We would like to remind you of the Special Defence Contribution tax on the Deemed Dividend Distribution on 2017 accounting profits which must be paid to the Cyprus tax authorities by 31 January 2020.
Tax provisions on deemed distribution of dividends.
The tax provision applies to the profits of Cyprus tax resident companies that are attributable directly to Cyprus tax residents and domiciled shareholders. It also applies to tax resident corporate shareholders, the ultimate or immediate physical shareholders of which, are tax resident individuals domiciled in Cyprus.
These provisions do not apply to the proportion of profits attributable directly or indirectly to non-Cypriot tax resident shareholders or to Cypriot tax resident that are not Cypriot-domiciled.
When do the deemed distribution of dividends provisions apply?
Any Cyprus tax resident company which has not distributed at least 70% of its profits within two years from the end of the year in which the profits are attributable, is subject to the provisions of deemed dividend distribution. In such a case, the undistributed part of such profits is subject to Special Defence Contribution (SDC) at the rate of 17%.
Payment of Special Defence Contribution Tax
Companies with accounting profits for tax year 2017 that fall within the Deemed Distribution of Dividends provisions, would have to declare an appropriate amount of dividend in order to meet the 70% threshold of distributed profits on or before 31st of December 2019 and where applicable, pay the relevant SDC only electronically via JCC smart (category 603: Contribution for Defence deducted from dividends).
Otherwise, on 31st of December 2019, 70% of the undistributed profits of 2017 will be treated as dividends payable to the Cyprus tax resident shareholders (individuals or corporations) (deemed dividends) and will be subject to Special Defence Contribution (SDC) at the rate of 17%. The SDC will need to be paid on or before the 31st of January 2020 only electronically via JCC smart (category 623: Special contribution for Defence on deemed dividends).
We are at your disposal to assist you with the relevant calculations and any further information or clarification you need.
Contact persons
Leonidas Papadopoulos Pavlos Tsiaklides
This email address is being protected from spambots. You need JavaScript enabled to view it. This email address is being protected from spambots. You need JavaScript enabled to view it.
+357 22 100 192 +357 22 100 192
Head of Accounting Head of Audit
We would like to remind you for the requirements of the Cyprus Tax Legislation (Assessment and Collection Law as amended in 2002, article 24) regarding the filing of temporary tax returns and relevant temporary tax payments for the year 2019.
Please note that a Temporary Tax Assessment of the estimated net taxable profit for the year 2019 (if any), should be submitted to the Tax Authorities by 31st of July 2019. The resulting tax is payable in two equal installments as per the following deadlines:
- 1st instalment: 31st of July 2019
- 2nd instalment: 31st of December 2019
Any final resulting tax liability for the year 2019 should be settled by 1st of August 2020.
Your estimation of the taxable profit (if any) must be as close as possible to the actual net taxable profit of the company and any taxes underestimated may be liable to a 10% surcharge. If you require assistance in calculating your estimated taxable profit, then please provide us with an estimated income statement (detailed) for the year and we will provide you with a forecast income tax computation together with our advice as to whether you should proceed with the filing of a Temporary Tax return or not. It is important to note that companies with no taxable profits do not need to deal with the submission of this return.
Revision of the Temporary Assessment form
Following the submission of the provisional income tax return you may submit a revised declaration (upwards or downwards), at any time before 31 December 2019. However, submitting a revised provisional tax declaration with a decreased estimated taxable profit may not result in an immediate refund of the provisional tax already paid until the final tax computations are filed and agreed with the Cyprus tax authorities.
Interest and Penalties
- An administrative penalty of 5% is imposed on each instalment if the company fails to pay the declared tax by the due dates stated above.
- Interest on an overdue instalment of the tax is calculated at an annual interest rate of 3,5%, on the basis of completed months.
- If the provisional tax declared is lower than the 75% of the actual tax payable for the year, then an additional 10% tax is imposed on the difference of the two.
As the temporary tax relies on the management’s best estimate, it is our recommendation that this should be dealt with only by companies which have their accounting records up to date and are in a position to accurately estimate what the expected taxable profits will be at the end of the year.
For any further information, or if you would like us to proceed with assisting you with the above, please do not hesitate to contact us.
You could proceed with the payment of the provisional tax through the web directly* at:
https://www.jccsmart.com/e-bill/merchants/4888/outlets/723/invoices/classified?node=4
* (Registration to JCC is required)
Alternatively, we can take over of the above responsibility. The estimation of profits and transfer of funds in our client’s bank account should reach our office by the 15th of December 2019, otherwise we will consider it as an assumption by you of the responsibility to comply with this obligation.
Please bear in mind that our fees for the above will be €50 plus VAT (total €59,50).
Our client’s bank account details can be found below:
CosmoCo Ltd (Clients A/C)
Bank of Cyprus Public Ltd
Account Number: 357003572612
IBAN: CY18002001950000357003572612
Swift Code: BCYPCY2N
On the transfer details please indicate your Company name and "Temporary Tax for 2019".
We remain at your disposal for anything you may need in connection with the above.
Contact persons
Leonidas Papadopoulos Pavlos Tsiaklides
This email address is being protected from spambots. You need JavaScript enabled to view it. This email address is being protected from spambots. You need JavaScript enabled to view it.
+357 22 100 192 +357 22 100 192
Head of Accounting Head of Audit
We would like to inform you that the 2018 Corporate Income Tax Return (T.D.4) template has been published by the Cyprus Tax Authorities.
Deadline
Please note that the 2018 T.D.4 needs to be submitted electronically (through Taxisnet) by the 31st of March 2020.
Failure on submission
A penalty charge of €100 is imposed for failure to submit the 2018 T.D.4 within the deadline.
In the cases that the tax return is requested by the Cyprus Tax Authorities (CTA) in writing, then the penalty for failure to submit within the due date is increased to €200.
It is also noted that in the 2018 T.D.4, the tax authorities have included an additional field, requesting taxpayers who deal in intra-group financing arrangements to confirm whether a Transfer Pricing Study (TPS) has been prepared in order to support the taxpayer’s position or whether the safe harbour rules were followed.
Kindly note that if a taxpayer selects to apply the safe harbour rules, then the back-to-back financing arrangement could still be reported to foreign tax authorities under the exchange of information rules.
Brief explanation of Transfer Pricing Circular
The Cyprus Tax Authorities (CTA) have issued on 30 June 2017 the Circular in relation to the Transfer Pricing Framework (the “Circular”), for companies carrying out intragroup financing activities in Cyprus.
The “Circular” is effective as from 1 July 2017.
The “Circular” applies to the following entities which are involved in back-to-back intragroup financing transactions:
- Tax resident entities.
- Permanent Establishments.
Back-to-back intragroup financing need to meet the following criteria in order the “Circular” to be applicable:
- Granting of loan or cash advances to related companies.
- The granting of loan or cash advances to be interest-bearing (or should be).
- Financed by financial means (e.g. debentures, private loans, cash advances and bank loans).
- Intermediary financing company is Cyprus tax resident.
Transfer Pricing Study (TPS)
TPS is the supporting document to be provided to Cyprus Tax Authorities as evidence that the transaction which took place was based on the Arm’s Length Principle.
In case you have intra-group back-to-back financing arrangements, for which no transfer pricing study has been prepared, it is highly advisable that you should contact us in order to support the Company’s tax position.
We are at your disposal for any further information or clarification you need.
Contact persons
Leonidas Papadopoulos
(Head of Accounting)
This email address is being protected from spambots. You need JavaScript enabled to view it.
+357 22 100 192
Pavlos Tsiaklides
(Head of Audit)
This email address is being protected from spambots. You need JavaScript enabled to view it.
+357 22 100 192
We would like to remind you for the requirements of the Cyprus Tax Legislation (Assessment and Collection Law as amended in 2002, article 24) regarding the filing of temporary tax returns and relevant temporary tax payments for the year 2019.
Please note that a Temporary Tax Assessment of the estimated net taxable profit for the year of 2019 (if any), should be submitted to the Tax Authorities by 31st of July 2019. The resulting tax is payable in two equal installments as per the following deadlines:
- 1st installment: 31st of July 2019
- 2nd installment: 31st of December 2019
With reference to the above subject, we would like to remind you that all companies incorporated in Cyprus, irrespective of whether they are active or not, or have assets or not, are subject to a €350 levy per annum.
The last day of payment of the annual levy for the year 2019 is the 30th of June 2019. For a late payment of the 2019 Annual Levy, a penalty will be imposed and the total amount to be paid will be as follows:
- €385 from 01/07/2019 until 31/08/2019
- €490 from 01/09/2019 until 30/11/2019
You can proceed with the payment of the annual levy online* through JCCsmart by clicking at:
https://www.jccsmart.com/e-bill/invoices/2749/pay
* (Registration to JCC is required)