T&L D-briefs - January 2025
In this issue, we:
- Share some important international tax developments;
- Inform you of new and important obligations for employers;
- Share a useful guide on the revised Start-Up Visa scheme;
- Share a useful guide on the protection of Intellectual Property.
- Update you on 'Instant Payments', as announced by the Central Bank.
Tax Developments
International Tax Developments
DAC9: Tax compliance simplification under the Pillar 2 Directive
On 28 October 2024, the European Commission announced the adoption of a proposal for a directive known as "DAC 9", amending Council Directive 2011/16/EU of 15 February 2011 on administrative cooperation in the field of taxation (DAC).
DAC 9, introduces a new category for the automatic exchange of information among EU member states, specifically focusing on the top-up tax information return. This enhancement allows MNEs within the directive's scope to submit their top-up tax information return centrally through the ultimate parent entity (UPE) or a designated filing entity, rather than locally in every jurisdiction where they have a constituent entity.
Furthermore, DAC 9 implements a standardized form, aligned with the OECD/G20 Inclusive Framework on BEPS, which MNEs must use for reporting. This form requires detailed information about their constituent entities, corporate structure, and all data necessary for calculating effective tax rates, top-up tax, and allocation information. Its aim is to reduce the administrative burden on companies by allowing centralized submission of the Pillar Two return. However, MNEs will still need to comply with domestic minimum top-up tax requirements as per each member state's legislation.
Upon the directive's adoption by the EU Council, member states will have until 31 December 2025 to implement DAC 9. MNEs are expected to file their first top-up tax information return by 30 June 2026, with relevant tax authorities exchanging this information by 31 December 2026.
Cyprus – Oman tax treaty
On 8 December 2024, The Republic of Cyprus and the Sultanate of Oman signed a bilateral tax treaty (the Treaty) for the avoidance double taxation. The Treaty was published in the Official Gazette on 13 December 2024 and its provisions will enter into effect on 1 January of the year following the year in which the ratification process is completed by both countries.
The Treaty is based on the OECD Model Tax Convention and its main provisions are briefly outlined below:
Dividends, Interest: No withholding tax (WHT).
Royalties: The Treaty provides for a maximum 8% WHT.
The Treaty is based on the latest version of the OECD Model Convention for the avoidance of double taxation and incorporates the minimum standards of the Base Erosion and Profit Shifting (BEPS) action plan, including exchange of information, mutual agreement procedure, and principal purpose test.
The Treaty is expected to contribute to the development of commercial and economic relations, as well as the promotion of investments between Cyprus and Oman.
Local Tax Developments
New obligations for employers
The Tax Department and the Social Insurance Department have issued announcements regarding the following additional obligations that employers must fulfil by 2025:
1. Submission of key employment terms on 'Ergani' platform.
The key employment terms as defined are the following: Employer details, In the case of a retail business, the type of business, Employee details, Employer’s address, Place of work based on the employment contract and the actual price of work at the time of registration, Type of work and duties assigned, Work start date, Work end date for fixed-term employment, In cases of temporary employment, the details of the indirect employer, Terms and duration of the probation period, Annual leave duration and method of granting, Remuneration - salary, frequency of payment (daily/weekly/monthly/hourly), Regular working hours per day/week, Clarification that the employee’s working hours are either fixed or non-fixed and any other benefits, allowances, bonuses, commission etc.
Deadline: This obligation must be fulfilled by 28 February 2025.
2. Submission of monthly tax withholding statements (PAYE) through the 'Tax For All' platform.
• We have been informed by the Tax Department that they intend to require employers, by 2025, to electronically submit monthly tax withholding and contributions statements through the new computerized system called "Tax For All" (TFA). Previously, PAYE was only paid through the submission of self-assessment via the Tax Portal.
• To facilitate the payment of PAYE and GHS contributions, a monthly declaration needs to be submitted, containing specific details of each individual for whom tax is paid, such as TIN number, gross earnings, PAYE, GHS, etc.
• The monthly declaration can be completed either by online data entry or by uploading an XML file.
• Once the declaration is submitted, the monthly liabilities will be automatically generated based on the information provided, and the employer can proceed to pay the resulting liabilities via TFA, either immediately or at a later time.
3. Submission of the Employer's Withholding and Tax and Contributions Declaration (TD7) through 'Tax For All'.
• The Tax Department has announced that by the first half of 2025, the submission of the Employer Tax & Contributions Withholding Declaration and the payment of taxes and contributions will be facilitated through the TFA system.
4. Until the completion of the submission process of the TD7 Declaration through the TFA System, the following apply:
• Submission of the TD7 Declaration until the year 2023 will be done through the TAXISnet.
• Monthly withholding payments of Tax and Contributions for the years 2023, 2024 and 2025 will be made through the Tax Portal.
5. After the start of submitting the TD7 declaration through the TFA, the following apply:
• Both the submission of the TD7 Declaration and the payment of withholding tax and contributions will be carried out exclusively through the TFA system.
• Starting from the year 2025 onwards, monthly TD7 returns will be mandatory for submission.
• All monthly TD7 returns (from January) must be submitted, including those for which tax and contributions payments were made through the Tax Portal.
• For the submission of the monthly TD7 Declaration, the use of a TIN is mandatory for each employee.
• For the submission of the TD7 Declaration through the TFA system, informative guides will be issued, and online seminars will be conducted.
Timing: The starting date of the submitting the TD7 Declaration and pay Tax and Contributions through the TFA system will be announced with the issuance of a relevant announcement.
Navigating the latest changes to the Cyprus Start-Up Visa |
On 18 December 2024, the Council of Ministers approved a number of significant changes to the Cyprus Start-Up Visa Scheme aimed at fostering innovation and attracting entrepreneurial talent from non-EU countries.
The key changes to the Cyprus Start-Up Visa Scheme are part of the broader Policy Statement on Strengthening the Entrepreneurial Ecosystem in Cyprus, which aims to foster innovation, create new jobs, and drive economic development by expanding eligibility criteria, simplifying application procedures, providing additional support services, offering incentives, and enhancing networking opportunities for entrepreneurs. By easing the entry and operational requirements, Cyprus positions itself as a prime destination for start-ups looking to establish, operate, and grow in a supportive and dynamic environment.
The updated Start-Up Visa Scheme came into effect on 1 January 2025.
Intellectual Property – Comparative Guide Legal 500 |
Intellectual property rights are believed to be the ultimate recognition of creative process and effort. This is why their protection is of paramount importance. Effective protection begins well before the launch of the final product which may consist of different types of intellectual property rights (trademarks, design rights, patents, copyrights etc). Knowledge of the IP rights attaching to a product is the 1st step to effective protection. This allows for effective planning, budgeting and taking necessary action for protecting IP.
Hadjianastassiou, Ioannides LLC (member of the Deloitte Legal network in Cyprus) contributed the Cyprus chapter to the Legal 500 comparative guide on IP. The chapter comprises 32 questions with concise information on IP rights, their protection and enforcement in Cyprus.
Instant Payments in Cyprus: A New Era in Financial Transactions |
As of 9 January 2025, the Central Bank of Cyprus has announced a significant leap in payment processing technology by accepting instant payments among others from Cyprus Banks, government departments and agencies.
Mark your calendar!
31 JANUARY 2025 |
28 FEBRUARY 2025 |
· Payment deadline of SDC and GHS contributions on deemed dividend distribution for the profits of tax year 2022 · Submission deadline for DAC7 report. |
· Deadline for electronic submission of the income tax return for tax year 2022 for companies with an obligation to submit a SIT. |
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