Cyprus - Andreas Neocleous & Co

CYPRUS
CYP/7
freely convertible and transferable balances with banks on the island. There is
no distinction between nationals of Cyprus, nationals of other EU member states
or third-country nationals.
Tax Regime
In General
The Director of Inland Revenue, who also is the Commissioner of Income Tax
and is responsible for tax policy and tax collection, administers the tax system in
Cyprus.
Cyprus has a modern tax system which is among the world's most businessfriendly.
It is fully compliant with EU and OECD best practice and Cyprus is on
the OECD's "white list" of jurisdictions complying with the global standard for
tax cooperation and exchange of information.
Cyprus residents are taxed on the basis of worldwide income, irrespective of
whether it is remitted to Cyprus. The tax year is the calendar year. An individual
is resident in Cyprus if he is physically present for more than 183 days in the tax
year. For companies, the test for residence is the locus of management and
control. A company is regarded as resident in Cyprus if it is managed and
controlled in Cyprus. Mere registration or incorporation in Cyprus may not be
enough to render a company liable to tax in Cyprus.
Non-resident individuals and companies are subject to tax on income accruing
or arising from sources in Cyprus. There is a comprehensive participation
exemption and a wide network of double tax treaties offering attractive tax
planning opportunities. Combined with the lowest corporate tax rate in the EU
and low rates for individuals, these make the Cyprus tax regime one of the most
attractive in the EU.
Value Added Tax
The value-added tax (VAT) registration threshold is €15,600 per annum.
Cyprus's standard rate of 17 per cent is among the lowest in the EU and reduced
rates of five per cent and eight per cent apply to certain goods and services.
Businesses that do not have trading activities within the EU need not register for
VAT but, if they do not, they will be unable to recover input tax.
Formation of Agency Relationship
Creation of Contract
A contract of agency may be created by:
• Express appointment;
• Implication of law from the conduct or situation of parties or from the
necessity of the case; or
(Release 2 – 2013)