The Cyprus Government in an effort to boost the competitiveness of the newly launched Cyprus Non-Domicile Scheme has recently proceeded to also amend the criteria that need to be satisfied by any individual who wishes to become a Cyprus tax resident.

These significant amendments to the Cyprus tax environment have now let to new advantageous co-ordinates for all persons interested in obtaining the Cyprus Tax-Residency and thus enjoy the country’s beneficial tax regime.

More specifically, as per unanimous approval by the Cyprus Parliament of a recent bill of date 14 July 2017, the classification of ‘Cyprus Tax Resident Individual’ can now be duly granted to any person who do not spend more than 183 days within a tax year at any other State, and is not a tax resident at any other country within that same tax year.

From thereon, the voted amendment to Article 2 of the Income Tax Law N118 (I)/02 in reference to the criteria for determining the rights of an individual to be considered a Cyprus tax resident requires a triple criterion to be satisfied which is comprised of the following:

1. The individual is expected to spend a minimum of 60 days within the year under assessment in the Republic of Cyprus
2. The individual maintains a permanent housing residence in Cyprus which can be either owned or rented
3. The individual carries out any kind of business within Cyprus or is employed in Cyprus, or holds an office as a Director of a Company which is tax resident in the Cyprus jurisdiction, starting at any time during the tax year under consideration and throughout to the completion of that year.

Additionally,  the very advantageous applicable tax rate bands for Cyprus tax residents are currently the following, and these rates are applicable to the entirety of their income earned worldwide.

Income bands of net chargeable income with net chargeable income being the resulting net Income following all allowable deductions as per the Cyprus Income Tax Regime:

• For up to € 19.500: Tax rate is Nil on the first €19.500
• For the €19.501 to € 28.000: Tax rate is 20%
• For the next € 28.001 to € 36.300: Tax rate is 25%
• For the next € 36.301 to €60.000: Tax rate is €30%
• For over €60.000: Tax rate is 35%

Thus, if you are interested in this Scheme, here at White November Corporate Services, our highly experienced teams can readily offer you the necessary detailed and specific guidance tailored to your requirements towards obtaining the advantageous Cyprus tax residency as well as the non-domicile individual status, and we look forward to attending your tax residency plans and enquiries.

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The Malta Gaming Authority Publishes a White Paper Proposing Major Reforms to Malta’s Gaming Legal Framework. On the 12th of July 2017 Malta Gaming Authority (MGA) has published White Paper proposing reforms to Malta’s Gaming Legal Framework.
 

Proposal’s main objective

 
According to article published on Malta Gaming Authority website “the main objective behind this proposal, is to repeal existing legislation and replace it with a singular primary Act of Parliament entitled the Gaming Act, together with subsidiary legislation covering the main areas of regulation as well as a series of directives and guidelines issued by the Malta Gaming Authority as the single regulator of this sector. The proposed regulatory framework shall decrease unnecessary regulatory burdens, strength the supervision of the regulator, propose better consumer protection standards, responsible gaming measures and a risk-based approach. It also establishes objective-orientated standards to encourage innovation and development.
 

Key highlights included

Main highlights of the changes envisaged include:
• “Replacing the current multi-licence system with a system two different types of licences covering different types of activities across multiple distribution channels: Business-to-Consumer (B2C) licence and Business-to-Business (B2B) licence;
• Moving towards an objective-based rather than excessively prescriptive regulatory approach, to allow for innovation whilst ensuring that the regulatory objectives are attained;
• Broadening the regulatory scope to increase MGA oversight and allow for intervention where necessary and in a proportionate manner;
• Widening the MGA’s powers under the compliance and enforcement functions to better achieve the regulatory objectives, in line with concurrent developments on anti-money laundering and funding of terrorism obligations;
• Segmenting the Key Official role into various key functions within a licensed activity, requiring approval, for direct scrutiny and targeted supervisory controls, thereby raising the bar for persons of responsibility within a gaming operation;
• Strengthening the player protection framework by formalising the mediatory role of the MGA’s Player Support Unit, enshrining segregation of player funds at law and moving towards a unified self-exclusion database across both remote and land-based delivery channels;
• Introducing new and more effective processes for criminal and administrative justice, including the allocation of appeals from decisions of the Authority to the Administrative Review Tribunal and the introduction of a distinction between administrative and criminal offences;
• Introducing the concept of administration to protect an operation in distress and, if necessary, to assist the winding down of an operation, thereby protecting jobs and player funds;
• Moving towards automated reporting, facilitating adherence to regulatory obligations and strengthening the Authority’s oversight;
• Bolstering the Authority’s role in the fight against manipulation of sports competitions by introducing new obligations on operators to monitor sports betting and report suspicious bets, in line with the efforts being made by the National Anti-Corruption Task Force in which the Authority also participates actively;
• Streamlining taxation into one flow with two main layers;
• Exempting B2B licensees from gaming tax, thus increasing Malta’s competitiveness as a hub for these services providers.”

 
Source

There were changes to the Malta Residence and Visa Programme as per Legal Notice 189 of 2017 as below:
 

• Additional EUR5000 non-refundable contribution per parent or grandparent of the main applicant or of the spouse at application stage
• EUR30,000 contribution fee now covers main applicant, spouse and the children of the main applicant and/or the spouse
• Age limit (27) for unmarried, economically dependent children was waived off. Moreover, children of the main applicant and/or spouse, will not lose the residency rights on their 27^th birthday, or if they become economically active or get married. Option to obtain residency for their suppose and direct dependants is also available (subject to EUR5000 non-refundable administration fee per person and successful due diligence check)
• The requirement for the main applicant and his/her dependants to spend outside of Malta a period that exceeds either six consecutive months or an aggregate period of ten months in any four-year period from the appointed day was removed. The main applicant and dependants will be eligible to apply for long term residence
• The main applicant may include children born or adopted after the approval date (subject to EUR5000 non-refundable administration fee per person and successful due diligence check)

On the 7th of June 2017 Cyprus signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (“MLI”). The MLI will implement tax treaty measures in order to reduce opportunities for tax avoidance by multinational companies.
 

Article 6 and 7 as the main impact on Cyprus Companies

The main impact on Cyprus companies will be Article 6 and 7 which relate to treaty abuse. As a result, Cyprus will implement in its double tax treaties principle purpose test (PPT) and a limitation of benefit clause (LoB). Consequently, it is essential that Cyprus companies owners examine the impact of these changes and ensure that they have sufficient substance in Cyprus. Failure to do so could lead to significant tax implications.

The treaty, based on the OECD model treaty, provides for the following maximum withholding tax rates on dividends, interest and royalty payments:

• Dividends: No withholding tax on dividends paid to a company that holds directly at least 10% of the capital of the dividend paying company.
  Otherwise, the rate will be 5%.
•  Interest and royalties: No withholding tax on interest and royalties paid to a resident of the other contracting state.

Who does the tax treaty apply to?

For the purposes of the treaty, a collective investment vehicle will be considered a resident of a contracting state if, under the domestic law of that state, it is liable to tax therein by reason of its domicile, residence, place of management or any other criterion of a similar nature. Collective investment vehicle will be considered as liable to tax if it is subject to the tax laws of that contracting state irrespective if it is exempt from tax.

The treaty also includes provisions for the exchange of financial and other information. The treaty will enter into force after formal ratification and with respect to taxes will have effect on or after 1 January following the date the treaty enters into force.

On the 3rd of May 2017 Cyprus signed double tax treaty with Barbados.
 

Nil withholding tax on dividends, interest and royalty payments

 
The treaty is based on the OECD Model Convention and provides nil withholding tax on dividends, interest and royalty payments. The treaty will enter into force after formal ratification and with respect to taxes will have effect on or after 1st January following the date the treaty enters into force.

Mr. Ionas Nicolaou, Minister of Justice and Members of Supreme Court had decided to set up a Commercial Court from the beginning of 2018.

The Commercial Court shall have jurisdiction over matters arising from contracts or disputes between companies, the purchase or sale of goods, the exploitation of oil or gas, the purchase or exchange of shares, intellectual property and insurance affairs. It shall apply to cases the scale exceeds EURO 5,000.000. The seat of the Court shall be in Limassol and Nicosia. The Procedure shall be fast track and to be completed up until 18 months at first instance. The existence of the Commercial Court shall attract new investment and companies.