Cyprus Taxation FAQ

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SERVICES	1. Which persons are liable to INCOME TAX in Cyprus and in respect of what income? 2. Which persons are liable to SPECIAL CONTRIBUTION FOR THE DEFENCE in Cyprus and in respect of what type of income? 3. Which type of income is liable to CAPITAL GAINS TAX in Cyprus? 4. On what value is IMMOVABLE PROPERTY TAX in Cyprus imposed? 5. What are the current INCOME TAX / CORPORATION TAX rates applicable to individuals and what are the relevant income bands? 6. What type of income is liable to SPECIAL CONTRIBUTION FOR THE DEFENCE ? 7. What is the current CAPITAL GAINS TAX rate and what deductions can you claim? 8. What are the current IMMOVABLE PROPERTY TAX rates? 9. What is the due date for the submussion of the Income Tax Return of an individual who does not submit accounts? 10. What is the due date for the submussion of the Income Tax Return of a legal person (company) or a self employed individual having an obligation to submit accounts? 11. What a Reorganization means and what are the procedures followed by Inland Revenue Department (IRD) for a Reorganization? 12. What is the procedure followed for the issuance of a certificate for tender submition purposes? 13. How do the objection procedures work? 1. Which persons are liable to INCOME TAX in Cyprus and in respect of what income? Individual and companies resident in Cyprus are liable to income tax in accordance with the Income Tax Law ( Law No. 118(I) of 2002 , as amended) in respect of their worldwide income. An individual is resident in Cyprus, if he/she resides therein for a period or more which in aggregate exceed 183 days. A company is resident in Cyprus, if its management and control are excersised in Cyprus. Non- tax residents are liable to tax in respect of Cyprus source income only. However, non-tax residents having a permanent establishment in Cyprus may elect, if it is to their benefit, to be taxed in accordance with the provisions applicable to tax residents. The income liable to income tax includes, inter alia, trade income, income from salaried services, pensions, interest, dividends, royalties, any amounts of trade goodwil, etc. The Law stipulates for various exemptions, provided certain conditions are satisfied. 2. Which persons are liable to SPECIAL CONTRIBUTION FOR THE DEFENCE in Cyprus and in respect of what type of income? Special contribution for the defence is imposed in accordance with the Special Contribution for the Defence of the Republic Law (Law No. 117(I) of 2002 , as amended) on income from sources in Cyprus, as stipulated below, which is derived by individuals and companies resident in Cyprus. An individual is resident in Cyprus, if he/she resides therein for a period or more which in aggregate exceed 183 days. A company is resident in Cyprus, if its management and control are excersised in Cyprus. The income upon which it is imposed, is restricted to dividends, interest, rents and the taxable income of public corporate bodies. The Law stipulates for various exemptions, provided certain conditions are satisfied. 3. Which type of income is liable to CAPITAL GAINS TAX in Cyprus? Subject to certain exemptions, capital gains tax is imposed in accordance with the Capital Gains Tax Laws 1980-2002, on capital gains arising after 1/1/1980, from the disposal of immovable property in Cyprus or shares of companies in Cyprus which own immovable property. 4. On what value is IMMOVABLE PROPERTY TAX in Cyprus imposed? Immovable property tax is imposed in accordance with the Immovable Property Tax Law 1980 Νο 24/1980, as amended, on the value of immovable property in Cyprus, on the 1/1/1980. This value relates to the value of immovable property which belongs to an individual or a company, on the 1st January each year. 5. What are the current INCOME TAX / CORPORATION TAX rates applicable to individuals and what are the relevant income bands? The income tax rates applicable and taxable income are available at TAX RATES on our website Special tax rates apply in certain cases. 6. What type of income is liable to SPECIAL CONTRIBUTION FOR THE DEFENCE ? Dividends, interest, rental income (reduced by 25%) and taxable income of public corporate bodies. Rates are available on at TAX RATES, some information may be available only on the greek site. 7. What is the current CAPITAL GAINS TAX rate and what deductions can you claim? The capital gain, as determined by the Capital Gains Tax Law, is liable to tax at the rate of 20%. Individuals may, subject to certain conditions, claim the following deductions from the applicable taxable gain: if the disposal relates to a private residence - up to CY£50.000, if the disposal is made by a farmer and it relates to gricultural land - up to CY£15.000, any other disposal - up to CY£10.000. These deductions are granted once in the lifetime of the individual, until fully exhausted and if an individual claims a combination of them, the maximum deduction granted cannot exceed CY£50.000. 8. What are the current IMMOVABLE PROPERTY TAX rates? The tax rates applicable and taxable income are available at TAX RATES on our website. Some Rates are available only on the Greek website. 9. What is the due date for the submussion of the Income Tax Return of an individual who does not submit accounts? For an employee, the due date is the 30th April, following the tax year to which the Income Tax Return relates. For a self employed individual who does not submit accounts, the due date is the 30th June, following the tax year to which the Income Tax Return relates. An extention of 3 months is given when the return is submitted electronically via the TAXISnet system. 10. What is the due date for the submussion of the Income Tax Return of a legal person (company) or a self employed individual having an obligation to submit accounts? 31 of December, following the tax year to which the Income Tax Return relates. An extention of 3 months is given when the return is submitted electronically via the TAXISnet system. 11. What a Reorganization means and what are the procedures followed by Inland Revenue Department (IRD) for a Reorganization? Reorganization is the transfer of assets and liabilities, including provisions and reserves, between companies, without generating profits subject to taxation. The main objective and purpose of the reorganization is to increase profitability and business productivity, better organization, reduce costs and expand business through synergies. The term reorganization includes Mergers, Divisions, Partial Divisions, Transfer of Assets, Exchange of Shares and Transfer of Registered Office. The reorganizations are covered by the Income Tax Law 118(I)/2002, as amended, Articles 26 to 30 (Adopting the European Directive 90/434/EEC in 1990, and later revised amending Directive 2005/19/EC) and the IRD Circular 2008/To activate procedures for considering the I.R. 88 (2008) form "Application for Certificate Release Waiver Payment of Tax Due to Reorganization" which is available on the website of the Inland Revenue Department (IRD) must be filled and submitted. 12. What is the procedure followed for the issuance of a certificate for tender submition purposes? The taxpayer must contact the District Tax Collection Office for the issuance of the I.R. 104A certificate. The Inland Revenue Department (IRD) in order to be able to issue such a certificate, the taxpayer has to submit tax returns as the provisions of Article 5 of the Assessment and Collection of Taxes Law No. 4/1978, as amended and pay the tax amounts raised for all years for all taxes administered by the IRD. If the taxpayer fails to pay the full amount of taxes due, he/she must agree on settlement of these debts, which should include the sum of the amounts received from the Government of such offer, provided that undertaken. If the taxpayer fails to pay taxes due to self assessment, the Department should adopt the relevant taxes. The completion of the procedures followed, including issuing of the certificate occurs on average within five working days. There is a stamp duty const that amounts to €2 and which adheres to the provisions of the Stamp Duties Act Ar.19/1963, as amended. 13. How do the objection procedures work? If there is an objection with the tax that has been imposed, the taxpayer may submit a written complaint (objection) to the end of the month following the month in which tax there is a disagreement. In case the taxation issued in December, the objection may be submitted by the end of February of the following year. If the Commissioner is satisfied that the absence from the Republic, sickness or other reasonable cause, or other inability for not submitting in due time the objection, may grant a reasonable extension in the circumstances of that period . Article 20 of the Assessment and Collection of Taxes Act 1978 (as amended) refers to objections against taxation. The Objection Form (Form I.R.15) 2007 is available on the website of the Inland Revenue Department. Together with the submission of the objection, it is requested to submit the inco9me tax return if not already submitted, and pay the undisputable amount of tax. Otherwise, the objection will not be accepted. The objection must state specifically and in detail the various grounds upon which your contention that the assessments are incorrect, and include all necessary supporting documents and evidence in support of the objection. Otherwise, the complaint will not be accepted. Below are listed all the cases in which the response is sent a written letter of response: (a) If all supporting documents and attached evidence are considered satisfactory and do not need any other additional information, then the objection will be resolved within a maximum period of three years from the date of your objection, and a new tax assessment will be raised. If the three-year period ended without taking any decision, the tax on which objects should be amended in accordance with the Tax Returns that have been submitted. (b) Within a period of twelve months from the date of the objection, the taxpayer may be asked to submit additional data and information likely to be necessary when examining your objection. The final decision with new taxes will be sent within three years from the date of submission of all data and information may be requested. If the three-year period ended without taking any decision, the tax on which objects should be amended in accordance with the Tax Returns that have been submitted


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