2022-2023 Cyprus Country Report

CYPRUSCOUNTRY REPORT 2022
SPECIAL TYPES OF COMPANIES
SHIPPING COMPANIES
The Merchant Shipping Legislation, fully approved by the EU, provides for an exemption
from all direct taxes and taxation under tonnage tax regime. The merchant shipping
legislation applies to qualifying shipowners, charterers and ship managers, which
are involved with the operation of qualifying community ships (ships under a CY flag
or a flag of an EU member state or of a country in the European Economic Area) and
foreign (non-community) ships (under conditions) and provided that they engage in
qualifying activities. The legislation allows non community vessels to enter the tonnage
tax regime provided the fleet is composed by at least 60% community vessels. If this
requirement is not met, then non community vessels can still qualify if certain criteria
are met. Exemption is also given in relation to the salaries of officers and crew aboard
a Cyprus ship.
INSURANCE COMPANIES
Profits of insurance companies are liable to corporation tax similar to all other
companies except in the case where the corporation tax payable on taxable profit of life
insurance business is less than 1.5% of the gross premium. In this case the difference is
paid as additional corporation tax.
ADMINISTRATION AND COMPLIANCE
The tax year is the calendar year. The accounts of a company may be closed on a date
different from 31 st of December, in which case taxable profits are apportioned on a time
basis relevant to the tax years.
CONSOLIDATED RETURNS
Taxation on a consolidated basis is not permitted and each company is required to
submit a separate standalone tax return. A set-off of group losses is possible provided
there is a 75% parent subsidiary relationship, including subsidiaries under 75% control
of a common parent company. Group loss relief is available only between resident
companies (and EU-based companies/companies with which Cyprus has concluded a
double tax treaty, provided that they have exhausted all options to utilise the losses in
their country of residence).
FILING REQUIREMENTS
Corporate tax returns must be filed electronically by the 31 st of March of the year following
the year under consideration (i.e. 15 months from the year-end). Companies are required
to pay provisional tax in two equal instalments by 31 st of July and 31 st of December of the
year under consideration. Any underpayment is due to be settled via self-assessment by
1 st of August of the following year. If the income declared for the payment of the provisional
tax is lower than 75% of the actual income as finally determined, an additional tax equal
to 10% of the difference between the final and provisional tax is payable.
66