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Cyprus Tax Glossary

Since the Republic of Cyprus' tax laws are written in Greek, and then translated into English for expatriate home buyers, some terms can sound a little confusing at times.

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Simple words can mean complicated things in Cyprus' Tax Terminology

 
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A perfect example of the sometimes confusing nature of Cyprus tax jargon can be seen in the fact that the term 'Person' can relate either to an individual, or to a corporate entiry, depending on context or circumstance.

Furthermore, tax status in the Republic of Cyprus most often depends on the long-term residency of the individual, or the corporate structure of a registered limited company.

 

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Tax Glossary

Glossary of Terms

'Resident' may be differentiated between:

Resident Individual: means an individual who stays in the Republic for a period or periods exceeding in aggregate 183 days in the tax year of assessment.

Resident Company: means a company the management and control of which are exercised in the Republic. This term is applied in practice even though there has been no specific definition of corporate residence in Cypriot tax law.

Non-Resident: A person or company who/which is not resident in Cyprus by the definitions given above.

Person: may refer to an individual or company, depending on how and where it is used.

 

Corporate Definitions

Management & Control: According to Cypriot law, there is no legal definition of what constitutes management and control. In practice it is taken to mean, in simple terms, that management and control is where the majority of the directors reside, where corporate board meetings are held and where the general policy of the company is formulated.

The co-existence of all three criteria is essential. It is therefore necessary to ensure that a company satisfies the residence test to be able to be taxed under Republic of Cyprus tax laws, and at the same time enjoy the benefits. If a company does not satisfy the management and control test, there is no residence, therefore no taxation in respect of such company can be imposed under local law.

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Corporate Tax Definitions continued...

Permanent establishment: A permanent establishment is defined as being a fixed place of business through which the business of an enterprise is wholly or partly carried out.

The term includes especially:
(i) a place of management
(ii) a branch
(iii) an office
(iv) a factory
(v) a workshop, and
(vi) a mine, an oil or gas well, a quarry or any other place or extraction of natural resources.

Any building site or construction or installation project or supervisory activities in connection therewith constitute a permanent establishment only if it lasts more than three months.

Input Tax: This is the Value Added Tax payable on the provision of goods and/or services to a taxable person. Note that this is one of the incidences where the word ‘person’ may refer to either a company, or a VAT-registered individual.

Output Tax: VAT paid to a taxable person by non-tax-registered retail customers is termed as Output Tax
Registered Person: A person or corporate entity who/which is registered in the Cypriot VAT register
Business: Any commercial activity which is undertaken for-profit, regardless of whether this activity results in profit or loss.

Standard Rate of VAT: In the Republic of Cyprus, the standard rate of VAT for goods and services either imported or rendered stands at 15%

Reduced Rate of VAT: Following an amendment on October 19th 2007, there are now two reduced rates of Value Added Tax in the Republic of Cyprus. VAT Rate 1 runs at 5%, while VAT Rate 2 stands at 8%. For more information about the types of goods/services covered by each rate, visit the Cyprus VAT Office Website.

Zero Rate: There are a variety of goods and services which fall into the zero-rate category, i.e on which no VAT is chargeable. Once again, you are advised to visit the Cyprus VAT Office website for more information.
Prescribed Tax Period: The PTP consists of a three month period, which basically constitutes one tax quarter in the financial year.

Tax Assessment: This is the simple process of determining how much tax is payable. However, in the Republic of Cyprus, tax assessments can be of a somewhat arbitrary nature, especially when you’re registering as self-employed, and the official behind the desk assesses your future Social Insurance contributions prior to you actually having earned anything. Our advice; get an accountant...

Monetary Levies: In effect, these are penalties imposed by the Ministry of Finance for failure to comply with certain portions of Cypriot tax and VAT laws.

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Unlike the vast majority of Cyprus Property Sales websites, ours doesn't depict the Republic in an excessively rosy light.

Cyprus may be a great place to live for many expatriates, but it is not the paradisical land of milk and honey it is so often portrayed to be by overseas property companies who want to convince you to part with your hard-earned cash by any means possible. The Republic is a real European Union member state, with real character, real issues, and real quirks.
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Disclaimer. Please note that the tax information given on this website is displayed for guidance purposes only. It does not replace the need for professional advice by a qualified accountant.. E&OE

 

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