Tax and Other Filing Requirements
Cypriot companies are periodically required to submit filings with various authorities in Cyprus concerning taxation, annual returns and other matters. These filings include, for example, the filing of tax returns both for the Cypriot companies and their employees (if any) and returns to the Department of the Registrar of Companies and Official Receiver (the “Registrar of Companies”).
Herein below appears a summary of the filings that a Cypriot company is required to make throughout the year.
Summary of tax filings required to be made by a Cypriot company
End of each month
- Payment of employees’ income tax deductions from employees’ salaries for the previous month (PAYE).
- Payment of tax withheld on payments made to non-Cyprus tax residents during the previous month.
- Payment of special contribution for defence deducted from dividends, interest or rent (where the tenant is a company, partnership, the state or local authority) paid during the previous month, as applicable.
- Submission of the deemed dividend distribution declaration (IR623 form) for the tax year three years preceding the current year (e.g. the declaration for the year ended 31 December 2017 should be submitted by 31 January 2020).
- Electronic submission of the corporation tax return (IR4 form) for companies preparing audited accounts for the tax year two years preceding the current year (e.g. the income tax return for 2018 should be submitted electronically by 31 March 2020).
- Payment of provisional tax by insurance companies (life business) for the first four months of the previous year.
- Payment of special contribution for defence in relation to rent (if such tax is not withheld at source by the tenant), dividends or interest from sources outside Cyprus for the first half of the present year.
- Electronic submission of employers’ return and employees’ details for the total payroll of the previous year (IR7 form). This is a summary statement of employees’ data, statement of PAYE lodgements for the year/period ending 31 December of the previous year and a summary of all employees’ emoluments, tax and other deductions.
- Submission of provisional tax assessment for the current year and the payment of the first instalment.
- Electronic personal income tax returns electronic submission and payment of self-assessment tax.
- Payment of the tax balance of the final corporation tax for the previous year through self-assessment by companies preparing audited accounts.
- Payment of provisional tax by insurance companies (life business) for the second four months of the previous year.
- Payment of second instalment of provisional tax liability for current year.
- Payment of provisional tax by insurance companies (life business) for the last four months of the previous year.
- Payment of special contribution for defence in relation to rent (if such tax is not withheld at source by the tenant), dividends or interest from sources outside Cyprus for the second half of the present year.
Interest and Administrative Penalties
Administrative penalties amounting to EUR 100 or EUR 200, depending on the specific case at hand, will be imposed for late submission of declarations or late submission of the relevant supporting documentation which has been requested by the Commissioner. In the event of late payment of the tax due, an additional penalty shall be imposed at a specific rate of interest based on the unpaid amount.
The rate of interest for late payment is determined by decree by the Minister of Finance and is applicable for the entire year. The official rate for 2020 is 1.75%.
Employees Income Tax Liability (PAYE)
In case of default by an employer in paying tax withheld under PAYE, the interest rate charged for 2020 is 1.75% per annum from the date it becomes due. In addition, a 1% charge is levied for each month of delayed payment.
Social Insurance (employers and employees)
The contributions that the employer is obliged to pay should be paid no later than the end of the calendar month following the month to which the relevant contributions relate. Employers or self-employed individuals who fail to pay the contributions within the time limit stipulated by law are obliged to pay an additional fee ranging between 3% and 27% of the amount of the contribution due to paid, depending on the period of the delay.
Summary of Filings with the Registrar of Companies
Each calendar year, a company registered in Cyprus is required to hold an Annual General Meeting (an “AGM”) of its shareholders and no more than 15 months must elapse between an AGM and a subsequent AGM. So long as the company holds its first AGM within 18 months from its incorporation, it need not hold it in the year of its incorporation or in the following year.
A Cypriot company has an obligation to prepare an annual return (HE32 form) every calendar year within 14 days from the date of the AGM. The annual return is prepared until the reference date of the relevant company – as this is determined in the Cyprus Companies Law, Cap.113 (the “Law”) – and a copy of the annual return must be submitted to the Registrar of Companies within 28 days from the date the annual return was drafted. There is an obligation to append to the annual return documents containing information with respect to the registered office of the company, registers of members and debenture holders, shares and debentures, indebtedness, past and present members and directors and secretary etc.
Furthermore, there is an obligation to notify the Registrar of Companies of all changes in the structure of a Cypriot company which include, non-exhaustively, the following:
- Increase in authorised share capital;
- Issuance and allotment of new shares, i.e. an increase in the issued share capital;
- Transfer of shares in the company;
- Appointment, removal or change in the particulars of the directors or secretary of the company; and
- Change of the registered address of the company.
New Administrative Fines as of 21 April 2020
As of 21 April 2020, the Registrar of Companies will be imposing administrative fines for failure by Cypriot companies to submit the following filings within the deadlines set out in the Law:
- For late submission of a company’s annual return, the Registrar of Companies will impose a one-off administrative fine of EUR 50, plus EUR 1 for every day for which the default continues within the first 6 months, plus EUR 2 for every day thereafter for which the default continues, with a maximum fee of EUR 500 for each default.
- For late submission of a transfer of shares, allotment of shares, changes in the registered office of a company or changes of its shareholders, directors, secretary and/or their details, the Registrar of Companies will impose a one-off administrative fine of EUR 50, plus EUR 1 for every day for which the default continues, with a maximum fee of EUR 250 for each default.