Tax Rulings – New Circular issued by the Tax Department
Following the EU Tax Transparency Package, Directive 2011/16/EU has been amended.
In order to comply with the requirements, the Cyprus Tax Department has released circular 2016/13 including the below amendments that set fees on the submission and handling of tax rulings:
Fees imposed on ruling requests
All ruling applications submitted to the tax authorities of Cyprus, shall be subject to the following fees from May 2016:
- EUR€1.000 for rulings without an expedition request
- EUR€2.000 for rulings with an expedition request
Payments shall be carried out through JCCsmart and payment codes shall be marked as 911.
Expedited requests shall be responded within 21 working days on the condition that all relevant facts and information relating to the case have been duly submitted.
Request without expedition shall be handled in chronological order.
Ruling applications on matters for which the Tax Department has an explicit obligation to respond by law, shall be exempted for payment provided that such applications they are submitted to the relevant District offices. The exemptions applies to requests concerning:
- Requests for the exemption from taxation of a reorganization plan falling under s.30 of the Cyprus Income Tax Law concerning restructurings
- Requests for the application of the relevant tax exemptions on loan restructurings processes
- Requests submitted by an employer in relation to whether an ex-gratia or other payment to an employee upon departure are subject to tax for PAYE purposes.
- Requests concerning the submission to the Tax Department of a request under s.31 of the Cyprus Stamp Duty Law.
Αdditional information and submission procedure
Due to the obligations imposed by the Administrative Cooperation Directive in relation to the mandatory exchange of information between member states and the EU Commission as regards advance cross-border rulings, the ruling request should be accompanied by document T.D.219/2016 and the payment receipt. Further as per the mandate of previous Circular 2015/13, the letter of request should include all relevant information regarding the transaction and the views of the taxpayer as well as a clear description of the subject matter of the request.
Requests will only be submitted electronically at email@example.com in the following manner:
- A single .pdf file will be submitted containing payment the T.D.219/2016 form (duly completed), the request and the payment receipt
- Another copy of T.D.219/2016 will be attached to the email in Word format but without the attachments.
Definition of advance cross-border ruling
Any agreement, communication or other instrument or action with similar effects on the interpretation or application of a legal or administrative provision concerning the administration or enforcement of
· The Income Tax Law
· The Special Contribution for Defence Law
· The Special Contribution Law
· The Capital Gains Tax Law
· The Stamp Duty Law
· The Assessment and Collection of Taxes Law
· The Immovable Property Tax Law
may be characterized as an advance cross-border ruling.
A ruling is deemed as an advance cross-border ruling if all of the three following conditions are satisfied:
- Is issued, amended or renewed to a particular person (or group of persons) and upon which such person is entitled to rely, and
- refers to a cross-border transaction or the question of whether or not the activities carried out by a person in another jurisdiction create a permanent establishment, and
- is made in advance of the transactions or activities carried out in the other jurisdiction which may create a permanent establishment or in advance to the filing of the tax return covering the period in which the transaction (or series of transactions) took place and concerns:
– the making of Investments
– the provision of goods or services
– the use or financing of tangible or intangible assets.
A cross-border transaction means a transaction (or a series of transactions) where:
- not all of the parties to the transaction or series of transactions are resident for tax purposes in the Member State issuing, amending or renewing the advance cross-border ruling;
- any of the parties to the transaction or series of transactions is simultaneously resident for tax purposes in more than one jurisdiction;
- one of the parties to the transaction or series of transactions carries on business in another jurisdiction through a permanent establishment and the transaction or series of transactions forms part or the whole of the business of the permanent establishment. A cross-border transaction or series of transactions shall also include arrangements made by a person in respect of business activities in another jurisdiction which that person carries on through a permanent establishment; or
- such transactions or series of transactions have a cross border impact.
For the purposes of the cross-border exchange of information, a business shall include any form of business but shall not apply for rulings that concern or include exclusively the tax affairs of one or more individuals.
Period of application and obligations of taxpayers
Rulings issued shall apply so long as the conditions and data on which they were based on remain the same and provided that there is no amendment to the relevant law or regulations or that no circular has been issued that has an impact on the ruling issued.
The taxpayer is obliged to notify the Tax Department the soonest possible with regards to any changes on the facts and circumstances that may substantially affect the ruling issued including and any important change to the parties involved.
The new procedure will apply for requests submitted as of 30 September 2016
For more information and clarification do not hesitate to contact us