T&L D-briefs - March 2025
In this issue, we:
- Share important international tax developments;
- Outline the proposed tax measures from the Cyprus Tax Reform Team;
- Present the case of Cyprus as a tax residency option for UK non-doms;
- Present VAT in the Digital Age.
Tax Developments
International Tax Developments
EU list of non-cooperative jurisdictions for tax purposes
On 18 February 2025, the EU Council published (link) the latest list (EU black list) of non-cooperative jurisdictions for tax purposes without any changes from the previous list.
As a reminder, Cyprus already applies withholding tax rules (link) for payments made to blacklisted jurisdictions and it is soon expected to introduce withholding tax (WHT) rules on dividend payments to low tax jurisdictions.
Upcoming tax implications on payments made to low tax jurisdictions
As part of Cyprus’s Recovery and Resilience Plan (link), the Government has committed to introduce WHT on outbound dividend payments and non-deductibility rules of interest and royalty payments to companies in “low tax jurisdictions”. A draft bill (in Greek only) has been published in the website of the House of Representatives (link) which is still under review. In terms of effective date, there is no clarity, but it will most likely be May 25 or Jan 26.
ECOFIN adopts DAC 9
On 11 March 2025, the Council of the EU, reached a political agreement on a new directive (referred to as “DAC 9”). The main aim of DAC 9 is to ensure that EU tax authorities receive and automatically exchange relevant tax information on Pillar Two. It also creates a standard form, which in-scope groups will be required to use to report tax-related information that is necessary to ensure proper functioning of the system on the minimum rate of corporate tax and minimize the burden on businesses.
For more details click here.
Local Tax Developments
Proposed tax law amendments from the Cyprus Tax Reform Team
On Wednesday 26th of February 2025, the proposals of the Tax Reform Team, led by the Center of Economic Research of the University of Cyprus, were presented to key stakeholders at the Presidential Palace.
The proposals are expected to be available for public consultation and will subsequently be submitted to the Council of Ministers for approval. For a proposal to be effective, it will have to be voted by the Parliament.
Cyprus as an alternative tax residency option for a UK non-dom |
With the UK changing its non-domicile regime from April 2025, High-Net-Worth Individuals (HNWIs) are seeking alternative tax residency options. Cyprus presents a highly attractive option with its favourable non-dom regime, offering significant tax benefits such as no taxation on dividends, interest, and capital gains.
VAT in the Digital Age (ViDA) |
This article outlines the European Union’s newly adopted package, VAT in the Digital Age (ViDA), which aims to modernize VAT systems to adapt to the rapidly evolving digital economy. The framework is built on three core pillars: Digital Reporting, which enhances real-time transaction tracking and minimizes VAT fraud through electronic invoicing and reporting; Platform Economy, which seeks to streamline VAT collection from digital platforms and online marketplaces, ensuring fair taxation; and Single VAT Registration, which simplifies cross-border trade by allowing businesses to engage in EU-wide commerce with a single VAT registration, thereby reducing administrative burdens and fostering a more interconnected digital market.
Archive
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