Travel to Cyprus

Archive for September, 2011

In January 1993, frontier controls on the movement of goods between EU member states were abolished and importers and exporters in EU trade no longer were required to complete customs documentation. Therefore, in order to fill the gap that was created concerning the collection of statistics information, the EU introduced a system known as INTRASTAT. The system was designed to ensure that statistics of internal EU trade could be collected in a way which would maintain the quality of the statistics and the timeliness of their collection.

The system places obligation on traders to submit periodic declarations of their trade. The INTRASTAT returns are submitted to the VAT Service each month and concern arrivals from, as well as dispatches to other member states.

OBLIGATIONS OF TRADERS UNDER INTRASTAT

As from May 1st 2004, each VAT-registered person who supplies goods to or/ and receives goods from other member states (the value of which is exceeding the statistical threshold), is obliged to submit the INTRASTAT return for arrivals as well as dispatches to the VAT Service each month.

According to the EU regulation, the Cyprus government defines each year thresholds expressed in annual values of intra-Community trade, below which parties are exempted from providing any INTRASTAT information. The thresholds are defined separately for arrivals and dispatches and they may change each year.  For 2010, the «exemption thresholds» are €75.000 for arrivals and €65.000 for dispatches, and the «simplification thresholds» are €1.500.000 for arrivals and €1.200.000 for dispatches.

The return must be submitted to the VAT service until the tenth day immediately following the end of the month to which the return relates.

PENALTIES

For Intrastat declarations of periods until 31/12/2009, if a person fails to comply, this person is liable to a penalty of eight euro (€8) for each working day of non-compliance, the maximum being thirty working days. As from 1/1/2010, if a person fails to comply, this person is liable to a penalty of fifteen euro (€15). Non-compliance that continues after the thirty working days constitutes a criminal offence and a convicted person may incur an additional fine of up to two thousand five hundred and sixty two euro (€2.562).

Also, according to the amendment of the Law N. 38(I)/2004, for Intrastat declarations of periods until 31/12/2009, if a person submits the INTRASTAT return and this report contains substantial omission and/ or inaccuracy and does not inform the VAT Commissioner within sixty days of the end of the relative period, this person is liable to a penalty of fifty one euro (€51). As from 1/1/2010 according to the amendment of the Law N. 38(I)/2004, for Intrastat declarations of periods until 31/12/2009, if a person submits the INTRASTAT return and this report contains substantial omission and/ or inaccuracy and does not inform the VAT Commissioner within sixty days of the end of the relative period, this person is liable to a penalty of fifty one euro (€15).

AGENTS

A trader may appoint an agent to make and submit the INTRASTAT return on his behalf. Under the national legislation, if an agent is appointed, the agent must be a forwarder as defined by the article 74 of the Customs Code Law 2004. The nomination of the agent does not, in any way, reduce or alter the legal obligations of the trader concerned. Any pursuit action initiated by the VAT Service will be concentrated on the trader concerned, not the agent.

Cyprus Corporate Services Multilysis Services Limited

VAT is charged on every taxable supply of goods or services, that is on every supply of goods or services made within the Republic, by a taxable person in the course or furtherance of any business carried on by him, other than a supply exempted in accordance with the provisions of the Law. Additionally, VAT is charged on the importation of goods into the Republic and on the acquisition of goods from other member states.

VAT is an indirect form of taxation intended to burden consumption expenditure. It is an indirect tax because the trader/taxable person acts as an agent of the VAT Service, collecting VAT from customers/consumers on its behalf and returning the tax to the Republic.

VAT is imposed on supplies and collected at every stage of the production, transportation and distribution of goods and services.

VAT is charged on every supply of goods or services at the standard rate of fifteen per cent (15%). The reduced rate of 5% is imposed on the supply of coffins, services supplied by undertakers, services of writers, artists, on the supply of fertilizers, foodstuff for animal, live animals, seeds, non bottled water, newspapers, books, periodicals, certain products for persons with special need, ice cream, certain types of nuts (salted etc), transport of passengers and their accompanying luggage with urban and rural buses, the letting of camping sites and caravan parks.

As from 19 October 2007, the following are taxable at the reduced rate of 5%:

· hair salon services,

· repair and maintenance of private households (based on specific condition)

· animal feedstuff

· confectionary product

· bottled water

· Juices

· pharmaceutical products that were previously taxed at the standard rate of 15%
· entry fees to theaters, cinemas at sports events, Luna parks and similar cultural events

As from the 1st August, 2005, the following are taxable at the reduced VAT rate of 8%: transport of passengers and their accompanying luggage within Cyprus, with urban, suburban and rural taxis as well as with tour and suburban buses.

The VAT reduced rate of 8% is also imposed as from the 1st January, 2006 up to 9/1/2011, on the services of restaurants and the supply of food in the course of catering except the supply of alcoholic beverages wine and beer, which is chargeable at 15%, as well as on the provision of accommodation in the hotel sector or in sectors with a similar character. As from the 1st January, 2006, the transport of passengers and their accompanying luggage by sea, within Cyprus is taxable at the VAT rate of 8%.

Certain supplies of goods or services are zero-rated; the supply, hiring and repair of sea-going vessels and aircrafts, the supply of services to meet the direct needs of sea-going vessels, the supply of goods entered into customs regime, the supply of medicines and food – except the supply of food in the course of catering. In addition, a supply of goods is zero-rated if the VAT Commissioner is satisfied that the goods have been exported or supplied to a registered person in another member state.

No VAT is charged on supplies of goods or services which are exempted under the VAT legislation; leasing or letting of immovable property, the supply of immovable property with the exception of buildings or parts of buildings and the land on which they stand if the application for a building permit was submitted after the 1st May, 2004, financial services, lotteries, medical care, social welfare, education, sports, cultural services, insurance transactions etc.

Since the establishment of V.A.T. legislation on the 1/7/1992 the changes for V.A.T. rates are shown in the table that follows:

V.A.T. Rates

Dates / Periods	Standard Rate	Reduced Rate 1	Reduced Rate 2
01/07/1992 – 30/09/1993	5%	—	—
01/10/1993 – 30/06/2000	8%	—	—
01/07/2000 – 30/06/2002	10%	5%	—
01/07/2002 – 31/12/2002	13%	5%	—
01/01/2003 – 31/07/2005	15%	5%	—
01/08/2005 – today	15%	5%	8%

Visitors will have to pay VAT on most of the goods they purchase locally. If they purchase goods from retailers who operate the “Retail Export Scheme”, visitors can claim a VAT refund on some of the goods they intend to export from Cyprus. To be qualified to use the scheme visitors must not be residents of any member state of the EU, must have not resided in Cyprus for more than 365 days in the two years prior to the purchase date and must intend to leave Cyprus by the last day of the third month following the month in which the goods were purchased, carrying the goods in their hand luggage. The value of the goods must exceed Euro 170.86 but must be below Euro 17.086,01 per person and the goods should be put to personal or family use. During the purchase the shopkeeper, if he operates the scheme, will provide the visitor with a sales invoice issued under the scheme. The visitor must produce this invoice along with the goods to the Customs Authorities upon departure from Cyprus. The Customs Officer will certify the exportation of the goods and the visitor will have to post the certified invoice back to the shopkeeper or to a VAT refund company in order to receive the refund.

Customer Rights

Customers have the right to know whether the retailers are registered for VAT. Therefore retailers have to display their registration certificate according to the VAT (Displaying the Registration Certificate) Order of 1992 or else the customers have the right to ask retailers to show the certificate.

Customers have the right to know, before any purchase, the selling price and to make sure that VAT is included. Therefore, goods for sale must bear a label with the selling price – including any amount of VAT – written on it.

When customers purchase goods or services, they have the right to demand an invoice. Therefore, every person who supplies goods or services must issue an invoice.

When a customer returns goods to the supplier, the seller, if he is a registered person and thus charged VAT, must return the whole amount to the customer including the tax.

Every person who is concerned, in whatever capacity in the supply of goods or services in the course or furtherance of a business, is liable to furnish to the VAT Commissioner such information and produce for inspection any documents upon demand by the VAT Commissioner

Cyprus Accounting Services  –  http://www.multilysis.com/en/accounting-bookkeeping

НДС взимается с каждой налогооблагаемой поставки товаров или услуг, то есть с каждой  поставки  товаров или услуг, произведенных в Республике, налогооблагаемым  лицом, в ходе любой предпринимательской деятельности, осуществляемой им, за исключением поставок товаров, попадающих под освобождение от налогообложения в соответствии с положениями закона. Кроме того, НДС взимается как  при ввозе товаров в Республику, так и при  приобретении товаров из других государств-членов ЕС.

НДС является косвенной формой налогообложения, призванной  обременять расходы на потребление. Это косвенный налог, поскольку трейдер/налогооблагаемое лицо действует в качестве агента налоговой службы, взимая  НДС с клиентов/потребителей от своего имени, и возвращая налог государству.

НДС взимается с поставок и взыскивается  на всех этапах, включая, производство, транспортировки, а также и распределения товаров и услуг.

НДС взимается с каждой поставки товаров или услуг, по стандартной ставке- пятнадцать процентов (15%). Пониженная ставка в размере 5% взимается  с услуг, предоставляемых предпринимателями,  писателями, артистами, с поставок удобрений, корма для животных, с поставок живых животных, семен, небутилированной воды, газет, книг, периодических изданий, с определенных продуктов для лиц с ограниченными возможностями, мороженого, определенных  видов орехов, с перевозок пассажиров (и их багажа) городскими и сельскими автобусами, а также со сдачи в аренду кемпингов и караван-парков.

Начиная с 19 октября 2007 года, следующие услуги/товары облагаются налогом по пониженной ставке в размере 5%:

• парикмахерские услуги
• ремонт и техническое обслуживание частных домашних хозяйств (с учетом конкретных условий)
• животный корм
• кондитерские продукты
• бутилированная вода
• соки
• фармацевтические продукты, которые ранее  облагались налогом по стандартной ставке 15%
• входные билеты в театры, кинотеатры во время спортивных мероприятий, луна парки и подобные культурные мероприятия

Начиная с 1-го августа 2005 года, следующие услуги облагаются налогом по пониженной ставке НДС в размере 8%: перевозка пассажиров (и их багажа) на территории Кипра,  городскими, пригородными и сельскими такси, а также  туристическими и пригородными автобусами.

С 1 января 2006 пониженная ставка НДС в размере 8% также применяется на предоставление услуг ресторанами,  на поставки продовольствия в целях общественного питания,  а также на предоставление жилья  гостиничном сектором (или  сектором  подобного типа), за исключением поставок алкогольных  напитков, которые подлежат налогообложению в рамере 15%.

Следующие товары и услуги облагаются нулевой ставкой НДС: снабжение, найм и ремонт морских и воздушных судов, предоставление услуг в целях удовлетворения  потребностей морских судов, поставка товаров помещенных под таможенный режим, поставка медикаментов и продовольствия – за исключением поставок продовольствия в целях общественного питания. Кроме того, поставки товаров облагаются нулевой ставкой, в случае представления  доказательств, что товары были экспортированы/поставлены  зарегистрированному лицу, в другом государстве ЕС.

НДС не взимается с нишеуказанных товаров или услуг, освобождаемых согласно налоговому законодательсту Республики Кипр:

Аренда или сдача недвижимого имущества в аренду, содержание недвижимого имущества (за исключением зданий и земель, в случае, если заявление о выдаче разрешения на строительство было подано после 1-го мая 2004 года) финансовые услуги, лотереи, медицинская помощь, социальное обеспечение, образование, спорт, культурные услуги, страхование сделок и т.д.

С момента постановления  закона о НДС (1992 г.), ставка НДС изменялась несколько раз  (ставки НДС  указаны в таблице ниже):

Ставки НДС 

Даты	Стандартная ставка	Пониженная ставка 1	Пониженная ставка 2
01/07/1992 – 30/09/1993	5%	—	—
01/10/1993 – 30/06/2000	8%	—	—
01/07/2000 – 30/06/2002	10%	5%	—
01/07/2002 – 31/12/2002	13%	5%	—
01/01/2003 – 31/07/2005	15%	5%	—
01/08/2005 – сегодня	15%	5%	8%

Что касается большинства товаров, НДС уплачивается на месте покупки товаров и услуг. В случае розничной  покупки товара посредством  “розничной схемы экспорта”, покупатели могут претендовать на возврат НДС касательно определенных товаров, которые они намерены экспортировать с территории Кипра. Для того, чтобы иметь право применения данной схемы, посетители не должны являться резидентами государств-членов ЕС, не должны  проживать на Кипре  более 365 дней, в течение двух лет до момента покупки, а также  должны иметь намерение покинуть Кипр, не позднее последнего дня третьего месяца, следующего за месяцем, в котором были куплены товары,  перевозя товары в качестве ручной клади. Стоимость товаров должна находиться в диапазоне от 170,86  до 17.086,01 евро, на человека. Данные товары должны предназначаться для  личного или семейного использования. Во время покупки, продавец (при условии, что на него распространяется  “розничная схема экспорта”), обязан предоставить покупателю  счет-фактуру, о продаже товара, выданный в рамках указанной выше схемы. Посетитель, в свою очередь,  должен предъявить этот счет вкупе с приобретенными  товарами, таможенным органам, при выезде с Кипра. Должностое лицо таможенной службы обязано подтвердить экспорт товаров. После сертификации и соответствующего  вывоза товаров, покупатель должен выслать владельцу предприятия-продавцу заверенный счет-фактуру, после чего продавец возместит НДС.

Права потребителей

Клиенты имеют право знать насколько ритейлер является зарегистрирован в качестве плательщика НДС. Поэтому розничные торговцы обязаны выставлять напоказ свое свидетельство о регистрации в соответствии с  приказом 1992 года. В обратном случае, покупатель  имеет право попросить продавца показать  вышеупомянутый сертификат.

Клиенты, до совершения какой-либо покупки, имеют право на информацию касательно как цены продажи товара, так и включения НДС в его стоимость. Таким образом, товары для продажи  должны иметь этикетку с продажной ценой, включающей  сумму НДС.

При покупке товаров или услуг, клиенты имеют право требовать счета-фактуры. Следовательно, каждое лицо, поставляющее товары или услуги, обязано, по требованию, предоставить данный счет.

Когда покупатель возвращает товар поставщику/продавцу (в случае, если он  зарегистрирован в качестве плательщика НДС), он обязан вернуть всю сумму клиенту, включая налог.

Лицо, заинтересованное  в поставках товаров/услуг, в целях расширения бизнеса,  обязано соответственно проинформировать  налоговую службу  Республики Кипр, а также предоставить для осмотра все  документы по требованию налоговых органов

Бухгалтерский учет - http://www.multilysis.com/ru/accounting-bookkeeping

Схема финансирования:

1. Вы оплачиваете 50% от стоимости объекта
2. Недвижимость передается в пользование
3. Оставшиеся 50% от стоимости объекта предоставляются в кредит на 3 года под 5,95% годовых
4. Оплата заемной суммы осуществляется помесячно или поквартально

Преимущества данной схемы:

1. Вы оплачиваете не всю сумму от стоимости недвижимости, а всего лишь 50%
2. Вы получаете недвижимость в пользование сразу после оплаты 50% от стоимости объекта
3. Вы избегаете трат примерно в 3,5% от суммы займа по сравнению с кредитованием у кипрских банков, которые Вы несет при получении кредита
4. Ставка кредитования <жестко> зафиксирована в размере 5,95% и не колеблется в зависимости от поведения конкретной валюты на финансовом рынке

Visitors from abroad can get Value Added Tax (V.A.T.) refund on goods purchased in Cyprus from shops that use the retail export scheme. The scheme is applicable to goods purchased within the retail trade frame, meeting the following prerequisites:

• they are chargeable with V.A.T.;
• they are for the personal use of the traveler or his/her family;
• they are carried in the passenger’s personal hand luggage, carried by him/her; and
• the goods’ value €50 for each person.

However these provisions are not applicable in the case of the following goods:

• goods subject to an export license;
• equipment and provisions for pleasure boats and private aircraft or for any other means of transport for private use.

Equipment is considered to be those goods which are incorporated or used on any means of transport for private use; provisions are fuel, oils and food supplies for these means of transport.

The buyer must produce to Customs the purchase invoice together with the goods for certification of the exportation at the point and time of departure from Cyprus.

The goods must be exported before the end of the third month following the month in which the goods were purchased.

After certification and exportation of the goods, the buyer must post the certified invoice to the shopkeeper who shall refund the V.A.T. once he receives it.

Private companies have been authorized by the V.A.T. Commissioner to refund V.A.T. in cash to departing passengers at Larnaca & Pafos Airports at the time of departure.

Cyprus Corporate Services Multilysis Services Limited

Cyprus Lawyers N. Pirilides & Associates LLC

Посетители из-за рубежа могут получить возврат НДС касательно товаров, приобретенных на Кипре, в  предприятиях, использующих  розничную схему экспорта. Данная  схема применяется к товарам, приобретенным в рамках розничной торговли,  в случае, если данные товары :

• являются облагаемыми НДС;
• предназначены для личного пользования путешественника или его семьи;
• перевозятся в личной ручной клади пассажира;
• стоимость товаров достигает  € 50 на каждого человека;

Однако, данные положения не применяются в случае следующих товаров:

• товары, подлежащие лицензии на экспорт;
• оборудование и  обеспечение для прогулочных судов, частных самолетов, а также для любых других транспортных средств частного использования;

Оборудованием считаются  товары, которые соединены или использованы на любых транспортных средствах  личного пользования; обеспечением считаются  топливо, масла, а также продукты питания для данных транспортных средств.

Покупатель, во время отъезда с Кипра, должен предъявить в  таможенный орган счета-фактуры, сопровождаемые  товарами подлежащими сертификации на экспорт.

Товары должны быть вывезены до конца третьего месяца, следующего за месяцем, в котором были приобретены товары.

После сертификации и вывоза товаров, покупатель должен выслать владельцу предприятия, заверенный счет-фактуру, который возместит НДС, как только он  получит соответствующий счет-фактуру.

Частные компании/предприятия,  санкционированы  налоговой службой Республики Кипр, возмещать  НДС наличными, во время вылета пассажиров, в аэропортах  Ларнаки и Пафоса.

http://www.multilysis.com/  - http://www.pirilides.com/ru

Все импортные товары, перечисленные в Приложении V,  Закона 95 (I)/2000 о НДС, попадают под пониженную ставку НДС- 5%, при условии соблюдения   упомянутых там условий. Вот несколько примеров:

• удобрения, инсектициды, родентициды, фунгициды, гербициды, дезинфицирующие средства;
• корм для животных, продукты питания для птиц и рыб;
• кормовые добавки для животных;
• гробы;
• семена и предметы для приготовления пищевых продуктов и кормов для животных;
• животные, используемые для получения продуктов питания;

Нулевая ставка НДС

Все импортные товары, перечисленные в Приложении VI,  Закона 95 (I)/2000 о НДС, попадают под нулевую ставку НДС, при условии соблюдения   некоторых условий. Вот несколько примеров:

• продукты питания;
• медикаменты, классифицируемые как таковые в соответствии с таможенным законодательством;
• газеты, журналы и т. п. ;
• детская одежда и обувь;
• слуховые аппараты;
• вакцины для людей и животных;
• инвалидные кресла-коляски;

Предметы освобожденные от НДС

Все импортные товары, перечисленные в Приложении VII,  Закона 95 (I)/2000 о НДС, освобождаются от уплаты НДС, при условии соблюдения   некоторых условий. Вот несколько примеров:

• зубные протезы поставляемые стоматологами и зубными техниками;
• человеческие органы, кровь и человеческое молоко;
• поставки почтовых марок по номинальной стоимости;

Стоимость импортируемых товаров в целях налогообложения НДС

Налогооблагаемая стоимость НДС включает в себя:

• таможенную стоимость импортируемых товаров, в установленном, таможенным законодательством, порядке;
• все пошлины, налоги и  сборы собранные при ввозе;

Исключением из правила, является доставка импортируемых товаров для домашнего использования, перед таможенной очисткой. Например, в случае, когда  товары продаются импортером другому лицу, во время их  нахождения  в складах временного хранения или на таможенных складах. Налогооблагаемая стоимость в таком случае составляет стоимость доставки (т.е. продажи), при условии что  она не ниже таможенной стоимости. Если товары продаются таким образом более одного раза, налогооблагаемая   стоимость равняется  цене продажи, по отношению к последнему покупателю, помещающему  товар в целях свободного обращения.

НДС при ввозе товаров

НДС налагается на все импортируемые товары, вне зависимости от подлежания импортера к уплате НДС.  Данный налог рассматривается как импортная пошлина. Она  начисляется и  уплачивается в момент оплаты  в соответствии с таможенным законодательством.

Таможенное законодательство применяется к импортируемым товарам в целях обложения  НДС. Также следует отметить, что существует ряд поправок и  исключений, предусматриваемых налоговым законодательством.

НДС уплачиваемый при ввозе, рассматривается как входной налог, касающийся лиц, подлежащих уплате НДС.

Стандартная ставка НДС

В целом, импорт, за немногими исключениями, предусмотренными налоговым и таможенным законодательством, подвергается стандартной ставке таможенной  пошлины, которая составляет 15%.

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V.A.T. is imposed on all imported commodities whether the importer is a person liable to V.A.T. or not. Οn importation, it is considered as an import duty and it is charged and paid at the time at which the import duty is paid according to the customs legislation.

The customs legislation is applied to imported goods for V.A.T. purposes, with the exceptions and amendments provided by the V.A.T. legislation.

V.A.T. paid on importation is considered to be an input tax for persons liable to V.A.T.

Standard rate of V.A.T.

In general all importations, with few exemptions provided by the V.A.T. and customs legislations, are subjected to the standard rate of duty, which is 15%.

Reduced rate of V.A.T.

All imported goods listed in Annex V to the V.A.T. Law 95(I)/2000 are subject to reduced rate of V.A.T. which is 5%, provided that the prerequisites mentioned there apply. Here are some examples:

• coffins;
• fertilizers, insecticides, rodenticides, fungicides, herbicides, disinfectants, etc;
• animal feeding stuffs, food for birds and fish;
• additives for animal feeding stuffs;
• seeds and items for preparation of foodstuffs and animal feeding stuffs;
• live animals used in the preparation of foodstuffs.

Zero rate of V.A.T.

All imported goods listed in Annex VI to the V.A.T. Law 95(I)/2000 are subject to zero V.A.T. rate, provided that the prerequisites mentioned therein apply. Some examples are:

• foodstuffs for human consumption;
• medicaments classified as such according to customs legislation;
• newspapers, magazine, etc
• clothing and footwear for children;
• hearing aids;
• human and veterinary vaccines;
• invalid wheelchairs.

Exempted items

All imports of goods mentioned in Annex VII to the V.A.T. Law 95(I)/2000 are exempted from payment of V.A.T. Here are some examples:

• dental prostheses supplied by dentists and dental technicians;
• human organs, blood and human milk;
• the supply at face value of postage stamps.

Value of imported goods for V.A.T. purposes

The taxable value for V.A.T. includes:

• the customs value of imported goods, as defined by customs legislation; and
• all duties, taxes or other levies collected on importation.

The case where imported goods are delivered before their clearance for home use is an exception to this rule. This is for example the case whereby goods are sold by the importer to another person while they are in temporary storage or in a customs warehouse. The taxable value in such a case is the value of delivery (i.e. sale), provided it is not lower than the customs value. If the goods are sold under such conditions more than once, the taxable value shall be taken to be the sale price to the last buyer, who will place the goods in free circulation.

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On the 26^th of August 2011, the House of Representatives voted as a first package of measures a number of amendments to tax legislation for the purpose of raising revenues and decreasing government spending and for the objective entry into the support mechanism.

These changes relate to increasing various taxes, introducing a levy for all companies incorporated in Cyprus, as well as introducing and/or increasing contributions to pension schemes of government employees, local authorities and semi-governmental organizations, and introducing a special levy for two years on the salaries and pensions paid to government employees, local authorities and semi-governmental organizations.

In the next few months a second and probably a third package of additional measures is expected, which hopefully should focus on further reductions in government spending. The increase in the VAT rate from 15% to 17% is expected to be approved with the second package of measures.

The most significant changes in the tax and company legislation are set out below:

The Income Tax Law

• Increase in the maximum personal income tax rate to 35%

A new income tax rate of 35% is introduced for individuals on taxable income in excess of €60.000.

• Tax incentives for the employment in Cyprus of highly paid non Cypriot resident individuals

In order to encourage the establishment or development in Cyprus of new businesses, tax incentives are offered for the employment in Cyprus of persons who are not tax residents of Cyprus. In such a case, if the income from employment exceeds €100.000 per annum, a 50% deduction is permitted for such income for the first 5 years of employment. The incentive is granted both to Cypriots and non-Cypriots, on condition that prior to the employment in Cyprus, such a person was resident outside Cyprus and was not considered as a tax resident of Cyprus.

• Abolition of exemption from taxation of the President of the Republic and the President of the House of Representatives

The exemption from taxation of the official emoluments and the pension of the President of the Republic and the pension of the President of the House of Representatives is abolished.

• Entry into force

The increase in the personal tax rate will come into effect as from the 1^st January 2011, whereas the incentive for new employees will come into force for employments starting as from the 1^st of January 2012.

The Special Contribution for the Defence Law

• Increase in the rate of defence tax on interest from 10% to 15%

The rate of special contribution for the Defence of the Republic (“defence tax”) on interest received or credited by Cypriot tax residents is increased from 10% to 15%. This applies to both individuals and corporations.  In the case of corporations, if the interest results from the ordinary carrying on of any business, including any interest closely connected with the ordinary carrying on of the business, it is not subject to defence tax, but instead is subject to corporate income tax. Therefore, financing companies, including companies involved in intra –group financing activities, are not expected to be affected from the involved in intra–group financing activities, are not expected to be affected from the change in the rate. It should be noted that no defence tax is payable on interest payments to non residents. It should also be noted that this provision applies to interest received by resident individuals or corporations, both from sources within Cyprus and outside of Cyprus.

For provident funds, defence tax on interest received remains at 3%, as well as in the case of an individual whose total income for the year does not exceed €12.000 (including interest income). The same rate applies to interest received by an individual from Government savings certificates and developments stocks.

• Increase in the rate of defence tax on dividends from 15% to 17%

The rate of defence tax on dividends received by a Cypriot tax resident is increased from 15% to 17%. This applies only to individuals, since under the provisions of the legislation companies are generally exempt from the payment of defence tax on dividends.

The increase in the rate also applies when the deemed distribution rules ate applied in cases where a tax resident company does not distribute within two years at least 70% of its after tax profits.

It should be noted that no defence tax is levied on dividends paid to non-resident individuals or corporations. It is also noted that the deemed distribution rules are not applicable in the case where shareholders of a resident company ate non tax residents of Cyprus. However, the deemed distribution rules are applicable in the case of a Cypriot tax resident company owned by another Cypriot tax resident company, which in turn is owned by non residents. It is expected that shortly such companies will be included from the provisions of the deemed distribution rules, therefore there should be a significant benefit for such companies in case of inability to distribute an actual dividend.

• Entry into force

The above provisions will enter into force as soon as the new law is published in the official gazette of the Republic.

The Immovable Property Tax Law

The rates applicable for the payment of immovable property tax, which is paid by both individuals and companies on property owned in Cyprus are significantly increased, as well as the threshold as from which taxes are paid is lowered. It should be noted that tax remains levied on the assessed value of the property as at 1 January 1980. The rates are as follows:

Up to €120.000                                                  0%0

 From €120.000 to €170.000                           4%0

From €170.001 to €300.000                            5%0

From €300.001 to €500.000                            6%0

From €500.001 to €800.000                            7%0

Over €800.00                                                      8%0

The increase will be effective as from the year 2012.

The Companies Law

• As from 2011 an annual levy of €350 is introduced for all companies incorporated in Cyprus payable to the Registrar of Companies. For groups of companies the maximum levy is fixed at €20.000.
• The levy for 2011 must be paid by 31 December 2011, whereas the levy for 2012 onwards must be paid by 30 June of each year.
• Dormant companies, companies which do not own any assets, as well as companies owning property located in the non Government controlled areas of Cyprus are exempted from the payment of the levy.

In case where the levy is not paid within the prescribed period, if the levy is paid within two months from the due date, a penalty of 10% is payable which is increased to 30% if the levy is paid within five months from the due date. If the levy is not paid within five months, the Registrar of Companies will remove the company from the registry (something which is expected to restrict the company from filing documents or requesting certificates from the Registrar’s Office). The return of the company to the registry can be effected within two years with the payment of a levy of €500 per annum and thereafter with the payment of a levy of €750 per annum.

The Value Added Tax Law

Under existing legislation, individuals who buy or construct a flat or house to be used as private main residence ate entitled to apply for a refund amounting to about €17.000 from the Government. This provision is replaced with the introduction of a reduced VAT rate of 5% on the purchase or construction of a house or flat to be used as private main residence, provided the area of the property does not exceed 200 square meters if the total area of the property does not exceed 300 sq.m).

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Limassol has been selected to be within the list of the top 50 from 500 destinations in southern Europe.

As a representative from the Limassol, Municipality announced, Limassol was chosen to be included in the list of ‘Fifty (50) excellent destinations in Southern Europe due to Quality of Beaches for 2011’.

The research took place, under the Union’s initiative in relation to the Beach and sea Areas-EUCC of the European program on Quality Coast, in more than 500 international destinations in southern Europe.

Part of the above mentioned list of one of the‘ 50 excellent Quality Coast 2011 – of Southern Europe destinations’ – was Pafos and Kouklia, which are both considered, internationally, as one of the most attractive destinations for tourists who wish to enjoy the natural and cultural heritage, local identity and environment.

The Mayors of the city-destinations which were awarded the above mentioned awards, were invited to the International Ceremony and Laboratory Quality Coast in Cyprus, which took place on the 13th May, in the medieval castle of Kouklia near Afrodite’s rock.

During the ceremony, Professor Johan Vande Lanotte delivered the certificates and the relative flags to the Mayors.

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