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2013.02.22 - Cyprus: Amended Regulations Regarding the Fixed Annual Fee.

 

On 6 August 2011, the Parliament of Cyprus voted for the first set of measures to improve the position of the state budget.

Under such measures, Cyprus Companies Law, Chapter 113 was supplemented with section 391, whereby all companies registered in Cyprus shall pay a fixed fee of EUR 350 per year.

It was laid down that the fee for 2011 had to be paid not later than by 31 December 2011, and the fee for 2012 not later than by 30 June 2012.

The law provides for penalties for delayed payment of the fee: if the delay is up to 2 months, the penalty amounts to 10% of the fee, and if the delay is 2-5 months the penalty amounts to 30% of the fee.

After 5 months of delay, the process of the company’s removal from the register may be initiated.

The initial version of this regulation provided that inactive companies (Dormant Companies) were not obliged to pay the fee in years 2011 or 2012.

In its turn, on 1 February 2013 Law 6(1)/2013 was adopted to amend section 391. In accordance with the amendments, the company has to pay the annual fee for 2012 even if it was dormant in 2012. To avoid the above penalties, the fee for 2012 has to be paid not later than by 29 March 2013.

In addition, in accordance with the amended regulations, the fee is payable regardless of the date of registration in 2012, i.e. even companies registered on 30 December 2012 have to pay the fee for 2012.

In 2013 or in subsequent years, no exemptions from the fee are available: all companies have to pay the fee of EUR 350 without exception, including those that were dormant. The fee for 2013 is payable by 30 June 2013.

International Overseas Services comments:

Companies registered in Cyprus are very popular among businessmen, due to their benefits for investment and holding operations, international tax treaties entered into by Cyprus, as well as the operation of the EC Parent/Subsidiary Directive.

With this aspect in view, the fixed state fee of EUR 350 is quite adequate.

It is important to take into account that the procedure of paying the fee to the treasury takes some time, hence this should be made in due time, without delaying the payment to the above deadline dates.

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