Taxation for physical persons and Investment Manager
First, a person who was employed for performing a particular service in Cyprus but was a non-resident of Cyprus by the time he was employed, it is highly probable to be exempted from the payment of 50% of income tax for a 10-year period on the remuneration. But to be eligible for the exemption, the payment for this service should be greater than 100.000 Euro.
Additionally, for a person who was employed for a service paid by maximum 8.550 Euro, but he was not a resident of Cyprus when the employment was made, he will be granted a 20% exemption from income tax payment, for 5 years on the remuneration. This exemption thought will only apply until 2020.
Moreover, a person who is tax resident but has its permanent house outside Cyprus, do not have to pay tax for dividends and passive interest income received. Also, an income from rent received by a person who is tax resident in Cyprus but his permanent house is elsewhere has to only pay income tax and exempted from SDC tax.
Moreover, the investment manager has to pay 12.5% at a flat rate for corporation tax from his income that remains when we deduct the tax-deductible expenses. There is also no VAT charged. Additionally, there is no withholding tax for distributing profits to investors that are not resident in Cyprus. No withholding tax also applies for distributing profits to those who are tax resident in Cyprus but have permanent housing elsewhere or they are corporate investors. However, there is a 17% withholding tax for the distribution of profits to those who are tax resident in Cyprus in case they are individual investors and they live permanently in Cyprus.
Furthermore, the company should have proceeded with the distribution of dividend within two years from the year they received the profits. Therefore, even though the dividends are not distributed, it will be regarded that they did distribute at least 70% of the profits for dividends. Indeed, they may be charged 17% tax for them in case the UBOs of the company are tax resident in Cyprus and live permanently in Cyprus.
For more information and guidance please email Michalaki, Pitsillidou & Co LLC – Cyprus Lawyers, at firstname.lastname@example.org or visit our website at www.impklawyers.com.Tel. +357 25660092 – Fax +357 25 660097.