The Cyprus Tax Department has issued a new circular (EE26, dated 7 September 2018) clarifying the taxation of earnings of insurance agents.
A representative of an insurance company who is not in an employment relationship with the company is treated as a commercial enterprise whose revenue is derived from fees or commissions for the conclusion of insurance contracts. If the annual revenue exceeds € 70,000, the intermediary must maintain accounting records and prepare audited financial statements as required by article 30 of the Assessment and Collection of Taxes Law of 1978.
If the intermediary does not maintain accounting records a general deduction of 25 percent of net commissions (commissions received minus commissions paid) on new contracts and renewals is allowed in respect of expenses, in line with past practice. However, if the intermediary maintains accounting records, even though they may not be required under article 30 of the Assessment and Collection of Taxes Law, the expenses actually incurred relating exclusively to the undertaking are deductible, even if they exceed 25 percent of revenue.
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.