Every Cyprus tax resident company must declare, at least, the 70% of its accounting profits for the year 2021 by 31 December 2023 and pay the special contribution for defence of 17% and National Health Contribution of 2,65% by 31 January 2024.
Deemed Dividend Distribution (DDD) provisions
According to the DDD provisions, a Cyprus tax resident company should distribute at least 70% of its accounting profits to its Cyprus tax resident shareholders, as dividends, within two years from the end of the tax year to which such profits relate. If the aforesaid profits (or part of them) were not distributed, then the relevant undistributed accounting profits would be considered as "deemed distributed" and the relevant Special Defence Contribution would need to be paid.
DDD provisions are applicable in cases that a Cyprus tax resident company has shareholders that are Cyprus tax residents and Cyprus domiciled and the Cyprus tax resident company has not distributed at least the 70% of its accounting profits for a specific tax year.
The DDD provisions also apply for National Health Contribution purposes in cases that a Cyprus tax resident company has ultimate shareholders Cyprus tax resident individuals (domicility is irrelevant).
Therefore, in the case that a Cyprus tax resident company has failed to distribute at least the 70% of its accounting profits for the year 2021 by 31 December 2023, then the DDD provisions of the Special Contribution for the Defence Law will come into force.
The National Health Contribution should also be paid by 31 January 2024 for the undistributed accounting profits.
Whereas a Cyprus tax resident company is ultimately owned by a non-Cyprus tax resident individual, the DDD provisions are not applicable.
The relevant form to be submitted by the end of the following month of the dividend declaration (actual or deemed) to the Tax Authorities is T.D. 603.
In the case of late payment of the special contribution for defence and national health contributions then there will be an imposition of interest at the rate of 2,25% per annum and to a 5% penalty of the tax due. It should also be noted that an additional 5% penalty may be imposed in the case that the special contribution for defence remains unsettled two months after the above due dates. Also, there is a penalty of €100 if the T.D. 603 form is not submitted within the deadlines.
We remain at your disposal for anything you may need.
Contact person
Stelios Ioannou
This email address is being protected from spambots. You need JavaScript enabled to view it.
+357 22 100 192
Managing Director
We would like to remind you for the requirements of the Cyprus Tax Legislation (Assessment and Collection Law as amended in 2002, article 24) regarding the filing of temporary tax returns and relevant temporary tax payments for the year 2023.
Revision of the Temporary Assessment form
All companies may submit a revised declaration of their estimated taxable profit (upwards or downwards) before 31 December 2023. However, submitting a revised provisional tax declaration with an increased estimated taxable profit will result to a 2,25% interest payable on the difference between the initial and the revised estimated amount to be paid. The interest will be charged from the due date of payment of the 1st instalment.
Interest and Penalties
- An administrative penalty of 5% is imposed on each instalment if the company fails to pay the declared tax by the due dates stated above.
- Interest on an overdue instalment of the tax is calculated at an annual interest rate of 2,25%, on the basis of completed months.
- If the provisional tax declared is lower than the 75% of the actual tax payable for the year, then an additional 10% tax is imposed on the difference of the two.
If you require assistance in calculating your estimated taxable profit, then please provide us with an estimated income statement (detailed) for the year and we will provide you with a forecast income tax computation together with our advice as to whether you should proceed with the filing of a Temporary Tax return or not. It is important to note that companies with no taxable profits do not need to deal with the submission of this return.
For any further information, or if you would like us to proceed with assisting you with the above, please do not hesitate to contact us.
You could proceed with the payment of the provisional tax through JCC. Alternatively, we can take over of the above responsibility. The estimation of profits and transfer of funds in our client’s bank account should reach our office by the 18th of December 2023, otherwise we will consider it as an assumption by you of the responsibility to comply with this obligation.
Please bear in mind that our fees for the above will be €50 plus VAT (total €59,50).
Our clients' bank account details can be found below:
CosmoCo Ltd (Clients A/C)
Bank of Cyprus Public Ltd
Account Number: 357003572612
IBAN: CY18002001950000357003572612
Swift Code: BCYPCY2N
On the transfer details please indicate your Company name and "Temporary Tax 2023 - second instalment".
We remain at your disposal for anything you may need in connection with the above.
Contact person
Stelios Ioannou
This email address is being protected from spambots. You need JavaScript enabled to view it.
+357 22 100 192
Managing Director
We would like to inform you that the implementation of the final solution of the electronic system of the Beneficial Ownership Register commenced on November 14, 2023.
The implementation is divided into three phases:
The first phase covers the period 14/11/2023-31/12/2023 where all companies and partnerships are required to inform/re-register their Beneficial Owners in the 'Final Solution', even if they have already done so in the interim solution system. Please note that no financial penalties will be imposed during this period.
The second phase covers the period 1/1/2024-29/2/2024 and requires those companies and partnerships that did not inform/re-register their Beneficial Owners in the "Final Solution" during the previous phase to do so. It is noted that at this stage financial charges will be imposed.
During the third phase, which covers a period of 1/4/2024 and thereafter, the provisions of Directive Κ.Δ.Π. 112/2021 as amended enter into force.
Below you may also find the announcement from the page of the Registrar of Companies and Intellectual Property in detail.
https://www.companies.gov.cy/en/knowledgebase/news/2126/?ctype=ar
Please inform us the latest by 18/12/2023, if you would like us to assist you with the above.
Bear in mind that our fees for the above will be €100 + VAT.
Kindly note that for the companies and partnerships that did not proceed with the initial registration of the Beneficial Ownership, they will need to do the whole procedure (Ariadni and submission of UBO).
Our fees for the above will be €250 + VAT.
We remain at your disposal for anything you may need in connection with the above.
Contact person
Stelios Ioannou
This email address is being protected from spambots. You need JavaScript enabled to view it.
+357 22 100 192
Managing Director
On 30 June 2023, an amendment to the income tax law was published in the Government Gazette, with reference to the 50% exemption of employment remuneration, as provided in the Article 8(23A).
The amendments:
(a) The non-tax residency requirement of the individual has been extended from 10 consecutive years to at least 15 consecutive years immediately before the commencement of the individual’s first employment in Cyprus.
(b) The provision now applies to remuneration from employment in Cyprus, whereas before it was limited only to the remuneration from first employment in Cyprus. This amendment broadens the scope of the provision and allows individuals to qualify for the exemption even if they change employer within the period of the 17 years. Thus, the provision would also apply to any subsequent employments within the period of the 17 years.
(c) The exemption applies for a period of 17 tax years or until the provisions of this Article are abolished, whichever is the earlier, starting from the tax year of commencement of the first employment of the individual in Cyprus.
(d) The amending law clarifies that the “second year” referred to in the below paragraph, is the year which follows the date of the first year of employment in Cyprus:
The exemption is granted in any year in which the remuneration from employment in Cyprus exceeds €55.000, regardless of whether in any tax year the remuneration is reduced below €55.000, provided that in the first or second year of employment in Cyprus the remuneration exceeded €55.000 p.a. and the Commissioner is satisfied that the fluctuation in the annual remuneration is not an arrangement put in place with the purpose of obtaining the exemption.
(e) The exemption is granted in the tax year of commencement of first employment, provided that the remuneration from employment in Cyprus during the first 12 months exceeds €55.000.
(f) The following provision regarding the tax year of termination, is deleted:
“The exemption is granted during the tax year of termination of employment in Cyprus or at the end of the 17 years period, provided that the remuneration from employment in Cyprus during the last 12 months of employment in Cyprus exceeds €55.000”.
(g) An individual is considered to have “Commencement of first employment in Cyprus” when the individual for the first time, after the period of 15 consecutive tax years during which he/she was not performing any salaried services in Cyprus, commences the exercise of employment in Cyprus with a Cyprus or a non-Cyprus employer.
Further, based on the amendments voted, regardless of the year of commencement of first employment in Cyprus, the provisions of Article 8(23A) of the ITL apply from the 1st of January 2022 and up to the completion of the period of 17 consecutive tax years, or until the abolishment of the current Article, whichever is the earlier, starting from the tax year of the commencement of first employment in Cyprus of an individual who has continuous employment in Cyprus from the year of commencement of his first employment up to and including the tax year 2021 and for a period of at least 15 consecutive years immediately before the commencement of his first employment in Cyprus was considered as a non-Cyprus tax resident and:
i. He/she was eligible for the 50% exemption based on Article 8(23) of the ITL; or
ii. Whose first employment commenced in Cyprus between the tax years 2016-2021, with emoluments exceeding €55.000 per annum; or
iii. Whose first employment in Cyprus between the tax years 2016-2021, with emoluments that did not exceed €55.000 per annum and within 6 months period from the date that the previous amendments were published in the Gazette, i.e. as from 26/07/2022, the individual’s remuneration exceeded €55.000 per annum.
The amending law has a retrospective effect as from 1 January 2022.
We remain at your disposal for anything you may need in connection with the above.
Contact person
Stelios Ioannou
This email address is being protected from spambots. You need JavaScript enabled to view it.
+357 22 100 192
Managing Director
We would like to remind you for the requirements of the Cyprus Tax Legislation (Assessment and Collection Law as amended in 2002, article 24) regarding the filing of temporary tax returns and relevant temporary tax payments for the year 2023.
Please note that a Temporary Tax Assessment of the estimated net taxable profit for the year 2023 (if any), should be submitted to the Tax Authorities by 31st of July 2023. The resulting tax is payable in two equal installments as per the following deadlines:
- 1st instalment: 31st of July 2023
- 2nd instalment: 31st of December 2023
Any final resulting tax liability for the year 2023 should be settled by 1st of August 2024.
Your estimation of the taxable profit (if any) must be as close as possible to the actual net taxable profit of the company and any taxes underestimated may be liable to a 10% surcharge. If you require assistance in calculating your estimated taxable profit, then please provide us with an estimated income statement (detailed) for the year and we will provide you with a forecast income tax computation together with our advice as to whether you should proceed with the filing of a Temporary Tax return or not. It is important to note that companies with no taxable profits do not need to deal with the submission of this return.
Revision of the Temporary Assessment form
Following the submission of the provisional income tax return you may submit a revised declaration (upwards or downwards), at any time before 31 December 2023. However, submitting a revised provisional tax declaration with a decreased estimated taxable profit may not result in an immediate refund of the provisional tax already paid until the final tax computations are filed and agreed with the Cyprus tax authorities.
Interest and Penalties
- An administrative penalty of 5% is imposed on each instalment if the company fails to pay the declared tax by the due dates stated above.
- Interest on an overdue instalment of the tax is calculated at an annual interest rate of 2,25%, on the basis of completed months.
- If the provisional tax declared is lower than the 75% of the actual tax payable for the year, then an additional 10% tax is imposed on the difference of the two.
As the temporary tax relies on the management’s best estimate, it is our recommendation that this should be dealt with only by companies which have their accounting records up to date and are in a position to accurately estimate what the expected taxable profits will be at the end of the year.
For any further information, or if you would like us to proceed with assisting you with the above, please do not hesitate to contact us.
You could proceed with the payment of the provisional tax through JCC. Alternatively, we can take over of the above responsibility. The estimation of profits and transfer of funds in our client’s bank account should reach our office by the 20th of July 2023, otherwise we will consider it as an assumption by you of the responsibility to comply with this obligation.
Please bear in mind that our fees for the above will be €50 plus VAT (total €59,50).
Our client’s bank account details can be found below:
CosmoCo Ltd (Clients A/C)
Bank of Cyprus Public Ltd
Account Number: 357003572612
IBAN: CY18002001950000357003572612
Swift Code: BCYPCY2N
On the transfer details please indicate your Company name and "Temporary Tax 2023".
We remain at your disposal for anything you may need in connection with the above.
Contact person
Stelios Ioannou
This email address is being protected from spambots. You need JavaScript enabled to view it.
+357 22 100 192
Managing Director