Cyprus introduces new tax incentives.

President Nicos Anastasiades in his speech at the 54th AGM of the Institute of Certified Public Accountants announced tax incentives that are aimed to improve Cyprus economy and to attract wealthy foreign nationals.

The reforms include tax breaks and extension of increased capital allowances on equipment and buildings until the end of 2016 to encourage the flow of new capital in businesses. Cyprus government plans to introduce the non-domiciled resident status in order to attract foreign entrepreneurs and wealthy individuals. In this case the substantive incentive is the exemption from the special defense contribution, provided these individuals choose to be Cyprus tax residents. The tax incentives relating to the revenues of an individual who was not a resident of the island before the start of his employment will also be kept in place.

Substantial changes are announced in real estate field so as to encourage transactions in this sector. Cyprus government plans to introduce full exemption from the capital gains tax (20%) of any future sale of immovable property acquired between the day the law is enacted and the end of 2016. A 50% cut in property transfer fees will continue. The decision on the integration of the municipal and state immovable property taxes into one was also made; furthermore, it will be calculated on the 2013 evaluation at a rate of 0.1%.

According to the finance minister, Haris Gorgiades, the overall reduction of tax revenue from transactions and possession of real property is estimated at €21m, however, it does not take into account the positive impact from an increase in transactions. He also noted that adjustments to the tax system make Cyprus taxation framework simpler and more effective. Several modifications are included to bring into line Cyprus tax framework with European directives and decisions of the European Court.

Source: Cyprus Property News

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