The Tax Department in Cyprus has recently released a guide on the amendments to the Assessment and Collection of Taxes Law (L.4/1978) in relation to tax registration and reporting, filing of income tax returns and employer’s returns, capital statements, auditing obligations, tax payments and compliance, card payments and tax lottery.
The key features of the guide are outlined below:
Tax Registration: A company that is incorporated (but is not tax resident) in Cyprus is obligated to inform the Tax Commissioner about its business status within a period of 60 days from its incorporation date.
Income Tax Returns Deadlines: The deadlines for the submission of income tax returns are shown below:
Taxpayer Concerned
- Companies and individuals obligated to prepare audited financial statements
- Individuals not obligated to prepare audited financial statements
Deadline for Tax Return Submission
- 15 months following the end of the relevant tax year
(i.e., 31 March)
- 7 months following the end of the relevant tax year
(i.e., 31 July)
Deadline for Tax Payment
- 1 August of the year following the end of the relevant tax year
- 7 months following the end of the relevant tax year
(i.e., 31 July)
The above deadlines may be extended by decree of the Council of Ministers.
Personal Income Tax Returns: As of 2020, individuals are obligated to submit a personal income tax return irrespective of whether their gross income exceeds the threshold of €19,500 per annum.
Revised Tax Returns: A person that has submitted a tax return may submit a revised tax return for one tax year only, within 3 months from the passing of the deadline for the submission of the tax return for that tax year and settle any outstanding tax due within 30 days from the submission of the revised tax return. A tax return may be revised if the revision (i) arises from claiming a reduction, credit or relief provided by law, (ii) is necessary to correct a mistake / error, or (iii) is necessary for legal consistency purposes. No revised tax returns may be submitted during a tax audit or investigation.
Employer’s Return: The deadline for the electronic submission of the employer’s return is the last day of February of the year following the year in question, with a three-month extension (i.e., the last day of May). The definition of “emoluments” has been amended to include the deemed monthly benefit of 9% per annum granted to its directors or shareholders or their spouses or relatives (up to 2nd degree) on the balance of any financing arrangement granted by the company to them. The company taxpayer will be considered as an employer and thus obligated to record such benefit on their respective employer’s return.
Supplementary powers: The revisions to the law afford the Tax Commissioner with the discretion (i) to exempt taxpayers from the obligation to prepare audited accounts and request the submission of other information, and (ii) to enter and inspect any premises used for business purposes without having to give reasonable notice.
VAT Compliance for Tax Refund: In cases where a taxpayer has omitted to submit their VAT return in accordance with the provisions of the VAT Law by the end of the tax year during which the tax refund assessment has commenced, the Tax Commissioner may suspend the payment of the tax remainder until the taxpayer has complied with their VAT return obligations.
