Cyprus, Elias Neocleous & Co LLC updates

Corporate Tax

Contributed by Elias Neocleous & Co LLC
Tax treatment of non-returnable capital contributions
  • Cyprus
  • 28 September 2018

The Tax Department recently issued Interpretative Circular 25, which clarifies the tax treatment of non-returnable capital contributions by Cyprus taxpayers to companies that are tax resident abroad. The circular confirms that Article 33 of the Income Tax Law will not apply to debit or credit balances generated by non-repayable capital contributions to non-tax resident companies, provided that a number of conditions are satisfied with full documentary evidence.

Taxation of insurance agent earnings
  • Cyprus
  • 21 September 2018

The Tax Department recently issued a circular clarifying the taxation of insurance agent earnings. A representative of an insurer who is not in an employment relationship with that insurer will be treated as a commercial enterprise whose revenue is derived from fees or commissions for the conclusion of insurance contracts. If their annual revenue exceeds €70,000, the intermediary must maintain accounting records and prepare audited financial statements.

Tax exemptions for loan restructuring implemented
  • Cyprus
  • 17 August 2018

Following the extension of tax relief for the disposal of immovable property for the restructuring non-performing loans introduced by Laws 96(I)/2018, 98(I)/2018, 99(I)/2018 and 100(I)/2018, the Tax Department has announced that its Form 415 (Disposal of Property due to Loan Restructuring) has been revised and that a new Form 415B (Immovable Property Declaration due to Loan Restructuring – Supplementary Certificate) has been published.

Amendments to tax laws to facilitate loan restructuring
  • Cyprus
  • 10 August 2018

Parliament recently passed a package of legislative measures that aims to encourage the resolution of non-performing loans. The measures include an extension of the current tax exemptions on transfers of immovable property from a borrower to a lender in the course of a loan restructuring to borrowers that dispose of the property themselves in the open market in order to restructure debt. Both sets of exemptions will be available until the end of 2019.

Clampdown on companies lacking substance
  • Cyprus
  • 03 August 2018

Recent developments have underlined the need for businesses to have real substance in order to operate and benefit from tax residence in Cyprus. Lack of proper substance may not only lead to the denial of benefits under double tax agreements or EU directives, but may also mean that the company is unable to operate a bank account in Cyprus.


Litigation

Contributed by Elias Neocleous & Co LLC
Court procedure when enforcing European Account Preservation Orders in Cyprus
  • Cyprus
  • 06 November 2018

EU Regulation 655/2014 recently established a European Account Preservation Order procedure to facilitate cross-border debt recovery. In Cyprus, claimants must file an application for such an order at the district court with jurisdiction over the main dispute. The Cyprus courts have always required appropriate security to be provided for freezing orders and are likely to adopt a conservative approach to prevent abuse of the procedure. It is hoped that the courts of other member states will also adopt a balanced approach.

Requirements for granting mandatory injunctions on interim applications
  • Cyprus
  • 02 October 2018

A recent Larnaca District Court judgment examined the requirements for granting mandatory injunctions on interim applications. The decision is in line with well-established legal principles, as mandatory orders are an extraordinary remedial process granted not as a matter of right, but rather after the exercise of sound judicial discretion. Their application is restricted to clear and exceptional circumstances in which order needs to be restored without delay.

Life imprisonment and whole-life imprisonment – a history of Cypriot case law
  • Cyprus
  • 25 September 2018

Life imprisonment generally does not constitute a whole-life sentence because the prisoner will, in most cases, be eligible for early release after a fixed period set by the court. In exceptionally grave cases, the court may order that life should mean life and that the prisoner should remain incarcerated for the rest of their life. The case of Panagiotis Kafkaris was considered sufficiently serious to merit a whole-life sentence and his release marks the end of a landmark case on this issue in Cyprus.

Foreclosure process amended to close appeal loopholes
  • Cyprus
  • 18 September 2018

In 2014 the Transfer and Mortgage of Properties Law was amended to introduce a streamlined foreclosure process aimed at helping banks to address the persistently high levels of non-performing loans and so-called 'strategic defaulters'. Several of the amendments were ambiguously drafted and borrowers were quick to oppose them, leading to numerous court appeals to suspend foreclosures that had already begun. In order to address this issue, Parliament recently decided on additional reforms.

Abuse of process and res judicata in asset freezing applications
  • Cyprus
  • 11 September 2018

Abuse of process and res judicata were the main issues examined by the Larnaca District Court when deciding on a recent interim application to freeze assets. The court ultimately held that when deciding whether to issue an interim order, it must consider only whether the applicant has shown an arguable case with a visible chance of success and whether, without the order, it would be difficult or impossible to do complete justice at a later stage.


Shipping & Transport

Contributed by Elias Neocleous & Co LLC
Ballast Water Management Convention enters into force
  • Cyprus
  • 24 October 2018

The Deputy Ministry of Shipping recently announced that the International Convention for the Control and Management of Ships' Ballast Water and Sediments will enter into force in Cyprus on 8 November 2018. The Cyprus shipping authorities will apply the requirements of the convention to ships that fly the flag of a country which is not a party to the convention to the extent necessary to ensure that they are not treated more favourably than ships flying the flag of parties to the convention.

English translation of merchant shipping law made available
  • Cyprus
  • 10 October 2018

The Deputy Ministry of Shipping has announced that an English translation of the Merchant Shipping (Recognition and Authorisation of Organisations) Law 2011 is now available on its website. The law sets out common rules and standards for organisations that inspect and survey Cyprus-flagged ships and regulates dealings between such organisations and the Cyprus Maritime Administration. The definitive text of the law is in Greek and the translation is for information purposes.

Carriage of goods by sea: principles of agency and functions of bills of lading
  • Cyprus
  • 29 August 2018

A recent Supreme Court decision considered the principles of agency and functions of bills of lading and provided a useful summary of this area of law. The case demonstrates the importance of expressly specifying the capacity in which various parties are acting when negotiating or entering into a contract – for example, whether they are acting as principals in their own right or as agents on behalf of someone else.

New circular on use of electronic certificates
  • Cyprus
  • 01 August 2018

The Deputy Ministry of Shipping recently issued a circular informing recognised organisations, security organisations, registered owners, bareboat charterers, managers and representatives of ships flying the Cyprus flag that it now accepts statutory certificates issued to Cyprus-flagged vessels by recognised organisations in electronic form, provided that they satisfy the International Maritime Organisation requirements set out in its Guidelines for the Use of Electronic Certificates.

Supreme Court confirms jurisdiction to determine claims arising in exclusive economic zone
  • Cyprus
  • 06 June 2018

In a recent case filed in its admiralty jurisdiction, the Supreme Court of Cyprus had to consider whether accidents which take place in the Cyprus exclusive economic zone (EEZ) give jurisdiction to the Cyprus courts. The court decided that it has jurisdiction to hear disputes regarding accidents which occur within its territory, including the Cyprus EEZ, provided that the accident concerns the prospection or exploitation of Cyprus's natural resources.


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