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New VAT rules as from 1 January 2010

We would like to inform you that, as a result of the implementation of the VAT package adopted by the EU, certain important changes will come into effect as from 1 January 2010 in all the EU Member States. These new rules may have an impact on your company’s obligations and therefore it is important that you carefully consider them.

We emphasize that whilst the information in this message was prepared with care, it is of a general nature and you should not proceed with any action based on it alone.  Instead, please contact us in order to organize the specific circumstances of your company and decide on what action should be taken specifically for your company.

 

Introduction
The new VAT rules may affect your company(s) obligation to register for VAT and charge VAT on its invoices and the preparation and filing of VAT returns. Therefore, it may be necessary to also adjust the way it maintains its accounting records in order to ensure that the required information will be available for the preparation and filing of the VAT returns.

Summary of the new VAT rules
In summary the changes involve transactions between two different EU member states and relate to:

1. The country of taxation of services provided between business (B2B)

2. Compliance obligations for persons who supply services and goods

3. The time of supply of services for which VAT is due by the recipient

4. The procedure for refund of VAT paid in another Member States (MS)

5. The country of taxation of services supplied to consumers (B2C)

 

For those of you who would like to know more, each of the above items is examined in more detail within the full downloadable VAT Rulings document, which can be found in the CosmoServe Downloads section. If you prefer, you may simply contact us in order to discuss the new VAT rules and their effect on your company.

CosmoServe will be pleased to assist you to ensure compliance with the VAT laws and, in this respect, in general, we recommend:

1. Please contact us every time you are planning to either supply or receive services of any kind, before you enter into the transition.  We will advise you on the effect that the VAT rules will have on your company as a result of the planned transaction.

2. Similarly, please contact us every time you plan to enter into a transaction involving goods within the EU.

3. Please ensure that you inform us in detail of all your transactions without delay, (preferably in advance of the transaction or on the same date), as the new reporting system for VAT for both services and goods within the EU is on a monthly basis.

 

As stated above, you may decide to read the remaining part of this article, which can be located within our downloads section.  The full article includes two appendices:

  • More detailed information on each of the above listed 5 items of changes in the VAT rules
  • Practical examples of effects of the changes in the VAT rules However, please ensure you contact CosmoServe for a detailed consideration of the impact of the new VAT rules on your company if its activities include any one of the following:
    • Providing services
    • Receiving services
    • Trading in goods within the EU

 

Conclusion
The changes in the VAT rules which extend over the whole of the EU, may have a significant impact on the business of your company and its legal obligations.  We recommend that you seriously consider these changes and you ensure that your company fully complies with its relevant obligations.

As always, CosmoServe is at your disposal for all the assistance that you require.

 

Cyprus Tax System - Summary of Benefits

The tax reform that took effect on 1 January 2003 introduced major changes to the Cyprus Taxation system. There is a uniform Corporation Tax Rate at 12.5%, which is one of the lowest in European Union and there is no distinction anymore between local and international companies. The maximum tax rate for resident individuals is 35%. The old, complex tax regime was replaced by a new system that eliminates discrimination and differential treatment between different categories of business and is simple and transparent. In addition, the increase in the rate of VAT made possible a reduction of certain taxes and the abolition of others. From 13 January 2014 the standard VAT rate is increased to 19% (still one of the lowest in Europe).

The main tax advantages of Cyprus Tax Resident Companies are as follows: 

  • Dividend income received from abroad is exempt (subject to conditions);
  • No thin capitalisation rules;
  • No Capital Gains Tax (except from the sale of immovable property situated in Cyprus);
  • Taxable losses carried forward for up to 5 years;
  • Capital gains on sale of qualified Securities: 100% exemption;
  • Gains relating to foreign exchange differences (forex), is exempt (subject to conditions)
  • No withholding tax on outward payments (Dividends-Interest-Royalties) to non Cyprus tax residents (companies or individuals);
  • Foreign Permanent Establishment profits exempt (subject to conditions);
  • Tax free corporate re-domiciliation permitted;
  • Possibility for establishing an SE (European Company);
  • Applicability of all EU directives;
  • Advance ruling practice exists;
  • Extensive Double Tax Treaty network;
  • Other Tax Credits and Incentives include: 
  • Notional interest deductionNew equity introduced to a company as of 1 January 2015 in the form of paid-up share capital or share premium may be eligible for an annual deduction for tax purposes.)
  • Intellectual property (IP) regime (The income tax law provides for generous exemptions from tax of income related to IP.)
  • Exemption from capital gains tax  Cyprus immovable property acquired in the period 16 July 2015 to 31 December 2016 will be exempt from capital gains tax upon a future disposal.

Advantageous tax system for pensioners and expatriates

  • Individuals who are not tax residents of Cyprus are taxed only on certain types of income accrued or derived from sources in Cyprus.
  • Individuals who are Cyprus tax residents but are considered of non-Cyprus domicile for tax purposes are not subject to any Cyprus tax on dividend and interest incomes

Last updated October 2016

 

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