The Organisation for Economic Cooperation and Development (OECD) has advanced the development of a standard that defines the Common Reporting Standard (CRS) – Automatic exchange of information among member countries (including Cyprus as a member) to combat fraud and tax evasion 

 What information will be exchanged?

Information will be exchanged on interest, dividends, bank balances, income from certain insurance products, revenue from sale of financial assets and other income or payments  
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The Cyprus Registrar of Companies announced that on March 31, 2017 will proceed to delete the companies in accordance with Article 327 (2A) (b) of the Companies Law, Cap. 113, which they have not paid the annual fee (Article 391 of the Companies Law Cap. 113) within one year from the date it should be paid.

In particular, companies…
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Cyprus has now adopted Action 5 of the OECD in the action against the “Base Erosion and Profit Shifting» (BEPS). This requires a clear link between the rights that generate income and activities that contribute to such income (Nexus modified approach). New changes are in effect as from 1 July 2016. The companies that join the scheme before that date will benefit from the savings until the middle of 2021. The Cyprus Intellectual Property scheme still provides for 80% exemption on income tax if intellectual property is owned by Cypriot resident company (net of any direct costs). Direct costs will exclude IP acquisition costs, interest, immovable property and payables to third parties. Other Intellectual Property jurisdictions are less attractive as Intellectual Property are taxed at a much higher level and the definition of IP is not wide enough to cover software, trademarks and copyrights. 
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EU or EEA citizens can apply for a Cyprus Resident Registration Certificate (Cyprus Resident Permit or the so called Cyprus Yellow Slip) allowing them to move, stay and work in Cyprus. The application for the issue of a Cyprus Resident Registration Certificate (Cyprus Resident Permit / Cyprus Yellow Slip) can be submitted immediately or at least within 4 months from the date of entry into Cyprus. Documents required
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Cyprus Cabinet approved significant new changes to the already popular Cyprus Citizenship by Investment program. Cyprus Passport (Cyprus Citizenship by investment) is still currently considered as the most attractive passport in Europe. Investment required now can be as low as 2 Million Euros

Cyprus Passport (Cyprus Citizenship by investment) criteria

The applicant should now:

1. Invest in Cyprus 2 Million Euros plus VAT where applicable over the last 3 years. The investment should be held for at least 3 years. Investment can be in either or a combination of:….

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The Cyprus Visa (Investment Permanent Residency Program),Cyprus visa, is the most popular and most attractive to foreign investors. It compares the most favorable among all other investments immigration programs offered by other countries.

Cyprus government decided to simplify and shortened the process to obtain Cyprus visa making it very attractive to foreign investors. In order for the government to issue immigration permit to applicants, who are third country nationals, they must fulfill the following criteria:

1. MINIMUM ANNUAL INCOME OF €30,000

The applicant must prove…
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Cyprus is now encouraging High-net worth individuals to move to Cyprus by giving personal taxation incentives

The introduction of “Domicile” regime aims to exempt High-net worth non-domiciled individuals moving to Cyprus from personal taxes (Special Contribution for Defense). High-net worth non-domiciled individuals (non-doms) will need to declare Cyprus as their taxable jurisdiction and receive an exemption from Cyprus personal taxes (Special Contribution for Defense) on rents (3% on 75% on rent income), interest (30%) and dividends (17%) which are applicable to Cyprus domiciled individuals.The exemption will apply for 17 years as from the date of declaring Cyprus as their taxable jurisdiction.
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There was a significant increase in gross tonnage in Cyprus, taking advantage of a unique tax system that has now been adopted by other shipping centers. The Cyprus Registry ranks as the tenth largest commercial fleet in the world and the third largest fleet in the European Union, Cyprus is considered to be the third largest ship management center in the EU and one of the largest worldwide. The Cyprus “Tonnage Tax System” continues to be the strongest asset in attracting more quality vessels and shipping companies. With the “Tonnage Tax system” introduced, there was a significant increase in the registration of new companies, particularly chartering and shipowning companies. The European Commission considers that the scheme complies with EU guidelines on state aid to maritime transport. Under the legislation, the Cyprus “Tonnage Tax” System is available to any qualifying person which are either owner, charterer or ship manager who owns, charters or manages qualifying ship in qualifying shipping activity

Click here to view Cyprus “Tonnage Tax” system rates

Globalisation, the growing need to encourage cooperation between companies of different Member States and to adapt to today standards, led the EU Council to adopt Directive on Cross-Border Merger.

The European Directive on cross-border mergers adopted in 2005 aims to facilitate mergers and acquisitions activity across the European Union.

Cyprus may even extend the meaning of the Cross-Border Mergers in countries outside the EU subject to certain conditions. (This is expected to pass into law soon)

Cross-border mergers combined with the transfer of Company’s Seat (companies that re-domicile their registered office in Cyprus) may prove most favourable for….
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Types of Cyprus Cross – Border Mergers

Merger 1: The transfer of all the assets and liabilities of the limited liability company which is dissolved without going into liquidation (the acquired company) to another existing company (the acquiring company), in exchange for members of the acquired company with shares in the acquiring company and possibly against payment in cash;
Merger 2: The transfer of all the assets and liabilities of two or more limited liability companies which are dissolved without going into liquidation in another limited liability company previously being formed (the new company) in exchange for their members being issued with shares representing the capital of the new company, and possibly against payment in cash;….
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CROSS-BORDER REORGANISATION TYPES PRESENTED IN A DIAGRAMMATIC FORMAT

CYPRUS CROSS-BORDER MERGER STRUCTURE 1. Company Cyprus Company transfer its assets and liabilities to an existing company in a different European Union jurisdiction European Union Company 1. Cyprus Company no longer exist….
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Cyprus Transfer-in companies, within the scope of the Cyprus Company Law Cap. 113, can be defined as the procedure of re-domiciling a foreign company’s registered office from a country or jurisdiction in the Republic of Cyprus and vice versa.

The transfer of a company’s registered office into Cyprus, apply inter alia, if the foreign company is registered in a country which allows re-domiciliation and which company’s Memorandum and Articles of Association provide for the possibility of re-domiciliation….
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There have been significant discussions around the world on taxpayers’ methods of minimizing taxes. Expressions like:

• beneficial owner,
• economic substance
• management and control,
• place of effective management,
• resident,

have been triggering discussions throughout the world as they are closely related with people’s tax minimisation.
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Recently there have been new changes on the South Africa – Cyprus Double Tax Treaty. New changes are now in force as they have now been ratified by both countries. The key changes of the treaty relate to the dividends tax and the exchange of information

Even after this change, Cyprus is still considered as one of the preferred routes for both South Africa inward and outward investments 

 Cyprus Double Tax Treaty main provisions….
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A new Cyprus, India double taxation treaty was successfully concluded. The agreement is similar to that of Mauritius which entitles the Indian tax authorities to tax capital gains from investments going through Cyprus. The new Cyprus, India double tax treaty provides for a sourced-based taxation on profits from sale of shares. Indian authorities will have the right to tax capital gains from the sale of shares after April 1, 2017. Investments made prior to April 1, 2017 are exempt in the sense that…
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The Cyprus Parliament passed legislation on reduction of Cyprus Immovable Property Tax for the year 2016 onward. 
The tax base will be that of year 2015 but the resulting tax will be reduced to 25% for those who will pay their Cyprus Immovable property tax until 31 October 2016.
If the resulting Cyprus Immovable Property Tax is paid between 1 November and 31 December 2016, the reduction will be …
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Over the past twenty years, Cyprus has developed into one of the most favourable places for international business. A low tax regime combined with its excellent geographical position and infrastructure and its ability to offer sophisticated Cyprus tax planning opportunities, its ability to set up and manage Alternative Investment Funds (AIFs), the enactment of the Cyprus International Trusts Law which provided for the formation and administration of Cyprus International Trusts combined with its excellent geographical position and infrastructure where the key factors for its success. 
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PKF Cyprus Tax Guide provides comprehensive and up to date information to Cyprus Companies and Individuals on Cyprus tax system and on Cyprus Tax rates, such as personal income tax, corporate tax, capital gains tax, immovable property tax, VAT rates, immovable property transfer fees, etc. In addition PKF Cyprus Tax Guide can be a useful reference in general and Cyprus tax planning.
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Over the years PKF Nicosia, Cyprus partners and staff have participated and contributed in the structuring of Multinational Companies (MNCs) and High Net Worth Individuals (HNWIs) including inter alia the proper allocation of Multinationals group risks, on the choice between capitalizing a business enterprise with debt or equity, on finance companies and payments in respect of loans between foreign companies, on intellectual property rights etc.
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