2023 Doing Business in Cyprus (UK Edition)
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DOING BUSINESS C YPRUS<br />
85<br />
UNITED KINGDOM EDITION<br />
SUBMISSION OF TAX RETURNS<br />
The tax year is the calendar year. Tax on employment <strong>in</strong>come is withheld by the<br />
employer under the PAYE system and remitted to the tax authorities.<br />
Self-employed <strong>in</strong>dividuals pay tax through the provisional and self-assessment<br />
systems. Tax returns must be filed electronically by 31 st of July follow<strong>in</strong>g the tax year<br />
for employees, 30 th of September for self-employed persons who are not required<br />
to file audited/reviewed f<strong>in</strong>ancial statements and 31 st of March of the year follow<strong>in</strong>g<br />
the year under consideration (i.e. 15 months from the year-end) for self-employed<br />
persons whose returns are accompanied by audited/reviewed f<strong>in</strong>ancial statements.<br />
Sole proprietors with an annual turnover of more than €70,000 are obliged to prepare<br />
f<strong>in</strong>ancial statements that are either audited or are subject to a review by a statutory<br />
auditor (<strong>in</strong> case their net turnover does not exceed the amount of €200,000 and the<br />
total value of the assets without deduct<strong>in</strong>g liabilities does not exceed the amount of<br />
€500,000).<br />
VALUE ADDED TAX<br />
Imposition of Value Added Tax (VAT) is imposed on the supply of all goods and services<br />
<strong>in</strong> <strong>Cyprus</strong>, on the acquisition of goods from other Member States and on the importation<br />
of goods from third countries. The standard rate of 19% applies to the supplies of all<br />
goods and services <strong>in</strong> <strong>Cyprus</strong> which are not subject to the zero rate, the reduced rates<br />
(3%, 5% and 9%) or are not exempt. <strong>Cyprus</strong> constitutes an attractive EU VAT jurisdiction<br />
apply<strong>in</strong>g several options permissible by the EU Directive, among others, a flexible VAT<br />
Group<strong>in</strong>g. As long as the pre-requisite l<strong>in</strong>ks are satisfied, and governmental revenues<br />
are not put <strong>in</strong>to jeopardy, related entities can form a VAT group disregard<strong>in</strong>g <strong>in</strong>tra-group<br />
transactions and hav<strong>in</strong>g a representative member submitt<strong>in</strong>g a s<strong>in</strong>gle VAT return.<br />
SPECIAL CONTRIBUTION FOR DEFENCE<br />
Limassol Seafront<br />
Special contribution for defence (SDC) is imposed on the dividend, <strong>in</strong>terest and rental<br />
<strong>in</strong>come earned by Cypriot tax resident and domiciled <strong>in</strong>dividuals. Non-domiciled<br />
Cypriot tax residents are exempt from SDC.
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