TaxLegi 31.7.2024

Based on a Decree of the Council of Ministers dated 21/06/2024 (ΚΔΠ 209/2024), an extension is granted for the electronic submission of tax returns for the tax year 2023, by employees, pensioners, and self-employed individuals, as well as for the payment of the due tax.

The deadline for submitting the tax return for the tax year 2023 by individuals other than self-employed and self-employed who are not required to prepare audited accounts, as well as the deadline for the payment of the tax due according to the said tax return, is extended until 31st October 2024.

EY Cyprus is at your disposal for any information and/or clarifications required.

By:

Petros Liassides

Partner, Direct Tax

Petros.Liassides@cy.ey.com

Herodotos Hadjipavlou

Manager, Direct Tax

Herodotos.Hadjipavlou@cy.ey.com

On 4th July 2024, the Tax Department of Cyprus announced that submissions can be made, until 31st October 2024 without the imposition of an Administrative Fine, of the Withholding Taxes & Contributions Returns (Form T.D.7) that have not been submitted by the specified due date and relate to tax year 2019 and thereafter.

After 31st October 2024, charges as stipulated by the relevant law will be applied for any such returns that would be due for submission.

EY Cyprus is at your disposal for any information and/or clarifications required.

By:

Petros Liassides

Partner, Direct Tax

Petros.Liassides@cy.ey.com

Herodotos Hadjipavlou

Manager, Direct Tax

Herodotos.Hadjipavlou@cy.ey.com

On July 8, 2024, the Ministry of Finance – Tax Department, issued Circular 04/2024 ("Circular") “50% exemption from income tax on remuneration from employment exercised in the Republic” which relates to the amended article 8(23A) of the Income Tax Law.

Specifically, the Circular provides clarifications regarding the application of the exemption in accordance with the amended article 8(23A), as published on 30/06/2023, of the Income Tax Law and is extended to its practical application through several examples.

It is recommended that taxpayers which fall under the provisions of the amended article 8(23A) and took a position regarding their status prior to the issuance of the Circular, to reassess their position by taking into consideration the guidelines provided in the said circular.

EY Cyprus is at your disposal for any information and/or clarifications regarding the application of the amended article 8(23A) of the Income Tax Law.

By:

Petros Liassides

Partner, Direct Tax

Petros.Liassides@cy.ey.com

Herodotos Hadjipavlou

Manager, Direct Tax

Herodotos.Hadjipavlou@cy.ey.com

A new law amendment has been passed on 11/07/2024 by the House of Representatives, regarding the implementation of the EU framework for Blue Cards, a work and residence permit for non-EU highly skilled individuals that require mobility within the EU.

Some of the key points included in the amendment refer to:

• The ability to set admission volumes.
• Penalties and actions against employers who do not comply with their obligations as decided by the relevant law.
• A salary threshold for the granting of a Blue Card was established, set at 1 to 1.6 times the average gross annual salary of the member state.
• Relevant professional skills are now recognized as equivalent to professional qualifications, in specific professions in the field of information and communication technologies.
• Beneficiaries of International Protection are eligible for applying for a Blue Card.
• Additional rights were granted to Direct family members of Blue Card holders.
• Long-term and short-term mobility within the EU is allowed on simpler terms, after the completion of 12 months of employment in the first Member State.
• Access to Long-Term residence for Blue Card holders, through more flexible provisions.

It should be noted that the implementation of the new amendment will only commence after its publication to the official Gazette of the Republic, at which point the authorities responsible for the implementation will have to determine the applicable application forms and fees, exact documentation, application process, etc.

How we can help: Our Immigration experts can assist you in understanding all the recent changes, and guide you through the whole process of applying for Blue Card, as soon as the amendment is issued in the Republic’s Gazette.

By:

As per the Assessment and Collection of Taxes Law, every company  or individual (who derives income other than from emoluments) must pay by 31st of July 2024 an estimate of the taxable profit for (corporate) income tax purposes for the tax year 2024.

Even though according to the law, the due date for the payment of the 1st instalment is 31 July 2024, as long as the 1st instalment is paid before 31 August 2024, there should neither be a monetary charge nor any interest for late payment of tax.

1. The temporary tax on such income is payable in two equal instalments as follows:

• by 31 July 2024; and
• by 31 December 2024.

If the tax is not paid before the end of the month following the month the instalment is due (i.e. 31 August 2024 and 31 January 2025, respectively), interest is payable at the rate of 5% per annum. Interest is calculated on the basis of completed months of delay.

2. Furthermore, failure to pay the due tax by 31st of July and 31st of December will result to a monetary charge of 5% on the tax due for each instalment (in addition to the 5% per annum interest). However, in practice the imposition of the 5% monetary charge will be made only if the tax is not paid by the end of the following month to which it relates (i.e. 31 August 2024 and 31 January 2025 respectively for each instalment).

3. The estimate of chargeable income may be  revised (upwards or downwards) at any time before 31st of December 2024. If the estimate is revised upwards, interest is payable on the difference between the revised amount payable for each instalment due and the amount initially declared and paid. The interest is calculated for each completed month of delay for the period the instalment was due (e.g. if a revised estimation is prepared in September, the interest will be imposed only for the 1st instalment for one complete month). No monetary charge is imposed on the revised estimates on the proviso that the incremental tax liability is paid on the date the temporary tax is revised. If the estimated tax liability is revised downwards, the minimum amount that can be declared as temporary tax should be equal to the amount of the previous payment made.

4. If the estimated chargeable income (as finally revised) is less than 75% of the actual chargeable income as this will be declared on the submitted income tax return (Form TD4) for the year, then there will be an additional tax of 10% on the difference between actual tax payable and the temporary tax paid.

5. Any difference between the actual tax payable and the temporary tax paid for the year 2024 is payable by 1st of August 2025.

Payment of 2023 final tax and 2024 
Provisional tax payments can only be made 
via the Tax Portal System

Payment of the Provisional tax (Code 200) and Final Income Tax (Code 300) can be made via the Tax Portal  (https://taxportal.mof.gov.cy/) through the JCC smart website, via online banking from a Cypriot bank account using the payment’s reference code or via wire transfer payment from a foreign bank account, provided that the relevant Tax Liability has been created in the Tax Portal. 

In addition, any payments that are subject to interest and penalties or relating to revised provisional tax, can be made through the above payment methods as well.

Repercussions of late payment of tax for Companies and Self-Employed individuals preparing audited financial statements for the year 2023. 

1. Any difference between the actual income tax payable for the year 2023 and the temporary tax paid during that year is payable by 1 August 2024.  As explained above, in cases where the temporary tax paid was less than 75% of the actual tax liability, a 10% additional tax is imposed on the outstanding balance. If payment is not made by 31 August 2024, interest will accrue at the applicable rate in force (currently 5% per annum) as from 1 August 2024 on the basis of completed months of delay.

2. Furthermore, failure to pay the outstanding balance in respect of the 2023 income tax by 31 August 2024 will result to a fixed monetary charge of 5% on the tax due. In addition, any outstanding tax (as this is declared on the income tax return) is subject to an additional monetary charge of 5% in case it is not paid within 60 days after the last day of the deadline for the payment of the relevant tax liability for that specific tax year (i.e. Failure to pay for tax year 2023 by 1 October 2024 should result to an additional 5% monetary charge).

Final remarks

The information in this memorandum is only intended to provide general guidelines and is not intended to be complete or exhaustive.  This memorandum is distributed   with the understanding that EY Cyprus Advisory Services Ltd is not responsible for the result of any actions taken on the basis of information included therein. EY Cyprus Advisory Services Ltd is not attempting through this memorandum to render any tax or legal advice. It is recommended to consult with professional advisors for advice concerning specific matters before making any decision. This memorandum reflects current information as of 1 July 2024 based on tax laws currently in force and tax circulars issued by the Cypriot tax authorities.  

By:

Philippos Raptopoulos

Partner, Head of Tax and Legal Services

Tel: +357 25 209 740

Philippos.Raptopoulos@cy.ey.com

Petros Liassides

Partner, Direct Tax

Tel: +357 22 209 797

Petros.Liassides@cy.ey.com

Myria Saparilla

Partner, Direct Tax 

Tel: +357 96 795 037

Myria.Saparilla@cy.ey.com

Glykeria Terpizi
Senior Manager, Direct Tax

Tel: +357 96 795 716

Glykeria.Tepizi@cy.ey.com