T&L D-briefs - November 2025
T&L D-briefs is a bi-monthly tax and legal update, through articles, videos and other sources, all bundled together in a newsletter.
In this issue, we share:
In this issue, we share:
- the latest EU list of Non-Cooperative Jurisdictions (unchanged);
- the latest OECD guidance on the creation of a PE in relation to remote working;
- update in relation to the Cyprus Tax Reform;
- recent findings by the Cyprus Audit Office concerning non-resident artists and relevant tax & VAT considerations.
Tax Developments
International Tax Developments
The Council of the European Union Confirms Unchanged List of Non-Cooperative Jurisdictions
On 10 October 2025, the Economic and Financial Affairs Council (ECOFIN) confirmed the EU list of non-cooperative jurisdictions for tax purposes without changes. The list (Annex I) consists of the same 11 jurisdictions as per the previous list issued on 18 February 2025: American Samoa, Anguilla, Fiji, Guam, Palau, Panama, Russia, Samoa, Trinidad & Tobago, US Virgin Islands, and Vanuatu.
OECD model tax treaty update: New guidance on remote working permanent establishments
On 19 November 2025, the OECD published approved updates to the OECD Model Tax Convention on Income and on Capital (“the OECD model tax treaty”). The updates include changes to the OECD model tax treaty’s commentary on the definition of a “fixed place of business” permanent establishment in situations of cross-border remote working. Click here for an overview of these changes and other key amendments.
Local Tax Developments
Cyprus Tax Reform update
On 26 February 2025, the Cyprus Tax Reform Team, led by the Center of Economic Research of the University of Cyprus, presented its proposals to key stakeholders at the Presidential Palace. The proposals went through the legal drafting process and were ultimately submitted to the Council of Ministers for approval. On 18 July 2025, the Cyprus Ministry of Finance published six draft tax bills. The bills went through public consultation and on 30 October 2025 six revised tax bills were published, together with a report.
In brief, the main issues addressed in the latest draft tax bills are as follows:
Personal tax measures
The tax-free threshold rises to €20.500, with restructured brackets and a top marginal rate of 35% applying on taxable income exceeding €80.000.
New tax deductions for children, housing, and green investments enhance equity and encourage sustainable behaviour.
The non-domicile regime for individuals is retained and allows non-dom individuals to opt for an extension of five years (renewable for another five years) tax period by paying a lump-sum amount of €250.000 covering the entire five-year period.
A tax-free threshold of €200.000 for various retirement and compensation payments is introduced and the income exceeding the threshold taxed at a flat rate of 20%.
New tax measures for businesses
Corporate income tax rate increases from 12.5% to 15%.
The deemed distribution of dividends for profits from 1 January 2026 is abolished.
The special defence contribution on actual dividend distribution of profits from 1 January 2026 is reduced from 17% to 5%.
Special defence contribution on concealed dividends is introduced at the rate of 10%.
The special defence contribution on rental income is abolished.
An 8% flat tax rate is introduced for gains from the disposal of crypto assets.
Loss carry-forward period is extended from five to seven years.
The reform also introduces mechanisms to combat tax evasion.
Timeline
The provisions are currently being discussed at the House of Representatives. The plan would be to complete the discussion and vote the final bills before the end of the year for its provisions to be effective from 1 January 2026.
A detailed tax alert will be issued once the final draft bills are voted and published in the Government Gazette.
Non-Cyprus tax resident artists performing in Cyprus
In the last few years, Cyprus has become a hot spot for famous entertainers visiting from abroad. This includes worldclass singers, popular DJs and well-known comedians.
But what are the tax considerations when organizing such events?
In a special report issued on 21 October 2025, the Audit Office of the Republic of Cyprus found out that in major entertainment venues, a large number of concerts performed by well-known international artists were organized without the corresponding “artist tax” being withheld and paid.
According to Article 23 of the Income Tax Law (ITL), titled “Profits of professionals and artists”, the gross income obtained by any person who is not a Cyprus tax resident from the exercise of any profession or occupation in Cyprus, the remuneration of persons who are not Cyprus tax residents, who provide entertainment services to the public and the gross receipts of any theatrical or musical group or other group of persons providing entertainment services to the public, arising from performances in Cyprus, are subject to a 10% taxation.
Furthermore, the Tax Department had not received any information from the organizers of such artistic events. Non-compliance with the procedures set out in the VAT legislation can lead to discrepancies in VAT reporting and significant public revenue losses.
According to VAT Notification 27/2020, any individual or legal entity planning to organize an artistic event should notify the Tax Commissioner of their intention by submitting the Declaration Form for Holding an Artistic Event (Form TD 2007) 2020. The form should include, among others, information on the expected income and expenses from the event and should be submitted at least one month before the event. A separate form should be completed for each event.
The relevant VAT officer calculates the amount of VAT which should be paid in advance (i.e. prepayment) and which should correspond to at least 30% of the total estimated VAT payable. The organizers will receive a letter specifying the VAT amount which should be paid electronically within 30 days from the date mentioned in the letter.
Adherence to both income tax and VAT legislation is crucial for ensuring compliance and avoiding penalties when organizing events with non-Cyprus tax resident artists in Cyprus.
Archive
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