A favorable government scheme for companies wishing to relocate to Cyprus with the option of expedited employment of Third Country Nationals (TCN). The company will need to be registered with the Business Facilitation Unit and the Civil Registry and Migration Department. As a main criterion, the majority of the company's shares should be owned by third-country nationals (in the event that the percentage of the foreign participation in the share capital of the Company is equal to or below 50% of the total share capital, the Company is eligible when this percentage of the share capital represents an amount equal to or greater than the amount of €200.000).
On 30/11/2022, the Council of Ministers amended the eligibility criteria of foreign interest companies and specifically included the criterion of a company’s obligation to prove an initial investment in the Republic of at least €200,000, which should be proven by presenting the appropriate certificates.
On 22 November 2022, the European Bank Authority published guidelines on the use of remote customer onboarding solutions (“EBA Guidelines”) when performing customer due diligence (“CDD”) procedures whilst complying with the anti-money laundering and countering the financing of terrorism (“AML & CFT”) rules under EU Directive 2015/849.
The EBA Guidelines were issued in an effort to address the increasing demand of FinTech companies to onboard clients remotely through the use of technology tools. The pressing need for onboarding via means other than the production of certified documentation in original or copy form that has been historically used, arose dramatically after the COVID-19 outbreak, when companies and customers were not able to have face-to-face meetings nor Know-Your-Client (“KYC”) documentation in forms permissible up to that point.
The purpose of the EBA Guidelines is to illustrate the safeguards that credit and financial institutions should adopt when performing remote onboarding processes to ensure the robustness of the KYC documentation received and that AML/CFT obligations are not compromised.
The key considerations for institutions intending to make use of remote onboarding solutions are the following:
1. Before adopting a new remote onboarding solution, institutions must carry out a pre-implementation assessment to check, among others, the appropriateness of the solution, and identify how the risks that such solution entails can be mitigated.
2. Internal policies should be set in place, outlining
- How the pre-implementation assessment of the new remote onboarding solution will be conducted,
- Remedial measures that will be followed in case a risk has materialised or where errors have been identified and how the remote solution's adequacy and reliability will be monitored on an ongoing basis.
- The types of data, documentation and other information institutions will use to identify and verify the identity of a customer.
3. Data collected via the new remote onboarding solution should be up-to-date, in a readable format and of sufficient quality, time-stamped and stored securely to enable future revisits for verification purposes.
4. The EBA Guidelines provide instructions on how different types of data should be assessed, without prescribing the type of data which must be collected or the method of collection.
The EBA’s technologically-neutral approach affords institutions the flexibility to customise the remote onboarding solution in a manner that suits their model of operations, as long as its pre-implementation assessment is positive.
Institutions using or intending to use third-party providers for their CDD should ensure their outsourcing arrangements include a duty on service providers to effectively implement and comply with the institution’s remote customer onboarding policies.
Our Financial Services, Funds and Capital Markets team can support clients with the implementation of remote customer onboarding procedures in line with the new guidelines, including but not limited to, the revision of existing AML manuals and policies and the drafting of outsourcing agreements with third party vendors offering remote onboarding solutions.
For the full EBA Guidelines document, click here.
On 25 November 2022 the General Healthcare System (GHS) amending Law (No.180), which relates to amendments in article 2 of the GHS Law, was published in the official Gazette of the Republic.
Amendments in Article 2
1) The purpose of the amending GHS Law is to amend the definition of the term "emoluments" so that, emoluments of the seafarers, who are non-permanent residents of the Republic, are exempted from GHS contributions. As such, the new definition of "emoluments" reads as follows:
« “emoluments” -
(a) in relation to an employee, has the meaning attributed to this term by the Social Insurance Law, excluding the emoluments of seafarers who are non-permanent residents of the Republic:
Provided that, for the purposes of this Law, seafarers are also considered workers in inland navigation …»
2) The said amending GHS law also includes an amendment in the definition of the term "income" so that the relevant term does not include, inter alia, lump sums or gratuities paid to employees in the public, broader public and private sector by Provident Funds, Pension Funds or Plans, as well as any income derived from the sources specified in paragraph (b) of subsections (1) and (2) of article 5, respectively, of the Income Tax Law in relation to salaried services of non-permanent resident seafarers of the Republic.
Therefore, the new definition of "income" reads as follows1:
« "income" means the income of any natural person derived from the sources specified in article 5 of the Income Tax Law, other than emoluments or pension and includes dividends, as specified in the Special Defence Contribution Law, excluding any lump sum or gratuity paid to employees in the public, broader public and private sectors, from Provident Funds, Schemes or Pension Funds, as well as any income derived from the sources specified in paragraph (b) of subsections (1) and (2) of article 5, respectively, of the Income Tax Law in relation to salaried services of non-permanent resident seafarers of the Republic:
Provided that, for the purposes of this Law, seafarers are also considered workers in inland navigation·…»
Finally, the specific amending GHS law defines the term "seafarer" as a «… person who works in any capacity on board a ship, including the captain∙».
Read the greek version here.
31st of December 2022 is the last date for:
Submission of a revised Temporary Tax return for the year 2022:
Upwards revision of the Temporary Tax return for the year 2022:
- In case the Taxpayer will proceed with the upward revision of the initial Temporary Tax submitted for the year 2022, such revision can be created through the Tax Portal (i.e. no requirement for the submission of the TD6 form) by the 31st of December 2022.
- It is noted that any excess amount (difference) between the initial and the revised 1st instalment can be paid either through Internet Banking to the Tax Authorities or via wire transfer before the 31st of December 2022 in order to avoid the imposition of additional interest and penalties for the month of December 2022.
- Upon revision, the deadline for the payment of the revised upward 2nd instalment is by 31st of December 2022 and can be paid either through Internet Banking or wire transfer. However, if the payment will be made before the 31st of January 2023, no interest and penalties will be imposed.
Downwards revision of the Temporary Tax return for the year 2022:
- In case the Taxpayer will proceed with the downward revision of the initial Temporary Tax submitted for the year 2022, such revision can be made only through the submission of a revised Provisional Tax return, (Form TD.5 for natural persons and Form TD.6 for legal persons), to the Tax Authorities various District Tax Offices via email, depending on the taxpayer's District Tax Office by the 31st of December 2022.
- Once the revised provisional form is processed by the Tax Authorities, the deadline for the payment of the payment of the 2nd instalment is by 31st December 2022 and can be made via through Internet Banking or via wire transfer. However, if the payment will be made before the 31st of January 2023, no interest and penalties will be impose.
Temporary Tax return for the year 2022 for the companies incorporated during 2022:
- Please refer to the attached Tax Alert previously issued during October by EY for the same matter for your reference.
No revision of the Temporary Tax return for the year 2022:
- The payment of the 2nd instalment of the 2022 Provisional tax can be made via through Internet Banking or via wire transfer by the 31st of January 2023.
SDC and GHS for the 2nd semester of 2022:
- Payment of the Special Defence contribution ("SDC") and General Healthcare System contributions ("GHS") for the 2nd semester of 2022 on rental income which has not been withheld by the tenant, on overseas bank interest income and on any dividend income which may be subject to SDC and GHS shall need to be made no later than the 31st of December 2022.
Special Contribution for Defence for the distributable profits of the year 2020 for deemed distribution purposes:
- The payment of SDC for the distributable profits of the year 2020 for deemed distribution purposes shall need to be made by the 31st of January 2023.
Note: Deemed distribution does not apply in respect to profits that are directly or indirectly attributable to shareholders that are non-resident in Cyprus or in the case of Individual shareholders not considered to be tax resident and domiciled in Cyprus.
- Philippos Raptopoulos
- Petros Liassides
- Myria Saparilla
- Michalis Katarzis
- Panayiotis Gregoriou
- Glykeria Terpizi
Location: Online Webcast
Date: 24 January 2023
Time: 10:00 - 11:00 am
On 1 January 2023, specific due diligence and reporting obligations for digital platform operators across the European Union will come into force with the DAC-7 Directive.
Under DAC7, relevant rules will require digital platforms to report income earned by sellers using their platform on an annual basis.
Information will be shared automatically between tax authorities to allow them to target under-declared income by sellers using digital platforms.
As a result digital platform operators will need to design their compliance and reporting strategy, brining significant numbers of sellers into the scope of automatic exchange of information.
With the rules being into effect as of 1 January 2023, please join us for a timely discussion.
The discussion will include the following specific topics:
- Discussion on the scope of the rules
- Overview of the reporting specifics
- What digital platforms should be doing now
- Lessons learned from previous automatic exchange of information regimes
- The successors of DAC7 - upcoming exchange of information regimes relating to the digital economy