Cyprus, Elias Neocleous & Co LLC updates

Corporate Tax

Contributed by Elias Neocleous & Co LLC
Taxation of deemed benefits on loans and advances to directors and shareholders
  • Cyprus
  • January 12 2018

The Tax Department recently issued Interpretative Circular 14, which has clarified the application of the Income Tax Law regarding a deemed benefit which is to be assessed on any drawings, loan or other financial facilities granted by a company to a non-resident director or shareholder or their spouse or close relatives. The circular clarifies that the deemed benefit is taxable in full, regardless of the period of residence of the individual in question.

Treatment of additional taxes for deemed distribution purposes
  • Cyprus
  • January 05 2018

The Cyprus Tax Department recently clarified the treatment of additional taxes imposed under the Assessment and Collection of Taxes Law. The department has specified that any additional tax is to be treated as such, meaning that penalties and interest will be imposed if they are not paid on time. The taxes are included under the term 'corporation tax' and are deductible from accounting profits for the purpose of calculating the deemed distribution for special defence contribution tax.

Extension of country-by-country reporting deadlines
  • Cyprus
  • December 22 2017

The Tax Department recently extended the deadline for the submission of country-by-country reports to be filed by the end of 2017. The deadline for reporting entities to submit country-by-country reports for multinational groups for the fiscal year ending December 31 2016 has been extended by two months, while the deadline for Cyprus-resident constituent entities to file their notifications for the fiscal year ending December 31 2017 has been extended to January 15 2018.

Further reminder of instalment scheme for tax arrears
  • Cyprus
  • December 15 2017

With the extended deadline for the submission of applications for inclusion in the deferred settlement scheme for tax arrears established by Law 4(I)/2017 now less than one month away, the Tax Department has issued a further reminder of the scheme's main features. For example, all tax returns due must have been submitted and all tax liabilities for periods after December 31 2015 must have been settled or be in the process of being settled in accordance with an agreed payment schedule.

Extension of accelerated writing-down allowances for tax purposes
  • Cyprus
  • December 08 2017

The Income Tax Law was amended in 2012 to introduce accelerated capital allowances for tax purposes on assets purchased between 2012 and 2014, inclusive. For plant and machinery acquired up to the end of 2018, the annual writing-down allowance rate will be 20% or any higher rate applying to the category of assets concerned. For industrial buildings and hotels acquired up to the end of 2018, the annual writing-down allowance will be 7%.


Litigation

Contributed by Elias Neocleous & Co LLC
Court finds that unjustified absence of members invalidates collective body and its decisions
  • Cyprus
  • January 09 2018

A recent administrative court case examined an allegation that an Electricity Authority of Cyprus (EAC) committee established to determine staff promotions had been invalidly constituted. The meeting under review had not been chaired by the EAC chair, as required by the relevant regulations, and no reason for this absence was provided. The court found that the absence of any record of the reasons for the chair's non-attendance at the meeting was sufficient grounds to invalidate the decisions made.

Only completed actions are subject to administrative review
  • Cyprus
  • December 19 2017

A recent case has affirmed that only completed actions can be subject to administrative review, and that an applicant must possess a legitimate interest at three crucial stages in order to pursue an action in the Administrative Court. The case concerned a complaint that a third party had been promoted unfairly in preference to other applicants. However, the applicant had filed his action before the third party accepted the promotion, so that when the action was filed there was no promotion to complain about.

Settlement agreement releases parties from rights and obligations under initial agreement
  • Cyprus
  • December 12 2017

The Supreme Court recently reaffirmed the long-established principle that when contracting parties agree to amend or replace an agreement, the new agreement will replace the old one and define all of their rights and obligations. Accordingly, in a case where a settlement agreement is agreed between the parties, but not fully complied with by one of them, the other party cannot reinstate any of its rights under the initial agreement.

Supreme Court dismisses Marfin's appeal against €100,000 fine from CySec
  • Cyprus
  • November 28 2017

The Supreme Court recently issued its decision in a case concerning the Cyprus Securities and Exchange Commission's imposition of a €100,000 fine on Marfin for buying shares in Marfin Popular Bank Plc on the Athens Stock Exchange during a closed period, which had contravened the Insider Dealing and Market Manipulation (Market Abuse) Law 2005 and the Code of Conduct for Advisers and Related Persons issued thereunder.

Courts consider confusion surrounding foreclosures
  • Cyprus
  • August 15 2017

In order to address the problem of non-performing loans following the 2013 financial crisis, the Transfer and Mortgage of Properties Law was amended in 2014 to speed up and streamline the foreclosure process which allows lenders to repossess and sell properties pledged as security for loans in arrears. With the lower courts unable to agree, significant uncertainties remain as to the application of the new procedure. It now falls on the Supreme Court to reach a decision that will provide guidance and set a binding precedent.


Shipping & Transport

Contributed by Elias Neocleous & Co LLC
Increase in maximum number of firearms permitted under anti-piracy law
  • Cyprus
  • January 10 2018

On the basis of experience gained since the implementation of the Protection of Cyprus Ships Against Acts of Piracy and Other Unlawful Acts Law, the Department of Merchant Shipping has increased the maximum number of firearms that approved private ship security contractors are entitled to register from 400 to 600. However, there has been no change to the ratio of two firearms per guard; the change will therefore affect only contractors with more than 200 guards.

New Cyprus-India agreement on merchant shipping
  • Cyprus
  • December 20 2017

Cyprus and India recently signed a new reciprocal agreement on merchant shipping. Among other things, the agreement requires each country to treat the other country's vessels in the same way as it treats its own vessels engaged in international voyages. Further, the taxation of income of any kind derived from the use of vessels in international traffic is governed by the double tax agreement.

Training subsidy scheme amendments
  • Cyprus
  • December 13 2017

Since November 2015 the government has subsidised practical training on board ships for deck and engine cadet officers. The Department of Merchant Shipping recently announced changes to this scheme and the procedure for claiming reimbursement. The scheme has now been extended to cover vessels managed by companies located in other EU member states and a new requirement of at least 750 kilowatts of propulsion power has been introduced.

Tonnage tax: countries whose ships are subject to surcharge
  • Cyprus
  • November 22 2017

The Merchant Shipping (Fees and Taxing Provisions) Law 2010 imposes a surcharge on the tonnage tax payable by qualifying vessels registered in countries which appear on the grey or black list of the Paris Memorandum of Understanding. On the basis of the 2016 Paris Memorandum of Understanding annual report, the Department of Merchant Shipping recently determined which flags are included in the relevant grey or black list for the purposes of calculating tonnage tax for 2017.

Department of Merchant Shipping upgraded to deputy ministry
  • Cyprus
  • October 25 2017

Law 123(I)/2017 has upgraded the Department of Merchant Shipping to a deputy ministry under the direction of the newly created post of deputy minister of shipping with effect from March 1 2018. The new Deputy Ministry of Maritime Affairs will assume the Department of Merchant Shipping's powers and responsibilities. This upgrade reflects the importance of the shipping sector in Cyprus and the significance that the government places on its development.


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