Further, some treaties provide for tax sparing credits whereby the tax credit allowed is not only with respect to tax actually paid in the other treaty country but also from tax which would have been otherwise payable had it not been for incentive measures in that other country which result in exemption or reduction of tax.

The Cyprus Limitation of Actions Law,  Cap 15, sets out the time limits within which claims must be brought before a court.

The Law was suspended following inter-communal disturbances in 1964 and has remained suspended ever since. Law 159(I)/2011, which was enacted on the 09.12.2011, now provides that the suspension of limitation will cease on the 30.06.2012.

Law 110(I)/2002 was passed, which provided that the Limitations Law would re-enter into force with effect from 1 June 2005. However, Law 110(I) itself was suspended, initially until 31 March 2010, later until 30 November 2010 and then until the 31 March 2011.  Subsequently Law 41(I)/2011, further extended period until the 31 December 2011.

Pekris & Theodorou LLC is a Cyprus law firm with Cyprus lawyers and other legal experts on legal matters involving Cyprus law, EU law and international law. The above should be used as a source of general information only. It is not intended to give a definitive statement of the law and is subject to the disclaimer.

Cyprus Parliament has enacted legislation providing for the partial write-off of interest and penalties on overdue tax, provided that the balance is settled by the 31 March 2012.

The newly enacted legislation applies to individuals and companies alike and affords a waiver of interest and penalties in excess of 5% of the principal amount owed. The law applies to income tax, SDC tax, immovable property tax, stamp duty and capital gains tax for periods up to 31 December 2008.

The law was enacted despite warnings from the office of the Attorney General`s office that it is unconstitutional. In a letter to the House Finance Committee, the Attorney General warned that the legislation contravenes articles 24 and 28 of the Cyprus Constitution, which provide that all persons are equal before the law and that every person is bound to contribute according to their means towards public burdens.

The Attorney General warned that the legislation would have the same effect as a similar law passed in December 2007, which was ruled as being discriminatory by the Supreme Court. In its May 2008 decision, the Supreme Court held that the 2007 law was unconstitutional since it discriminated against taxpayers who comply with their obligations in favour of those who refuse to assume and fulfil the same obligations.

Pekris & Theodorou LLC is a Cyprus law firm with Cyprus lawyers and other legal experts on legal matters involving Cyprus law, EU law and international law. The above should be used as a source of general information only. It is not intended to give a definitive statement of the law and is subject to the disclaimer.

Further Tax Law related information is available here.

The tax bands and rates are therefore now as follows:

Pekris & Theodorou LLC is a Cyprus law firm with Cyprus lawyers and other legal experts on legal matters involving Cyprus law, EU law and international law. The above should be used as a source of general information only. It is not intended to give a definitive statement of the law and is subject to the disclaimer.

Further Tax Law related information is available here.

On the 19th July 2011,  Luxembourg’s Finance Minister Luc Frieden conducted an official visit to Cyprus.

According to the Luxembourg government Mr Frieden exchanged views with his Cypriot counterpart Charilaos Stavrakis, on recent developments in their respective financial sectors and on European and national legislation in this area. Within this context, Cyprus and Luxembourg agreed to initiate negotiations seeking to conclude a bilateral double taxation agreement (DTA) between the two countries, in a bid to strengthen cooperation between the two financial centres.

Mr Frieden also met the governor of the central Bank of Cyprus, Athanasios Orphanides, as well as the president of the Cyprus Securities and Exchanges Commission, Mr Georgios Charalambous.

The MoU has been signed on behalf of the CBRC by its Chairman Mr LIU Mingkang, who visited Cyprus for this purpose and, on behalf of the Central Bank of Cyprus, by its Governor, Mr Athanasios Orphanides.

The MoU follows the basic principles of cooperation between supervisory authorities, as formulated by the Basel Committee on Banking Supervision. The MoU outlines the general framework of mutual cooperation and exchange of information between the two supervisory authorities, for the purpose of facilitating the performance of their supervisory function as well as for the effective supervision and regulation of credit institutions with a cross border presence, in accordance with the respective national laws and regulations.

Pekris & Theodorou LLC is a Cyprus law firm with Cyprus lawyers and other legal experts on legal matters involving Cyprus law, EU law and international law. The above should be used as a source of general information only. It is not intended to give a definitive statement of the law and is subject to the disclaimer.

Provided that the totalamount of the  levy does not exceed 20% of the total taxable profits of the financial Institution, as these are assessed by the Director of Inland Revenue, the law provides for a 0.095% levy on commercial and cooperative bank deposits.

The Cyprus Parliament also approved an amendment to the draft law deleting the provision that the levy be a temporary one of two years and making it permanent.

Another amendment to the draft bill provides that the Governor of the Central Bank of Cyprus and the Authority for the Supervision and Development of Cooperative Societies have the power to impose a fine up to EUR€100.000 to any financial institution that is deemed to have passed the levy onto customers.

The legislation provides that the bank levy will be imposed on the total amount of deposits (local and cross-border) on 31 December each year. The law defines deposits as ‘an amount of money, expressed in any currency, paid or received on terms under which such amount will be repaid with or without interest, or at a premium, either on demand, or at a fixed date, or under conditions agreed between the payer and the recipient of the amount, but where these terms are not related to the supply of goods, or property, services or to the issuing of shares or debentures’.

However the term deposit excludes interbank deposits between banks operating in Cyprus and deposits from foreign financial institutions.

The Cyprus Parliament also narrowly approved an amendment to the draft law deleting the provision that the levy be a temporary one of two years and making it permanent. Another amendment to the draft bill foresees a 100,000 euro fine on any bank deemed to have passed the tax onto customers.

The above should be used as a source of general information only. It is not intended to give a definitive statement of the law and is subject to the disclaimer.

The investigation followed a tip-off by the German company, Henkel. The fines were discounted by 10% after the Unilever and Procter & Gamble admitted running a cartel. Unilever was fined 104m euros and Procter & Gamble was fined 211.2m euros. Henkel was not fined in return for providing the tip-off.

The EU Competition Commissioner Joaquin Almunia said in a statement: “By acknowledging their participation in the cartel, the companies enabled the Commission to swiftly conclude its investigation.”

Unilever sells Omo and Surf, Procter & Gamble makes Tide, and Henkel sells Persil in certain European countries.

The full press release of the European Commission can be found here.

The European Commission has today asked Cyprus to respect EU rules that give nationals from the EU, as well as from Iceland, Norway and Liechtenstein, the right to buy a second home in Cyprus without restrictions.

Since the accession of Cyprus to the EU in 2004, transitional measures were in force that could restrict such acquisitions but these measures expired in 2009. As Cyprus has not yet repealed these restrictions, the Commission is sending Cyprus a reasoned opinion, the second step in the infringement procedure. If the Cypriot authorities fail to take satisfactory measures to remedy the infringement of EU law within two months, the Commission may decide to refer the case to the EU Court of Justice.

What is the aim of the EU rule in question?

Free movement of capital is at the heart of the Single Market and constitutes one of its “four freedoms”. It allows for more open, integrated, competitive and efficient markets and services in Europe. For citizens it means the ability to undertake a range of operations abroad, such as opening a bank account, buying shares in nondomestic companies, or purchasing real estate. For companies it means the ability to invest in and own companies in other European countries, and to play an active role in their management.

How is Cyprus not respecting these rules?

According to the 2003 Accession Treaty, Cyprus was allowed to maintain transitional measures that imposed restrictions on buying second homes for EU/EEA nationals.

These measures would apply for five years after the Accession Treaty entered into force and thus expired on 1 May 2009. By that date, the Cypriot authorities were obliged to repeal the transitional measures. However, this has not been the case.

Since Cyprus has not adopted any new legislation repealing or amending the abovementioned restrictive rules, the Commission is of the opinion that Cyprus infringed its obligations under the EU Treaty rules on the free movement of capital. In this context, the Commission refers to the jurisprudence of the Court of Justice, according to which any incompatibility of national rules with Treaty provisions can only be redressed by adopting other binding domestic provisions, having the same legal force as those which require to be amended, and providing for sufficient legal certainty.

The above should be used as a source of general information only. It is not intended to give a definitive statement of the law and is subject to the disclaimer.

Further Property Law related information is available here.

Orphanides, a member of the European Central Bank’s Governing Council, told the finance committee of parliament, that ‘as an initial target, our aim is to build a fund of around 3.0 percent of GDP.’

It is hoped that this will create an additional safety buffer for the island’s banks.

Orphanides added, ‘our aim is to have this fund ready by September … the creation of a financial stability fund is of primary importance to ensure the credibility of the banking system, irrespective of … public finances which, as we know, are not in the best of state of late.’

Orphanides said the central bank would be drafting regulations for the operation of the fund. He said it would be built on contributions from banks, but did not provide further detail.

Commercial banks said that, in principle, they did not oppose the creation of a financial stability fund.

‘It is however important for our Association to take part in the consultation process for the drafting of any Bill (legislation) in relation to such fund, since we have several core issues as well as other technical provisions we would like to raise,’ the Association of Cyprus Commercial Banks said.

The fund will run independently of plans by the finance ministry to impose a 0.095 percent levy on financial sector deposits.

That levy is expected to generate an estimated 120 million euros for its two-year validity in 2011 and 2012.

The above should be used as a source of general information only. It is not intended to give a definitive statement of the law and is subject to the disclaimer.