TaxLegi 22.3.2023

Executive summary

On 16 March 2023, the Cypriot Tax Department issued an announcement that lists the 10-year government bond yield rates as of 31 December 2022 for a number of countries (listed in the table below) with respect to the Notional Interest Deduction (NID) on equity. These yield rates should be used to determine the reference interest rate forclaiming NID for the 2023 tax year. The key NID provisions and the applicability of the 10-year government bond yield rates are summarized below.

Notional Interest Deduction

As of 1 January 2015, Cyprus tax-resident companies (as well as foreign companies with permanent establishments in Cyprus) that carry on a business are entitled to claim a NID on their equity capital introduced on or after 1 January 2015. The NID is deducted from the company’s taxable income for the relevant tax year (subject to any restrictions) for the period of time during which the company used the equity in carrying on its activities. The NID is subject to a number of conditions, including a taxable-income limitation. The NID equals the multiple of the “reference interest rate” (as defined below) and “newequity.’’ “Reference interest rate” means the 10-year government bond yield of the country in which the newequity is invested, as of 31 December of the year preceding the tax year, increased by 5%.

10-year government bond yield rates as of 31 December 2022 (applicable for 2023 tax year)i 

* There are currently no government bond yield rates for the above indicated countries.

Endnotes

1 The Cypriot Tax Department updates the list during the year. As such, it is advisable to check their website for announcements of new additions to the list. Please visit: Tax Department | Announcements (mof.gov.cy)
 

• Philippos Raptopoulos 
• Petros Krasaris 
• Petros Liassides 
• Myria Saparilla 
• Anna Papamichael

The existing TAXISnet system will be gradually replaced by the new online Tax Administration Portal Tax For All (TFA) in March 2023. The Cyprus Tax Department in its latest alerts has announced that the new portal will go live on 27 March 2023. For the smooth transition to the new TFA portal, the following updates with regards to deadlines and payments were communicated:

VAT Submissions

• March 16, 2023 is the last day where VAT registered persons (businesses/ individuals) are allowed to submit VAT returns, VIES forms and VAT refund requests and/or update their email address through the TAXISnet system.

• As from March 27 2023 all VAT and VIES obligations (including special taxi and farmers schemes) will be processed exclusively through the TFA portal. The Intrastat Returns will continue to be submitted through the TAXISnet system.

VAT Payments
• March 16 2023 is the last day where payments of any VAT liabilities can be facilitated via the use of TAXISnet slips and reference codes.
• As from March 27 2023 all payments will be facilitated through the reference codes and slips provided by TFA portal. Payments can be concluded via the use of credit/debit card or through Commercial Banks, either with Internet Banking or at Banks cash desks.

Extension of VAT Returns deadlines

• The deadlines of VAT return submissions due on
    o April 10 2023 (covering the period December 2022- February 2022) are expected to be extended to April 26 2023.
    o May 10 2023 (covering the period January 2023- March 2023) are expected be extended to May 26 2023.

More information regarding the new TFA operation, guidance and trainings
can be found in the Tax Department’s YouTube Channel
 

• George Liasis , Partner, Indirect Tax Services
• Georgios Pitsillis , Director, Indirect Tax Services
• Maria Raspa , Senior Manager, Indirect Tax Services
• Elpida Papachristodoulou , Senior Manager, Indirect Tax Services
• Iacovos Kefalas , Senior Manager, Indirect Tax Services
• Simos Simou , Senior Manager, Indirect Tax & Controversy

Following our latest Tax Alert dated 15/03/2023 in relation to the new online Tax Administration Portal “Tax For All” (TFA), the following announcements were released by the Cyprus Tax Department on 24/03/2023. In particular: 

Deadline extension for the submission of VIES, VAT returns and payment of VAT due

·       The deadlines for the submission of the VAT return forms as well as the deadline for the payment of VAT due for:

o    the period December 2022 - February 2023, will be extended to 26 April 2023 (previously 10 April 2023),

o    the period January 2023 - March 2023, will be extended to 26 May 2023 (previously 10 May 2023).

·       The deadline for the submission of the VIES return covering the month of March 2023 will be extended to 26 April 2023 (previously 15 April 2023).

VAT Payments

Following the go live of the new TFA platform, all payments relating to VAT due will only be performed through the new TFA platform via any of the below payment methods:

o    using a debit/credit card;

o    through commercial Banks either with Internet Banking or at Bank cash desks using the new payment reference codes that will be available in the new TFA system.

·       It is clarified that as from 27 March 2023, all existing VAT payment forms as well as all existing VAT payment reference codes are abolished and therefore, for the successful execution of payments, all taxpayers should use the new payment methods as well as the new payment reference codes as these are found in the TFA platform.

Activation of TFA account

·       As from 27 March 2023, the Cyprus Tax Department has initiated the process of sending emails to all VAT registered taxpayers (i.e. to their registered email address as per the TAXISnet system) for the effective activation of their new TFA account;

§  In case where the respective email is not received by 6  April 2023, we are at your disposal to assist on the matter and ensure the smooth transition and activation of TFA account.

More information regarding the new TFA operation, guidance and trainings can be found in the Tax Department’s YouTube Channel and TFA website.

• George Liasis, Partner, Indirect Tax Services
• Georgios Pitsillis, Director, Indirect Tax Services
• Maria Raspa, Senior Manager, Indirect Tax Services
• Elpida Papachristodoulou, Senior Manager, Indirect Tax Services
• Iacovos Kefalas, Senior Manager, Indirect Tax Services
• Simos Simou, Senior Manager, Indirect Tax & Controversy