Tax Alert - Settlement of taxes with exemption
As from February 2017 the House of Representatives in Cyprus voted for a new legislation for the settlement of taxes due, providing incentives for these to be settled with a discount. This legislation covers income tax, special contribution for defence, immovable property tax, capital gains tax, stamp duty and VAT. It includes all taxes due up to and including 31 December 2015 (i) assessed by the Cyprus tax office as payable (ii) amounts appearing as payable as a result of submission of a self-assessment and the amount of tax is not already paid (iii) tax liabilities arising after 3 July 2017 through the issue of assessments by the Cyprus tax office relating to years up to 31 December 2015.
From there on, on 23 June 2017 the Cyprus tax office issued a detailed notification on how to implement the relevant law. We summarize below the main provisions.
Timeframe to apply the new law
The application by the taxpayer should be submitted within 3 months from the effective date of the law, which is 3 July 2017. Thus the application should be filed by 2 October 2017 through a specific website application (‘Ariadne’). The decision of the Cyprus tax office will be communicated through the website application. It has been clarified that for the first 2 weeks that the new law will come into force only persons who seek to settle their obligations with a one off payment (see below) will be allowed to claim this procedure, not through the website application but through a submission of a relevant form and payment of the relevant tax at the relevant district tax office.
Exemptions to be provided
Taxes due may be settled with exemptions/discounts as a percentage of the interest and penalties due based on the number of monthly installments. Please see the summary below:
Monthly Installments (%) of exemption
One off payment 95%
2-8 months 90%
9-15 months 85%
16-21 months 80%
22-28 months 75%
29-35 months 70%
36-42 months 65%
43-49 months 60%
50-56 months 55%
57-60 months 50%
- Interest and penalties will no longer apply for cases where this legislation is claimed by the taxpayer;
- The legislation is terminated in cases of non-compliance by the taxpayer with the obligations set out in the notification, resulting in the obligatory immediate settlement of the outstanding of the outstanding balance of the tax liabilities;
We remain at your disposal to assist in claiming the benefits of the provisions of this legislation, emphasizing that we have until 2 October 2018 to achieve the exemptions offered for taxes arising up to 31 December 2015.