Tag Archives: Cyprus

  • -

Polish CFC Rules

Tags : 

SOLUTIONS TO POLISH CFC RULES

Our analysis of the Polish CFC Rules in the new Polish Act which came into force 1 January 2015 appears below and is separated into two sections:

I.    CFC legislation in Poland and how this affects Cyprus.

II.   Suggested solution to the CFC provisions.

The content is restricted for subscribed users only. Please register to our website or contact us on info@lsts.com.cy.

 *image

 


  • -

Cyprus Russia Double Tax Treaty

Tags : 

CYPRUS RUSSIA DOUBLE TAX TREATY

Presentation Contents:
  • Significant Developments in 2012
  • Cyprus Tax Provisions as a Holding Jurisdiction
  • Cyprus Tax Provisions as a Financing Jurisdiction
  • Cyprus Tax Provisions as an Intellectual Property Vehicle
  • Cyprus Tax Provisions – Payments by Russia
  • Cyprus Russia Double Tax Treaty – Effective changes
  • Cyprus Structures in Investing in Russia

The content is restricted for subscribed users only. Please register to our website or contact us on info@lsts.com.cy.

*image


  • -

Cyprus Poland Double Tax Treaty

Tags : 

CYPRUS POLAND DOUBLE TAX TREATY

Presentation Contents:
  • Desired Attributes for a Holding Location
  • Cyprus Corporation Tax
  • Management Control
  • Cyprus Poland Double Tax Treaty [Jan 2013]
  • Benefits of Cyprus Entity
  • Cyprus Company Structures
  • Summary
The content is restricted for subscribed users only. Please register to our website or contact us on info@lsts.com.cy.

*image


  • -
Permanent Residence in Cyprus

Permanent Residence in Cyprus

Tags : 

PERMANENT RESIDENCE IN CYPRUS

In January 2014 the Ministry of Interior in Cyprus has revised the criteria for granting a permanent residence in Cyprus (an immigration permit) providing a new expedited procedure for third country nationals who invest in Cyprus.

To qualify for the permanent residence in Cyprus a third-party national must purchase in Cyprus one or two, new real estate properties with total purchase cost of at least €300.000 (excluding VAT) and have a secure and steady income, provisions that along with the fact that such permanent residence can be obtained within 2 to 3 months make Cyprus one of the easiest countries to attain a permanent residence.

A third-party national having obtained a permanent residence has the right to permanently reside in Cyprus along with the family who can also obtain the permanent residency (married spouse, children under 18 years old and financially dependent children up to 25 years old).

The benefits of obtaining a permanent residency as well as the detailed requirements are set below:

Benefits:

A third-party national having a permanent residence is exempt from the immigration entry procedures in Cyprus (i.e. no Visa required) and can permanently reside in Cyprus continuously enjoying the benefits offered by a Mediterranean Island such as warm sun, sparkling sea, welcoming people and wonderful scenery.

Cyprus is also expected to enter the Schengen Zone of Europe meaning that the holders of the permanent residence will be able to travel freely through Europe. Even though Cyprus is not currently in the Schengen Zone a holder of a permanent residence can very easily obtain a Schengen visa in a process that takes less than 1 hour.

Other benefits include amongst others the absence of inheritance tax in Cyprus, the low property taxes and lower tuition costs than in other EU countries.

Requirements:

In order for the permanent residence to be granted the third-party national applicant must meet the provisions as set below:

  • Deposit an amount of EUR30,000 in a Cyprus bank and pledge for 3 years;
  • Obtain a stable income of EUR30,000 per year together with his spouse increased by EUR5,000 for each dependent person;
  • Purchase in Cyprus one or two, new real estate properties with total purchase cost of at least €300.000 (excluding VAT). Properties can be 2 residences, or 1 residence & 1 office or 1 residence & 1 shop. At least €200.000 of the purchase cost must be settled. Obtaining property in the name of a company into which the applicant or spouse are the sole shareholders is also acceptable;
  • Have a clean criminal record;
  • The applicant and his spouse shall confirm that they do not intend to be employed in Cyprus in any direct or indirect manner.
  • The applicant and his family included in the Immigration Permit, must visit Cyprus at least once every two years.

The applications are reviewed by the Civil Registry and Migration Department and the Minister of Interior grants final approval with the whole process lasting for 2 to 3 months.

How We Can Assist You:

LSTS will guide you through the application process and act as your agent in submitting all the required documents successfully

We will provide clarification and advice on the matters of your concern, assist in drafting the required documents and continuously reviewing the documentation to ensure the quality and success of the process.

We will also closely monitor the status of the review of the application by the authorities and address any issues that may arise providing complete support throughout the process for a successful outcome.

*image


  • -

Cyprus UK Double Tax Treaty

Tags : 

Cyprus UK Double Tax Treaty

  • Cyprus UK Double Tax Treaty
  • Cyprus Holding Company
  • Cyprus Financing Company
  • Financing Company structure using Cyprus Incorporated Maltese Resident
  • Cyprus – Luxemburg Financing Structure
  • Cyprus Holding Company – Real Estate
  • Cyprus SPV for trading in “titles
  • Shipping companies in Cyprus
  • Key considerations
  • Summary

*image

 


  • 0
Naturalisation of Investors in Cyprus

Naturalisation of Investors in Cyprus

Tags : 

NATURALISATION OF INVESTORS IN CYPRUS

On 19 March 2014 the Council of Ministers of the Republic of Cyprus (“Cyprus”) revised its previous criteria and conditions dated 24 May 2013 for the Naturalisation by Exception of non-Cypriot entrepreneurs investing in Cyprus (Cyprus Citizenship “CC”). A non-Cypriot citizen, who meets one of the below economic criteria (A) may apply for the acquisition of the CC through Naturalisation by Exception, either:

i. personally

or

ii. through a company / companies in which he / she participates as a shareholder; proportionally based on the percentage of participation,

or

iii. as a high-ranking senior manager of such company / companies that meet the economic criteria (A) provided that:

a. he / she receives such a remuneration that generates for the Republic tax revenue of at least €100.000 for a three (3) year period and that;

b. this tax has already been paid or prepaid.

LSTS will assess the eligibility of the applicants based on their current position, advise on the additional actions needed and assist them in successfully and efficiently obtaining the Cyprus citizenship by exception.

A. Criteria

Α.1 Investment in government bonds: The applicant must have purchased Cyprus bonds of at least €5,0 million. or Α.2 Investment in financial assets of Cypriot companies or Cypriot organizations: The applicant must have purchased financial assets of Cypriot companies or Cypriot organizations (bonds / securities / debentures registered and issued in Cyprus) of at least €5,0 million; purchased either at issuance or subsequently by the market.

or

Α.3 Investment in real estate, land development and infrastructure projects: The applicant must have made an investment of at least € 5,0 million for the purchase or construction of buildings or for the construction of other land development projects (residential or commercial developments, developments in the tourism sector or other infrastructure projects).

or

Α.4 Purchase or creation or participation in Cypriot businesses or companies: The applicant must have made an investment of at least € 5,0 million in the purchase, creation or participation in businesses or companies, that are based and operating in Cyprus. These businesses or companies should evidently have a tangible presence in Cyprus and employ at least five (5) Cypriot citizens.

*It is noted that the mandatory conversion of deposits into shares is included in this criterion.

or

Α.5 Deposits in Cypriot banks: The applicant must have personal fixed term deposits for three years in Cypriot banks or deposits of privately owned companies or trusts (in which he / she is the beneficiary owner) in Cyprus of at least €5,0 million.

or

Α.6 Combination of the aforementioned criteria Α.1 to Α.5: The applicant is required to have a combination of the above A.1 (Investment in Government bonds), A.2 (Investment in financial assets of Cypriot companies or Cypriot organizations), A.3 (Investment in real estate, land development or infrastructure projects), A.4 (Purchase or creation or participation in Cypriot businesses and companies) and A.5 (Deposits in Cypriot Banks) amounting to at least €5,0 million.

or

Α.7 Persons whose deposits with the Popular Bank Public Company Ltd have been impaired due to the measures implemented after 15 March 2013: The applicant has incurred an impairment in deposits amounting to a total of at least €3,0 million. In the case where the applicant has incurred an impairment in his / her deposits under €3,0 million he/she may apply, having made an additional investment through the criteria A.1 to A.5 for the balance of the required amount of the above mentioned criteria.

or

Α.8 Major Collective Investments: The Council of Ministers shall have the right on special occasions, to reduce the above criteria Α.1 to A.4:

i. To €2,5 million for investors, who demonstrably participate in a special collective investment scheme, provided that the total value of the investment is at least €12,5 million.

ii. To €2,0 million for investors who demonstrably participate in a special collective investment scheme, provided that the total value of the investment is more than €12,5 million. It is noted that this present provision (i), will be in force until the 1st of June 2014.

In addition, it is noted that for the above mentioned provisions (i) and (ii), the investment for the Criteria Α.1 to Α.4 may be realized through a different sales rep / provider (physical or legal entity).

B. Terms and Conditions

In addition to meeting the above criteria the applicant must:

i. have a clean criminal record and not be included on the list of persons whose property is ordered to be frozen within the boundaries of the EU, and;

ii. in all cases listed in Criteria (A), hold a permanent privately owned residence in Cyprus, the purchase price of which must be at least €500.000, plus V.A.T.

  • members of the same family, which apply separately as investors, can collectively acquire a residence, provided that the total value of this home-property covers the amount of € 500.000 per each applicant.

iii. have concluded the necessary investments during the three (3) years preceding the date of the application and retain the said investments for a period of at least three (3) years since the date of the Naturalisation.

iv. the CC may be revoked if it has been ascertained that any condition has been breached.

How We Can Assist You:

LSTS will guide you through the application process and act as your agent in submitting all the required documents successfully.

We will provide clarification and advice on the matters of your concern, assist in drafting the required documents and continuously reviewing the documentation to ensure the quality and success of the process.

We will also closely monitor the status of the review of the application by the authorities and address any issues that may arise providing complete support throughout the process for a successful outcome.

*image


  • -

Yacht Registration

Tags : 

Yacht Registration: Cyprus the Preferred Location

 

YACHT LEASING SCHEME

 

On 13 March 2012, the Cyprus VAT Authorities announced the implementation of a new yacht leasing scheme though the issue of Circular 163 (updated under Circular 198 issued on 25th November 2015) (the “Yacht Leasing Scheme”) making Cyprus one of the most attractive EU jurisdictions for yacht registration.

As a result of the Yacht Leasing Scheme, the VAT on the purchase of a yacht can be reduced to as low as 2.42% on the initial value of the yacht, a rate that compares favorably to the 5.4% applicable in Malta under their corresponding yacht leasing scheme.

Under the Yacht Leasing Scheme a Cyprus company can enter into a lease-sale agreement of a yacht with a third-party paying only a percentage of VAT compared to the standard VAT rate of 19%. Such percentage is based on the time the yacht is deemed to sail within EU waters and, as analytically set below, this percentage has been predefined by the Cyprus VAT authorities based on the length and the type of yacht (motor or sailing).

 

GUIDANCE TO THE YACHT LEASING SCHEME

 

Interpretation

The yacht leasing agreement is an agreement whereby the lessor (the owner of the yacht) contracts the use of the yacht to the lessee (the person who leases the yacht) in return for a consideration.

Such an agreement can, at the end of the lease period, provide the option to the lessee to purchase the yacht at a fraction of the original price. Such final purchase is strictly an option which may be exercised by the lessee, at the end of the lease period, for a separate consideration.

Vat Treatment

For VAT purposes, the leasing of the yacht is considered as a supply of services with the right of deduction of input VAT by the lessor. This supply of services by the lessor is taxable at the basic VAT rate of 19% but only to the extent that the leased yacht is used within the territorial waters of the European Union (“EU”) (refer to Table A and Table B below).

A strict condition which applies is that the lessor must be a company registered in Cyprus, whereas the lessee can be any natural or legal person, irrespective of country of incorporation or residency[1].

From 1st January 2013 the place of supply of pleasure yachts (except short-term leases) is the country where the yacht is made available to the recipient-lessee.

Calculation of Use in EU Territorial Waters

For the purpose of calculating the use of a yacht within EU territorial waters and due to the inherent difficulty of tracing the movements of each yacht in order to determine the time that the yacht is used within the territorial waters of the EU and the time it is used outside the EU, the Yacht Leasing Scheme provides that Cyprus VAT will only be applied on a percentage of the lease depending on the length and type of the yacht (motor or sailing yachts), without the need to maintain for VAT purposes, any detailed record or log books of the movements of the yacht.

 

VAT RATES APPLICABLE

 

Tables by the Cyprus VAT authorities setting the applicable presumed percentage of use of the yacht in EU territorial waters and the effective VAT rate:

Length of yacht Presumed percentage of use within EU territorial waters Effective VAT rate on lease payments*
Length over 65 meters 10% 2.42%
Length between 45.01 and 65 meters 15% 3.72%
Length between 24.01 and 45 meters 20% 37%
Length between 14.01 and 24 meters 30% 6.32%
Length between 8.01 and 14 meters 50% 10.21%
Length up to 8 meters 60% 12.16%
Boats allowed to sail only within protected waters 100% 19%
Length of yacht Presumed percentage of use within EU territorial waters Effective VAT rate on lease payments*
Length over 65 meters 10% 2.42%
Length between 45.01 and 65 meters 15% 3.72%
Length between 24.01 and 45 meters 20% 37%
Length between 20.01 and 24 meters 30% 6.32%
Length between 10.01 and 20 meters 50% 10.21%
Length up to 10 meters 60% 12.16%

* The effective VAT rate takes also into account that the final installment for the purchase of the yacht should not be less than 2.5% of the initial value of the yacht and that such final payment will be subject to the standard VAT rate applicable (i.e. 19% without any discount on presumed  percentage of use within EU territorial waters ).

 

CONDITIONS

 

ALL of the following conditions must be met in order for the VAT treatment prescribed in the Yacht Leasing Scheme to apply:

  • A lease agreement is concluded between a Cyprus company registered for VAT in Cyprus, and be any natural or legal person, irrespective of country of incorporation or residency[2].
  • The yacht arrives in Cyprus within 1 month from the date of inception of the lease agreement. Any extension of aforementioned time limit may only be given by the VAT Commissioner. Such extension shall not exceed, under any circumstances, the time at which the option to purchase the yacht is exercised.
  • At the inception of the lease agreement an initial payment amounting to at least 40% of the value of the yacht must be paid by the lessee to the lessor.
  • Lease payments should be payable on a monthly basis and the agreement for the leasing of the yacht must not be less than 3 months (91 days) and in no circumstances more than 48 months.
  • The lessor is expected to have a profit from the lease agreement of at least 5% of the total value of the yacht.  At the inception of the lease agreement, the total amount of the lease payments on which the VAT is accounted, is increased by the half of the profit i.e. 2.5%.
  • The yacht may be purchased outright by the lessee at the end of the lease period. The final payment should not be less than 2.5% of the initial value of the yacht. Such final payment will be subject to the standard VAT rate in effect at the date of payment (i.e. 19%).
  • A written approval must be received in advance by the Commissioner of VAT, who will calculate the presumed percentages of use within the EU territorial waters. The application should be accompanied by the certificate indicating the price of the yacht (surveyors valuation and bill of sale) along with the lease agreement between the lessor and the lessee.
 

VAT CERTIFICATE

 

On entering into the scheme, the VAT Authorities will issue a provisional VAT paid certificate. In the case where the lessee exercises the option to buy the yacht at the end of the lease period, the VAT authorities will issue a certificate to the lessee confirming full payment of the total VAT liability, provided that all the VAT liability has been paid.

 

OTHER TAXES

 

Stamp duty:

Cyprus stamp duty is levied on ‘documents’ (i.e. written agreements/contracts) relating to assets located in Cyprus and/or matters or things taking place in Cyprus.

Stamp duty is calculated on the value of the agreement at 0% for the first €5,000, 0.15% between €5,001 and €170,000 and at 0.2% thereafter. As of March 2014 onwards, stamp duty due on agreements effected is capped to a maximum of €20,000 per stampable agreement. The person legally liable to pay such stamp duty (unless otherwise stated on the agreement) is the purchaser. The due date for such stamp duty payment is within 30 days from the day of the ‘signing’ of a document which is considered to be subject to stamp duty.

In order to be able to obtain the approval of the Cyprus VAT Authorities to use the Yacht Leasing Scheme, the lease agreement must be duly stamped.

Income tax:

In addition to the VAT liability on the Yacht Leasing scheme there are also income tax implications resulting from the acquisition, leasing and usage of a pleasure boat under the scheme. These are set below:

  1. The lessor company is subject to 12.5% Corporation tax on 5% of the value of the vessel (section 33 of Income Tax Act
  2. Any expenses such as accounting, audit e.t.c. will be disallowed in reaching the net margin of 5%
  3. No capital allowance is allowed to the lessor

 

PRACTICAL EXAMPLE

 

Yacht information
   
Value of the yacht € 21,000,000
Length 40 meters
Type of yacht Motor yacht
Presumed use in EU (Table A) 20%
Monthly instalments – Calculation
 
Total value of yacht 21,000,000
2.5% of required profit 525,000
Total value plus 2.5% of expected profit 21,525,000
Less balloon payment (40% of value) 8,400,000
Total lease instalments 13,125,000 (273,437.50 x 48 instalments)
Residual value 2.5% of total value 525,000
Total cash paid to lessor 22,050,000
VAT and Tax liability calculation
      Year 1 Year 2 Year 3 Year 4 Total
     
VAT Impact   Effective VAT rate          
Balloon payment 8,400,000 3.8% 319,200       319,200
Monthly lease payments 273,438 3.8% 124,688 124,688 124,687 124,687 498,750
Residual value 525,000 19%       99,750 99,750
Total VAT             917,700
Tax impact   Effective Income tax rate          
Taxable profit for the year 1,050,000   262,500 262,500 262,500 262,500 1,050,000
Income tax per year   12.5% 32,813 32,813 32,812 32,812 131,250
Total VAT and Income Tax             1,048,950
Effective tax rate             5.00%

From the above table it is concluded that the effective rate of tax for the particular yacht is 5.00% (€1,048,950/€21,000,000).

 

PROPOSED STRUCTURE

 

 

 

 

HOW CAN LSTS ASSIST YOU

 

  • Set up the required legal entities to hold the yacht
  • Draft the required lease agreement
  • File all necessary documents for participating in the scheme
  • Comply with all subsequent requirements after joining the scheme

[1] Even though the lessee can be any natural of legal person, irrespective of country of incorporation or residency, we recommend that a Cyprus company is also used.

[2] Even though the lessee can be any natural of legal person, irrespective of country of incorporation or residency, we recommend that a Cyprus company is also used.

[3] The effective rate is calculated as the presumed percentage of use within EU territorial waters (i.e. 20%) on the standard VAT rate (i.e. 19%)

[4]The final payment should not be less than 2.5% of the initial value of the yacht. Such final payment will be subject to the standard VAT rate in effect at the date of payment (i.e. 19% from 2014)

 


  • -

Cyprus Financing Tax Structures

Tags : 

CYPRUS FINANCING TAX STRUCTURES

BACK TO BACK LOANS

One Tier Financing Company

Provisions of the Law

Article 33 of the Income Tax Law 2002 (the “Law”) gives the Inland Revenue Department the power to adjust transactions between connected companies, entities and individuals on an arm’s-length basis and to tax the resulting deemed profits, gains or benefits.

The Income Tax Office (ITO) was invoking Article 33 when a loan from a Cyprus company to a related party was considered below market rates and imposing a deemed interest income on the Cyprus company which it sought to tax at, at the applicable income tax rates at that time.

For example, if a Cyprus company had provided a loan of 0% to a related party then the ITO was imposing tax on the deemed interest as if that Cyprus company had given a loan at market rates (i.e. 5%).

In relation to back-to-back loans there was an uncertainty as to which was the minimum margin which would be acceptable by the ITO as being at arm’s length and, therefore, complying with Article 33 of the Law.

In 2011 after numerous requests by members of the Institute of Certified Public Accountants in Cyprus ( ICPAC) to address the issue of the back-to-back loans with the Income Tax Office and formalise what was by that time an unofficial common practice as to the minimum acceptable margins on the back to back loans, the ICPAC sent a letter to the ITO requesting an official guidance.

On 27 June 2011 the ITO has responded to the request of ICPAC officially setting the definition of the back to back loans as well as the detailed guidance on these loans.

The guidance provided is set out below:

The content is restricted for subscribed users only. Please register to our website or contact us on info@lsts.com.cy.

*image


  • -

Protection of Intellectual Property Rights through Cyprus

Tags : 

Intellectual Property in Cyprus

In July 2012 the Cyprus Income Tax Law, Law 118 of 2002 was amended to provide, amongst others, very beneficial tax incentives and exceptions relating to income deriving from intellectual property rights (“IP”). The legislation adopts the beneficial principles of already established and successfully implemented tax legislation in European countries such as Luxembourg, Ireland and UK and gives Cyprus a competitive edge in the tax planning arena when dealing with IP.

The basis of the legislation adopted by governments in relation to the beneficial tax regime on IP is the provision of additional incentives for companies to retain and commercialise existing patents and to develop new innovative patented products, with an indirect benefit to the public such as the example of Nokia and Finland.

The mobility attributes of IP, derived from its non-tangible nature, makes it ideal for cross border planning as it can easily be transferred between different jurisdictions, subject always to prevailing tax legislations and circumstances.

This article analyses the provisions of the new IP tax legislation and sets examples of how a Cyprus company can be used for tax planning purposes in both groups owning IP or individuals entrepreneurs looking to benefit from the registration and development of the IP.

The provisions of the revised tax legislation relating to IP and which became effective from 1 January 2012 are analysed below:

DIRECT TAX BENEFITS
Amortisation period – 5 years

The cost of acquisition or development cost of IP by a Cyprus company (“CypCo”) is now amortised for 5 years, yielding a write down allowance of 20% per year.

The importance of this provision is that amortisation for tax purposes is no longer linked to the useful life of the IP (i.e. a patent with validity of 25 years would get a 4% writing down allowance), which yields considerable cash flow benefits by deferring the tax liabilities, especially if the value of the IP is high.

Exemption of 80% of profits deriving from the IP

80% of the profits earned from the use of IP (including any compensation for improper use) are exempt for tax purposes. The 80% exemption applies on the net profit after deduction of all direct expenses including amortisation.

Exemption of 80% of profits from disposal of the IP

80% of the profits from the disposal of the IP is exempt for tax purposes. The 80% exemption applies on the net profit after deduction of all direct expenses.

Further deduction of indirect expenses resulting in even lower effective tax rate

In addition to the direct expenses being deductible before the 80% exemption, such being  the amortisation and the interest costs of financing the acquisition, any indirect expenses that can properly be substantiated are deductible from the remaining profit of the CypCo. Applying the Cyprus corporate tax rate of 12.5% makes the effective tax rate on income derived from IP lower than 2.5%, which is the lowest in EU.

Furthermore any income earned by the CypCo relating to IP and paid to the shareholder in the form of dividends is exempt from any withholding tax in Cyprus thus resulting in minimum tax leakage in Cyprus when a CypCo holds the IP and generates income from it which it then distributes to its shareholders.

TAX BENEFICIAL STRUCTURE

In addition to the benefits provided by the provisions in the new tax legislation, Cyprus has an extensive network of double tax treaties and is also a member of the EU, giving CypCos the benefits of the EU Interest and Royalties directive resulting in low to zero withholding taxes by the payer of the royalties. Any withholding tax on royalties can be used as a credit when calculating the tax payable in Cyprus.

Below is the beneficial tax structure as well as an example for the tax calculation (Click image to enlarge in a new window):

Cyprus IP Structures

INDIRECT TAX BENEFITS

In light of the increasing court cases questioning the substance of intermediary companies acting as sub-licensees to obtain tax treaty benefits, which are often being viewed as “conduits” such as the case of Russian Monetka [1], the recent changes in Cyprus tax legislation remove one area of vulnerability from the taxpayer’s point of view, namely the need for an offshore company holding the IP and an intermediate ‘‘conduit’ receiving IP generated income.

Since the CypCo will be the legal owner of the IP and provided that sufficient substance exists in the CypCo, such as skilled Directors not controlled by a Russian company and evidence of the IP being developed or enhanced in Cyprus then the beneficial ownership principle as set in the Russia –Cyprus double tax treaty is more likely to be met.

Note that it is crucial that sufficient documentation exists regarding the IP development that would assist in making assertions for defence during a tax audit.

CONCLUSION

The attributes that investors seeks from a jurisdiction to hold the IP is the low effective tax rate and also the legal protection of the IP.

Cyprus under the new provisions of the legislation benefits from a very low effective tax rate on the IP generated revenue and also has a mature and sophisticated legal framework based on the English law principles providing the appropriate legal protection on IP. It also has a highly skilled and well-educated IT workforce which can be utilised in the development or enhancement of the IP thus providing additional substance making Cyprus the most beneficial jurisdiction to holding and deriving revenue from IP.


[1] Element-TradeLLC, a company incorporated and resident in Russia, exploited the trademark MONETKA and paid royalties to a Cyprus company acting as an intermediary licensing vehicle. The Cyprus company paid the royalties it received to the ultimate owner of the trademark, a British Virgin Islands company.

The Russian tax authorities contended that this structure was introduced purely for the purpose of avoiding withholding taxes on royalties paid from Russia to a company in the British Virgin Islands, which is on the Russian Ministry of Finance’s blacklist of tax havens, by routing the royalties through Cyprus. On 17 May , 2012 the Federal Arbitrazh Court of the Urals District in Russia issued its ruling in favour of the taxpayer. That was a marginal “win” on formal grounds and had representation been better in the case the decision could have been different.

*image


  • -

Cyprus India Double Tax Treaty [Developments]

Tags : 

CYPRUS INDIA DOUBLE TAX TREATY

News and Updates

HC dismisses plea against blacklisting of Cyprus [29/01/2015]

Cyprus accepts India’s condition [17/09/2014]

India-Cyprus tax treaty talks at an impasse [15/09/2014]

India Reviewing Cyprus Tax Treaty to Reduce Withholding Tax Issues [18/06/2014]

New double taxation avoidance agreement signed by September the latest [6/06/2014]

Finmin officials to visit Cyprus to negotiate tax agreement [24/04/2014]

India-Cyprus double tax avoidance agreement to be finalised soon  [11/02/2014]

Decision to blacklist Cyprus for not providing tax data will hit developers and realty funds [6/02/2014]

India hopes for friendly resolution of tax snag [4/02/2014]

India in Talks with Mauritius and Cyprus to Prevent Tax Base Erosion  [10/01/2014]

India to withdraw order suspending tax benefits [4/12 /2013]

Lex Aspire Journal Vol. 1 – No. 6 December 2013 [12/12/13]

Stricter information sharing in India – Cyprus Treaty [5/12/2013]

Press Release from the Cyprus Ministry of Finance [3/12/2013]

  • The renegotiation of the existing DTT between Cyprus and India which entered into force on 21st December 1994, a new DTT is expected to be finalised soon.
  • It was further agreed that, based on the discussions held, once the notification of Cyprus as a “notified jurisdictional area” under section 94A of the Indian Income-tax Act 1961 is rescinded, it will be with retrospective effect from 1 November 2013, date when the notification of India was issued.

“Cyprus to conform with tax issues to avoid Indian & Russian black-list” [30/11/2013]

Cyprus allays investor fears after India rap”  [11/11/2013]

  • The Minister of Foreign Affairs of the Republic of Cyprus, Mr. Ioannis Kasoulides, held a bilateral meeting with the Minister of Foreign Affairs of India, Mr. Salman Khurshid, in the context of their participation in the Asia – Europe Meeting (ASEM) which took place in New Delhi between 11 – 12 November 2013.
  • The meeting was held in a very positive atmosphere, where the two Ministers reaffirmed the close and historic ties of friendship between Cyprus and India.
  • At the same time, the two sides agreed to remain committed in working together to resolve issues that arose regarding the Agreement on Avoidance of Double Taxation.

Although we are surprised by the unilateral action taken by a friendly state, India, towards Cyprus, we are confident that the matter will be resolved in November as Cyprus is committed to cooperating with India in a review of the Agreement. We are certain that much certainty will be instilled once the matter is resolved that will benefit both India and Cyprus.

1. It is important to stress that the Cyprus India DTT is still valid, further to the announcement made by the Cyprus Ministry of Finance;

2. Cyprus has taken the matter seriously and a visit is due in India in order to review the agreement and overcome the difficulties within November.

3. We are monitoring the matter and have contributed an article to Indian newspaper “Times of India: Cyprus allays investor fears after India rap” in this respect.

*image


Search For

Twitter

Social Media

Twitter
Visit Us
LinkedIn
Facebook
Facebook
Google+
Google+
http://www.lsts.com.cy/tag/cyprus/page/2">
RSS
Follow by Email
SHARE

Review our Updated Cyprus Double Tax Treaty Network

Twitter
Visit Us
LinkedIn
Facebook
Facebook
Google+
Google+
http://www.lsts.com.cy/tag/cyprus/page/2">
RSS
Follow by Email
SHARE