by 30th of June of each year of its operation.

It is noted that, if a company fails to timely pay the annual fee it is subject to a late charge as follows:

• for payment within two (2) months from the 30^th of June (i.e. up until 31st August), the charge imposed equals to an additional ten percent (10%) on the original fee, thus making the total amount to be paid three hundred and eighty-five euros (€385);
• for payment within five (5) months from the 30^th June (i.e. up until 30th November), the charge imposed equals to an additional 30% on the original fee, thus making the total amount to be paid four hundred and ninety euros (€490).
• non-payment of the fee may cost the deletion of the company from the Registrar of Companies

Methods of payment of the annual fee

You may proceed with the payment of your company's annual fee, via the following ways:

• The website of JCCSMART for payments relating to the years 2018 and onwards; 
• The e-service of the Registrar of Companies, following registration to Ariadne Government Gateway, for payments relating to the years 2012 - 2017 (including);
• Through Anstia Investments Ltd, if you wish to pay through Anstia Investments Ltd please contact us.

Ιn accordance with an amending Assessment and Collection of Taxes law published on 20 April 2021, the following deadlines are extended to 30 September 2021

• Electronic submission of the 2020 personal income tax return of employees and pensioners (TD1) and  self-employed whose turnover do not exceed € 70,000 (TD1 self-employed),as well as the payment of the final tax due;
• Electronic submission of the 2020 employer’s tax return (TD7);
• Payment of the second instalment for the 2020 provisional tax based on the provisional tax return filed for the year 2020 without the payment of interest and penalties.

Following the Obstruction and Combating Money Laundering Activities Law of 2007-2019 as amended in 2018 voted by the Cyprus Parliament, a legislation which resulted  from the mandatory  4^th European AML Directive (EE 2015/849) for the prevention of the use of the financial system for money laundering activities or for the financing of terrorism, we would like to inform you that the Cyprus Council of Ministers has appointed recently the Cyprus registrar of Companies as the appropriate governmental department to proceed with the establishment of a central registry of beneficial ownership of companies and other legal entities existing in its records in Cyprus.

The collection of all the necessary information will begin on 16/03/2021 on a platform which will be established by then by the registrar and is expected to be completed in the following 6 months.

Beneficial owners of companies are defined as natural persons with a 25 per cent direct or indirect ownership of shares or voting rights, except for publicly listed companies. For trusts, the beneficial owners are the settlor, trustees, protector, beneficiaries and potential beneficiaries, or any other natural person exercising ultimate control over the trust.

Because the registry is being implemented under 4AMLD, and not the EU Fifth Anti-Money Laundering Directive (5AMLD), it will not be available to the public. This situation is unlikely to change until the end of 2021 at the earliest.

In the meantime, access will be restricted to competent authorities such as the Tax Department, MOKAS, the police and the Customs office. Ultimately, it will be accessible to any person or organization that can demonstrate a legitimate interest, as set out in 5^th AMLD. However, under Cyprus’ anti-money laundering laws the jurisdiction’s implementation will restrict 'legitimate interest' to mean suppression of money laundering activities and related offences

The information to be provided relating to the beneficial owners will include name, month and year of birth, country of residence and nationality. Any other information connected to fees to be charged and which companies have to upload the relevant information (active companies only or under dissolution as well etc) and any other details will be announced by the registrar in due time.

Αll Cyprus companies regardless if they are dormant or not, have an obligation to prepare and file audited financial statements to both the Registrar of Companies and the Tax Authorities. All companies to be up to date and in good standing should prepare and file Financial statements until 2020. Companies that were incorporated in the second half of 2020 will prepare financial statements together with 2021.

To be able to proceed, we need you to send us all the documents of the company to complete the bookkeeping and send them for audit and the preparation of the financial statements of 2020, until the end of February 2021. 

Documents for the preparation of Accounting books 

Please provide us with supporting documentation/ information for maintaining proper accounting books and records: 

1. All bank statements and advice slips for any bank accounts the company maintains abroad. 

2. All sales/purchase invoices (if it is applicable). 

3. All expense invoices 

4. All invoices for acquisition of fixed assets (i.e machinery, computer equipment etc) 

5. Closing Stocks (if it is applicable). 

6. All contract notes for purchase and sale of shares. If the share portfolio was handled by an investment broker, a statement of a/c to be provided for all transactions done in the year and a confirmation of the closing position of the share portfolio. 

7. If the company has invested in any other companies please send us: 

a) Agreement for acquisition of the investment 

b) Incorporation certificate 

c) Certificate of ownership of the shares

d) Financial statements of the investment companies 

e) Details of any dividends received during the period and original withholding tax certificates, if any. 

 8. All contracts/ agreements signed during the year. You should prepare a small summary in English for each contract. The most important details would be: 

a) the parties involved 

b) reasons for the agreement 

c) contract price 

9. Copies of all minutes/resolutions for the directors and the shareholders

10. Other information relevant to the company

You can contact Anstia Investments team for information and clarification needed at [email protected] or call us at +357 25 212 616

We are required to declare on behalf of your Cyprus companies by 31 of July 2021 to the Cyprus Inland Revenue, your estimated 2021 profits for the purposes of computation of your provisional income tax. This tax will be payable in 2 equal instalments as follows:

1. 31/07/2021

2. 31/12/2021

 To timely manage all submissions we will need your response the latest by 25 June 2021. If we do not receive and feedback we will declare NIL profits for 2021. You will have the opportunity to revise your declaration by 31 December 2021.

Your estimate should be as accurate as possible. The amount of the estimated tax payable is 12.5% on the estimated profit. Failure to submit this information carries additional tax of 10% of the actual tax payable.

If your declared estimated profits are lower than your final actual profits by more than 25% you will have to pay additional tax of 10% on the difference of the tax arising. Similarly any excess of provisional tax paid will be repaid to you by the Cyprus Inland Revenue.

Please promptly inform us in writing of your estimated profits so that the above deadlines can be met. 

As always, Anstia Investments Ltd. is at your disposal should you require any further information or clarifications.

Referring to the previous newsletter dated 3 June 2021, in accordance to the Assessment and Collection of Taxes Law, every company or individual (who derives income other than from emoluments) must pay before 31 July 2021 the 1st instalment of temporary tax based on estimate taxable profit for the year 2021. 

Anstia Investments would like to bring to your attention that the deadline for the payment of the Annual Levy for 2021 has been extended from 30 June to 31 December 2021 without the penalty charge of 10% or 30%.  

We remind you that according to the Cyprus Company Law, Cap. 113, all Companies are liable to pay the annual levy of ‎‎€350 for the year 2021 to the Department of Registrar of Companies and Official Receiver.  

Companies that have been incorporated between 01/07/2020 up to 30/06/2021 are liable to pay the amount of €350 as Annual Levy.   

Companies are obliged to pay the Annual Levy to the Department of Registrar of Companies and Official Receiver every year, in order to be in Good Standing. Considerably, companies that have failed to pay for the previous years, they will need to pay for all the years including the relevant penalties imposed.  

Non-payment of the annual levy may result in a deregistration (strike-off) of a company by the Registrar of Companies.  

The Minister of Finance has issued a decree on 09/07/2021, which states that individuals with annual gross income below of €19,500 are exempted from the obligation to submit a personal income tax return (TD1) for the year 2020.

 As a reminder, in August 2020, the Minister of Finance amended its Assessment and Collections of Taxes Law stated that from the year 2020, all individuals with annual gross income below of €19,500 were obliged to submit personal tax return. The gross income that falls under the provisions of the Article 5 of Income Tax Law. 

On 9 July 2021, a Decree of the Ministry of Health of the Republic of Cyprus “The Quarantine (Determination of Measures to Prevent the Spread of COVID-19 Coronavirus) Decree (No. 28) of 2021 (the Decree) entered into force. The Decree rendered the presentation of a SafePass mandatory in all indoor and outdoor venues in the Republic of Cyprus, in gatherings of more than 20 people.   In obtaining a SafePass, any individual aged 12 and above may present one of the following forms of evidence:

• Vaccination card indicating at least one dose of the vaccine has been received at least 3 weeks prior.
• Text message by the Ministry of Health that the individual has contracted COVID-19 in the past 6 months.
• A negative COVID-19 Rapid or PCR Test certificate, carried out in the past 72 hours.

 
Further, the Decree provides that employers shall ensure the compliance of their employees with the abovementioned provisions. This grants employers the legal obligation and authority to verify that all employees are SafePass holders in order to safeguard the health, safety and security in the workplace.
 
The Decree entered into force on 9 July 2021 at 05:00 a.m. and shall have effect until 31 July at 23:59 p.m.

We would like to inform all our clients that the deadline for the payment of the 2nd instalment of Temporary tax for 2021 is by 31 December 2021. 

In case where a company fails to pay a provisional tax of a minimum 75% of the actual tax obligation of year 2021, an additional tax of 10% will be imposed on the actual tax payable amount.

If you have not declared any estimated profits in July of 2021 please inform us in writing of your estimated profits for the year the latest by December 13th , to ensure that the deadline will be met. 

We inform you that the House of Representatives approved the extension of the deadline for filing the following tax returns from 03/31/2022 to 07/31/2022:

• Corporate tax return (T.D4) for 2020
• Self-employed whose annual turnover exceeds EUR 70,000 (T.D1) for 2020

We inform our clients that according to the Cyprus Income Tax Law the dates of submission and payment of the provisional tax for the year 2022 are as follows:

31/07/2022 Submission of return and payment of 1st installment;

31/12/2022 Payment of 2nd installment – last day of revision of provisional tax (if needed).

The provisional tax is calculated on the profits that are expected to arise in the year 2022 for companies and self-employed persons.

Remember that the corporate tax rate is 12.5%.

The late submission of the return and the late payment of the installments are liable to a penalty of 5% plus interest of 1.7% on the payable amount.

Legal entities and self-employed who expect to have profits in the year 2022 and do not pay provisional tax will be liable to 10% additional tax on the tax payable for the specific year. The same applies for provisional tax payments that will not cover at least the 75% of the final profit for the year 2022. You are therefore advised to estimate your company’s and/or personal taxable profits (if self-employed) for the year 2022 and the relevant tax thereon and inform us as soon as possible of your expectations.

Ministry of Finance of the Republic of Cyprus, has announced a new strategy for attracting business and talent  starting from January 2022. The strategy involves enhancement of already existing programs, as well as introduction of new incentives for businesses already operating or planning to operate in Cyprus.

Business Facilitation Unit

As of January 2022, the existing Fast Track Business Activation Mechanism, will be transformed into Business Facilitation Unit (BFU), which will be a central digitalized online platform and a contact point for all businesses in Cyprus that will have an enhanced role in provision of the below services:

a) Provision of information regarding all steps necessary for the registration of the company in:

i) Registrar of Companies of the Republic;

ii) Social Insurance Register;

iii) Registration in the TAX/VAT Register;

b) Provision of information and guidance as to all the relevant operation licenses;

c) Assistance and acceleration of issuance and renewal of residence and employment permits.

New Policy for the employment of third country highly skilled nationals

In combination to the establishment of the BFU, the government of the Republic will introduce a new employment policy for the third-country high-skilled nationals in certain eligible types of companies that will join the business facilitation unit, and those companies which are already registered in the Civil Registry and Migration Department (CRMD). The eligible type of companies are:

a) Companies of foreign interest operating or planning to operate in Cyprus;

b) Cypriot shipping companies;

c) Cypriot high tech/innovative companies;

d) Cypriot pharmaceutical companies or companies active in the sectors of bioenergetics and biotechnology.

At the same time, the policy itself provides for the following eligibility criteria for the third-country highly-skilled nationals:

a) Minimum gross monthly salary of at least € 2.500;

b) University diploma or degree or equivalent qualification or confirmation of relevant experience in a corresponding job of at least 2 years duration;

c) Employment contract of not less than two years.

The maximum number of third-country nationals is set at 70% of all the employees of the company for a period of 5 years from the date of joining the business facilitation unit. Following the expiration of the 5 years period, if criterion for employment of 30% Cypriot citizens is not met, a re-assessment will be conducted on a case by case basis.

Finally, the residence and employment permits will be issued within one month and have a duration of 3 years.

Supporting Staff

Apart from the above high-skilled third-country nationals, eligible companies will be able to employ other supporting staff from third countries for the duration of 3 years, provided that it does not exceed 30% of all support staff, and provided that a valid employment contract exists.

Family Reunification

Spouses whose family member is a third-country high-skilled national, accepted in the policy, will have the right to an immediate and free access to the labor market with remunerated employment. It must be noted that this right is not extended to supporting staff.

Digital Nomad Visa

Except from matters related to the BFU, the new strategy will provide for the introduction of the Digital Nomad Visa. The main idea is to attract skilled professionals who are working remotely, which becomes an all growing phenomenon in the employment sphere nowadays.

The beneficiaries of the above visa will be third-country nationals who are either self-employed or salaried employees who are working remotely with employers/clients outside of the Republic of Cyprus through the use of information and communication technologies. The residence permit for the eligible persons will be valid for 1 year, with a right to renew the permit for another 2 years. It must be noted, that these persons can be accompanied by their family members whose residence permit will last as long as the permit lasts for the eligible person. Finally, if the total residence in Cyprus will amount to 183 days within the same tax year, they will be considered as tax residents of the Republic, provided they are not tax residents in any other country.

The conditions for the issuance of a digital nomad visa are:

a) Evidence of Sufficient funds, which is set for € 3.500 per month. The evidence can be either the employment contract, pay-slips or account statements;

b) Medical Insurance;

c) Clean Criminal Record.

Furthermore, the strategy will involve the following innovations in the immigration policies of the Republic of Cyprus:

a) Simplification and acceleration of granting Category E work permits (Long Terms Resident Status);

b) Naturalization period for high-skilled third-country nationals will be limited to 5 years instead of 7 years, and to 4 years provided that an eligible person has a recognized certificate of very good knowledge of Greek language.

Tax Policies

In respect to tax policies, the new strategy will broaden the tax incentives in the below matters:

a) Tax exemption of 50% to new non domicile employees with employment remuneration of €55.000 and above for the period of 10 years;

b) Tax exemption of 50% for existing non domicile employees with employment remuneration of €100.000 and above – for the extended period of 17 years;

c) Tax exemption of 50% for existing non domiciled employees with employment remuneration between €55.000 and €100.000 EUR – for the period of 10 years;

d) Possibility of extending 50% tax exemption for investment in certified innovative companies to corporate investors;

e) Grant of an increased discount on research and development expenditure (e.g. 20 %). Eligible research and development expenses will be deducted from taxable income at 120% of actual expenses.

Social Insurance

Finally, the present strategy supposes the conclusion between the Republic of Cyprus and other third-countries, bilateral treaties, allowing for third-country nationals who worked in the Republic of Cyprus, and contributed social securities towards the social insurance fund, upon their return to the country of their permanent residence, to be able  to transfer their contributions paid, on the condition that these contributions did not acquire any right to an ole age pension, disability, etc.

We would like to Remind all of our clients that the Department of Registrar of Companies announces the following:

Payment of the special levy of € 350:

• Every company registered in the Registrar of Companies must pay an annual fee for 2022, the amount of three hundred and fifty euros (€ 350), until the 30^th of June 2022.
• The company that pays the annual fee within two (2) months from June the 30^th (i.e., until August 31), is subject to a charge of ten percent (10%) and pays a total fee of three hundred and eighty-five euros (€ 385).
• The company that pays the annual fee within a period of five (5) months from June 30^th, 2022, i.e., until November 30), is subject to an additional charge of 30% and pays a total fee of four hundred and ninety euros (€ 490).

Anstia Investments Ltd remains at your disposal for any further clarifications you may need.

On 30th of June 2022, the Cyprus Parliament has approved amendments to the Income Tax Law introducing detailed rules for the Transfer Pricing legislation. The legislation is effective from 1 January 2022, and it actually incorporates the OECD’s TP Guidelines into the Cyprus legislation.

When the TP legislation applies

The new TP rules apply to transactions between related parties (either legal persons or individuals).

For the purposes of the legislation, it is clarified that two companies are considered as related parties if the same person (and its related persons) or a group of persons directly or indirectly:

• hold 25% of the share capital or voting rights of both companies, or
• have the right to at least 25% of both companies’ income.

A company is considered as related to a physical person (and its related persons), if that person(s):

• hold 25% of its share capital or voting rights, or
• have the right to at least 25% of the company’s income.

TP requirements

The TP legislation requires the preparation of a TP study related to the intercompany transactions to justify compliance with the arm length’s principles (subject to a small size exemption where the intercompany transactions do not exceed the level of EUR€750.000 per annum per category) and the submission of a summary information table about the intercompany transactions and general information for the group, the business activities and the TP method used in the said transactions.

The Tax Department is expected to issue a relevant circular providing guidelines about the required information needed to be kept for the TP Documentation (both the Master File and the Cyprus Local File).

Deadline for compliance

Same deadline with the Income Tax Return of the relevant year. Will be submitted together.

Penalties

Late submission of required information will give rise to penalties ranging from EUR€500 (for non-submission of the summary information table) to EUR€20.000 (for non-submission or late submission of the TP Documentation File to the Tax Department, upon request).

We would like to inform you that on 23 September 2022, a Decree (No. 373/2022) was issued in the Official Gazette which exempts individuals with gross annual income below €19.500, from the obligation to submit a personal income tax return (Form IR1) for tax year 2022.

Back in 2020 an amending Assessment and Collection of Taxes was published, according to which, from tax year 2020 onwards, all individuals with gross income that falls under the provisions of Article 5 of the Income Tax Law are obliged to submit a personal income tax return, subject to a decree to be issued by the Council of Ministers which may provide for an exemption.

Dear Associates,

Τhe national minimum wage is determined by the Minimum Wage Order of 2022 which came into force on January 1, 2023. According to the Order:

a) Every employee who works full-time must receive an initial monthly wage of at least €885 gross and after a 6-month continuous period of employment with the same employer, this wage must increase to at least €940 gross.

b) The working hours of the employees must be those that were applied at the time that the Order came into force, as determined either by collective agreement, or by a written agreement between the employer and the employee.

c) The provisions of this Order do not apply to domestic workers, the workers in agricultural and animal farming workers and seamen, as well as to workers to whom the Minimum Wages in the Hotel Industry Order of 2020 applies.

d) Α readjustment mechanism is instituted and it will be operating every two years, beginning from 2024.