Tax Atelier is a boutique tax firm in Cyprus specializing in Cyprus and international tax. It combines expertise from experienced professionals recognized as some of the best tax advisors in Cyprus. The firm's services include international tax advice, tax compliance, and indirect tax services. Recent changes to Cyprus tax legislation introduced incentives for new investments and setting up regional headquarters, including a notional interest deduction on equity and employment incentives.

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Tax Atelier is a premier boutique tax
firm practising exclusively in the field of
Cyprus and international tax. The firm
combines the expertise, professionalism
and knowledge of serving international
clients for a considerable number of
years, both locally and internationally,
with the personal approach,
responsiveness and creativity of a
boutique firm.
Our directors are amongst the most
experienced professionals and are
generally recognized as some of the best
tax advisors in Cyprus with proven track
record and excellent reputation within
Cyprus and internationally.
Our Services
• International Tax Advice
• Tax Compliance
• Indirect Tax Services
Neofytos Neofytou
the managing director of
the firm, one of the best-
known tax advisors in
Cyprus.
Costas Savva
with experience
in corporate
tax and
VAT.
Christos Theophilou
a person at the forefront of
developments in the Cyprus tax market,
well-known for the establishment of the
first international tax school in Cyprus.
Demis Ioannou
an expert in international
tax planning for
companies and
individuals.
Recent and Proposed Changes
in the Tax Legislation of Cyprus
By Neofytos Neofytou
I
n July 2015, Cyprus introduced part of the proposed chang-
es to its tax legislation for the purpose, amongst others, of
introducing incentives to encourage new investments in
Cyprus and the setting up of regional headquarters on the
island by international groups, including those in the shipping
industry. The remaining changes are expected to be introduced in
September-October 2015. The most important amendments to
the previous laws are summarized below.
A. NEW INVESTMENT
OPPORTUNITIES IN CYPRUS
1. Notional interest deduction on equity
Cyprus has introduced provisions to allow the
notional deduction of interest in cases where
funds are introduced to the company in the form
of equity instead of interest- bearing loans. The
main provisions are:
• Deemed interest deduction will be allowed
on “new equity” funds introduced into a company after 1
January 2015.
• The deemed interest will be calculated on the basis of a
“reference interest rate”. This rate is equal to the yield on the
10-year government bonds, plus 3%.
• The notional interest to be deducted cannot exceed 80% of
the taxable income of the company.
2. New capital expenditure
Under existing rules, capital expenditure incurred during the
years 2012, 2013 and 2014 qualifies for increased wear and
tear allowances. It is proposed that this benefit be extended
for capital expenditure incurred in the years 2015 and 2016.
B. ESTABLISHING OFFICES AND
RELOCATING SENIOR STAFF IN CYPRUS
A number of incentives for encouraging the setting up of
regional headquarters in Cyprus by international groups,
including those in the shipping industry are introduced.
1. Employment incentives
Under current law, 50% of the income from employment
in Cyprus which commences after 1 January 2012 of a per-
son who was not tax resident of Cyprus during the previous
tax year is exempt from taxation for a period of five years,
provided the income from employment in Cyprus exceeds
€100.000 per annum. It is now proposed that the period of
the incentive be extended to 10 years.
2. Introduction of the “non-dom concept” for defence
tax purposes
Currently, the defence levy is payable only by Cyprus tax
resident individuals and is payable on dividends, interest
and rental income earned by the tax resident individual both
from sources within Cyprus and outside Cyprus. The law
has been amended so that Cyprus tax resident individuals
who are not considered to be “domiciled” in Cyprus would
be exempt from payment of the defence levy on dividends,
interest and rents, even if they are considered to be tax resi-
dents of Cyprus.
C. OTHER CHANGES
• Extending the group loss relief provisions to cover losses of
overseas subsidiaries.
• Exchange differences will no longer be taxable/tax
deductible (except in the case of companies trading
in foreign).
• In the case of transactions with related parties when an
adjustment in the income of the one party, a corresponding
deduction should be given to the other party to the transac-
tion.
Our directors are:
Excellence in Taxation
CONTACT INFORMATION
Taxatelier Ltd
Address: Delfon Street 10, 5th floor, 1101 Nicosia, Cyprus
Postal Address: P.O Box 24699, 1645 Nicosia, Cyprus
Tel: (+357) 22875720
Fax: (+357) 22875721
e-mail: info@taxatelier.com.cy
Website: www.taxatelier.com.cy