Cyprus: Recent Changes To The Cyprus Tax Legislation

Last Updated: 23 April 2013
Article by Elias Neocleous and Philippos Aristotelous
Most Read Contributor in Cyprus, December 2017

Cyprus has undertaken a series of reforms to secure Troika financial support. The following article considers the latest reforms in detail.

In November and December 2012 Cyprus enacted a number of changes to its corporate, taxation and financial regulatory laws in order to streamline its administration and demonstrate its commitment to the reforms proposed by the ''troika'' (the European Commission, the European Central Bank and the International Monetary Fund) negotiating a financial support package for the island. The legislative package included measures ranging from straightforward increases in tax rates to more complex adjustments to arrangements for exchange of tax information and the introduction of a new licensing regime for fiduciary and corporate service providers, as well as changes to indirect taxes, pensions and other government expenditure. In the following paragraphs we set out the main changes regarding business taxation, which, unless otherwise specified, took effect on January 1, 2013.

i. Amendments to the Assessment and Collection of Taxes Law of 1978

Law 163(I) of 2012 and Law 197(I) of 2012, enacted in November and December 2012 respectively, amend the Assessment and Collection of Taxes Law of 1978 regarding payment of taxes, record keeping and exchange of information with overseas tax authorities.

Payment of provisional tax liability

The provisional self-assessment tax return must be submitted by July 31, of the tax year, together with a remittance for half the estimated tax payable. The other half must be paid before December 31. Previously the provisional return had to be submitted by August 1 and estimated tax paid in three instalments.

Tax returns and supporting documentation

Where returns are submitted by electronic means and the submission of full supporting documentation is dispensed with, the documents concerned must be retained for at least six years (previously seven) from the end of the tax year to which they relate.

The retention period for accounting books and records and any other documentation supporting amounts or information reported in the return has also been shortened to six years from the end of the tax year to which the records relate. Corresponding amendments have also been made to the Companies Law.

All persons who have income derived from interest and dividends are now required to maintain adequate accounting records.

Companies incorporated in Cyprus but not taxresident there are now required to submit a summary annual tax return so that information is available in the event of a request from an overseas tax authority (see section II below).

Employers' returns

Annual employers' returns of remuneration (Form IR 7) for 2012 onwards must be submitted by electronic means. The due date for submission is July 31 in the following year.

ii. Exchange of information with overseas tax Authorities

Prior to the enactment of the 2012 amendments the Inland Revenue Department was not authorised to disclose information to an overseas tax authority except under a double taxation agreement. The Department may now exchange information with any country with which Cyprus has signed an agreement to exchange tax information as well as in the context of Council Directive 2011/16/EU of February 15, 2011 on administrative cooperation in the field of taxation.

Article 6 of the Assessment and Collection of Taxes Law empowers the Inland Revenue Department to require any person to make available any information, records, books or any other document which they consider necessary to be disclosed under a double tax agreement to which Cyprus is a party. The 2012 amendments have extended the scope of this power to allow the Department to require information or documentation to be made available for the purposes of a tax information exchange agreement or under the provisions of Council Directive 2011/16/EU, which obliges taxation authorities of EU member states to comply with requests for information on taxation matters received from their counterparts in other member states within specified time limits and provides for automatic exchange of information in specified circumstances.

Article 6(b) of the Assessment and Collection of Taxes Law previously required the Inland Revenue Department to inform persons who were the subject of any tax investigation process. They may now refrain from disclosure if they consider that it might jeopardise the effectiveness of the investigation.

iii. Carry forward of tax losses

Trading losses may be carried forward for relief against future trading profits for a maximum of five years. Previously there was no limit on the period for which losses could be carried forward.

iv. Changes to stamp duty

The Stamp Duty Law of 1963 to 2007 was also amended to rationalise rates and provide round-sum base amounts following the change from the Cyprus pound to the euro in 2008. The changes took effect from March 1, 2013. From that date, the rates of stamp duty are as follows:

  • on transactions with a consideration up to EUR 5,000 no stamp duty is payable;
  • on transactions with a consideration between EUR 5,000 and EUR 170,000, stamp duty of EUR 1.50 for every EUR 1,000 or part thereof is payable;
  • on transactions with a consideration in excess of EUR 170,000 stamp duty of EUR 2.00 for every EUR 1,000 or part thereof is payable. Where no amount of consideration is specified in the contract the stamp duty is EUR 34.
  • the maximum stamp duty payable on a contract is capped at EUR 20,000.
  • for a transaction which is evidenced by several documents stamp duty is payable on the main contract and ancillary documents are charged at a flat rate of EUR 2.

The wording of the law indicates that the rate of stamp duty is determined by the aggregate value of the contract and applies to the entire consideration, whereas previously the appropriate rate was applied to each tranche of the consideration. Discussions with the relevant authorities indicate that they intend to continue to apply the old method of calculation in practice. In any event, the difference is less than EUR 300. A number of categories of documents remain exempt from stamp duty, including documents relating to corporate reorganisations (which are exempt from all forms of taxation) and ship mortgage deeds or other security documents. Stamp duty must be paid within 30 days from the date of execution of the relevant documents or, if they are executed abroad, within 30 days after they are received in Cyprus. If stamp duty is paid late, a surcharge of approximately 10 percent of the unpaid amount is payable if payment is made within six months after the due date; otherwise the surcharge is twice the unpaid amount.

v. Annual levy on bank deposits

The levy on deposits held by banks and other credit institutions has been increased from 0.095 percent to 0.11 percent and the previous cap of 20 percent of taxable profits has been abolished.

vi. Regulation of fiduciary and corporate service Providers

A new law governing the provision of fiduciary and corporate services, which was published in draft form for consultation as long ago as 2006, has also been enacted. It introduces a system of licensing and supervision of commercial providers of fiduciary services and other services relating to the administration or management of trusts and companies in or from Cyprus.

The principal objectives of the new law are to regulate the provision of relevant services and to establish and impose licensing procedures for and supervision of such services, offering security to clients and strengthening confidence in the sector.

The new law provides that relevant services may be offered only by persons or legal entities that hold a licence from the Cyprus Securities and Exchange Commission (''CySEC'') or who are specifically exempted from the licensing requirement. Lawyers and accountants regulated by their respective professional bodies are exempt from the need to obtain a licence. CySEC will maintain a register of licence holders and licences may be issued on such terms and conditions as CySEC considers appropriate. In order to obtain a licence, providers of relevant services must comply with certain criteria regarding their professional and academic qualifications, experience and their internal procedures.

Contravention of the law is a criminal offence punishable on conviction by imprisonment of up to five years, a fine of up to EUR 350,000 or both. If the offence was committed by a legal person, then any of its directors, managers or responsible auditors may be liable if it is proved that he or she agreed or assisted in the commission of the offence. CySEC may also impose an administrative fine of up to EUR 500,000 (or up to EUR 1 million for repeat offences), depending on the seriousness of the offence.

vii. Effect of the changes

The changes introduced by the legislative package streamline administration and improve regulation, and should have a positive effect on Cyprus's competitiveness as international financial and business centre. The limit of the carry-forward period for loss relief should not affect most companies and the strong taxpayer safeguards contained in the Assessment and Collection of Taxes Law mean that investors should have nothing to fear from the provisions facilitating exchange of information. Requests for exchange of information are dealt with exclusively by a specialist department of the Department of Inland Revenue and direct informal exchange of information between tax officers is prohibited. Requests for information must be supported by a detailed justification, ruling out speculative enquiries and so-called ''fishing expeditions''. As a final safeguard, the written consent of the Attorney General is required before any information can be released to an overseas tax authority. The improved regulation of fiduciary and corporate service providers should weed out any rogue operations and provide a level playing field to attract the largest and most reputable trust service providers.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Elias Neocleous
Philippos Aristotelous
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions