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Cyprus citizenship by investment scheme most attractive in EU

In the Financial Times Professional Wealth Management Group’s report on citizenship by investment schemes around the world, Cyprus was ranked 7th out of the 12 countries studied ahead of Malta, Bulgaria and Austria which where the other European Union countries on the list. The rankings were based on the below 7 factors, measured and scored on a scale of 1-10, with 10 being the highest: Freedom of Movement Standard of living Minimum investment outlay Mandatory residence or travel requirements Citizenship timeline Ease of process Due diligence Cyprus scored 67 overall, with Bulgaria, Austria and Cambodia ranking last on the scoring scale. At the top of the scale was Dominica, with one of the longest running citizenship by investment schemes with an overall score of 90 %. Second was St. Kitts & Nevis with 88%, and third was Grenada with 85%. Cyprus scored highest in the freedom of movement factor, receiving a score of 9 as the Cyprus passport allows for visa free travel to over 160 countries worldwide without restrictions. Cyprus also scored high for the highest standard of living and for the timeline of obtaining citizenship, receiving a score of 8 for both factors. The country received a score of 7 for the mandatory residence or travel requirements factor, as the Cyprus citizenship by investment scheme does not require physical residency prior, during or after the citizenship application. Moreover, Cyprus also received a score of 7 for the ease of process, the scheme having clear procedures for the citizenship application with no additional language or health requirements. Lastly, Cyprus scored a 6 in the due diligence factor. The report...

Cyprus – Tax Treatment of intra-group back-to-back loans

The Cyprus Tax Department has issued on 30 June 2017 a Circular in relation to the Tax Treatment of intra-group back-to-back financing arrangements, which becomes effective from 1 July 2017. This Circular applies to any Cyprus tax resident company (or to a company that is tax resident outside Cyprus and has a permanent establishment in Cyprus) carrying out intra-group financing transactions to related parties. The term intra-group financing transaction refers to any activity consisting in the granting of loans or cash advances remunerated by interest to related parties and includes debentures, private loans, cash advances and bank loans. According to the Circular, two companies are related if they fall within the scope of Section 33 of the Income Tax Law (ITL). The arm’s length principle Reference to the arm’s length principle is made in section 33 of the ITL and allows for adjustment of the reported profits in cases where the transfer prices differ from the prices that would have been agreed between independent entities. It is also set out in Article 9 of the OECD Model Tax Convention on Income and on Capital and used in determining the transfer prices between related undertakings conducting cross-border transactions. Application of the arm’s length principle to intra-group financing transactions For each intra-group financing transaction conducted, it is necessary to determine whether the remuneration agreed is in line with the arm’s length principle. An appropriate comparability analysis must be carried out to determine whether the transactions between independent entities are comparable to transactions between the related entities. The comparability analysis should consist of two parts: -Identification of commercial or financial relationship between...

Amendments to the Definition of “resident of the Republic” for Individuals – the 60 days rule

With effect from 1st January 2017 the Cyprus Income Tax Law was amended with regard to the definition of “resident of the Republic” for individuals. Under the provisions of the Cyprus Income Tax Law, the term “resident of the Republic”, when applied to an individual, means an individual who stays in the Republic for a period, or periods, exceeding in aggregate 183 days in the tax year. The definition has been amended to also provide that an individual who does not stay in any other country for one or more periods exceeding in aggregate 183 days in the same tax year, and is not tax resident in any other country for the same year, is deemed as a resident in the Republic in that tax year, if all of the following conditions are met: the individual stays in the Republic for at least 60 days in the tax year, exercises any business in the Republic and/or is employed in the Republic and/or holds an office with a Cyprus tax resident person at any time during the tax year, and maintains (by owning or leasing) a permanent home in the Republic. The law is further amended to clarify that an individual that cumulatively meets all the above conditions shall not be treated as a Cyprus tax resident in the tax year if, during that year, the exercise of any kind of business in the Republic and/or employment in the Republic and/or the holding of an office with a tax resident person in the Republic is terminated. This is provided for informative purposes only. If you wish further information and/or clarification...