Circular 2016/14,1 issued by the Tax Department on September 29 2016, clarifies the taxation arrangements for companies which provide betting services under a licence issued by the National Betting Authority in accordance with the Gambling Law 2012.2
Such companies are not subject to income tax on profits or gains arising from the services they provide if:
- they are not resident in Cyprus (ie, they are controlled and managed from outside Cyprus); and
- they have no permanent establishment in Cyprus, because they provide their services by automated electronic means.
A back-up server installation within Cyprus will not be deemed to constitute a permanent establishment. The circular clarifies that, despite the tax exemption, Article 5A of the Assessment and Collection of Taxes Law 1978, as amended, continues to apply to such companies.3 Under Article 5A:
- a company must register for tax immediately after incorporation or registration under any law in force in Cyprus; and
- companies that are incorporated in Cyprus, but not tax resident, must submit annual income declarations in the prescribed form.
Footnotes
1 Available here in Greek.
2 Law 106(I)/2012.
3 Law 4/1978.
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