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Here's What The European Central Bank's Stress Test Has Uncovered.

29/10/2014 - by Cyprus.com Admin
The European Central Bank has made public the results of the banking health test they performed on 130 of Europe’s top banks.

Four banks in Cyprus participated in the test, Bank of Cyprus, Hellenic Bank, Central Co-op and RCB.

Of the four, only Hellenic Bank failed with a shortfall of €176 million in capital.  As a result, its Board of Directors has to meet urgently to discuss additional equity.

A total of 24 banks within the European Union have been determined too weak to handle a 3 year recession and in Greece, Eurobank Ergasias, National Bank of Greece and Piraeus Bank have shown to have a combined shortfall of €8.7 billion.

Two weeks have been given to the Eurozone banks to find contingency strategies to deal with any flaws uncovered within the next nine months. Those unable to meet this deadline risk facing closure.

More on this story here.

(Photograph from here)

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  • 28/07/2014 - by Eurofast Taxand

    More specifically, the supply of such services to private individuals and non-business customers will always be taxed in the country where the customer belongs - i.e. the Member State of the customer and not the Member State of the supplier. The adoption of the aforementioned changes was part of the “VAT Package” (Council Directive 2008/8/EC amending Directive 2006/112/EC) for purposes of the proper functioning of the internal market.

    Following the changes in the VAT place of supply rules, it was also decided to set up a single electronic portal to allow for the simplified implementation of the new rules (Council Regulation No. 143/2008), namely the mini One Stop Shop (MOSS). The scheme will allow taxable persons to avoid registering in each Member State of consumption. More specific, the application of the scheme will allow taxable persons supplying telecommunication services, television and radio broadcasting services and electronically supplied services to non-taxable persons in Member States in which they do not have an establishment to account for the VAT due on those supplies via a web-portal in the Member State in which they are identified (single point of electronic contact for VAT identification, declaration and payment purposes).

    The Member State of identification is the member state in which the taxable person is registered for using the MOSS. For example a Bulgarian company which makes B2C supplies to customers in Romania, Greece and Cyprus may choose the latter as the Member State of identification and will therefore declare and pay VAT in Cyprus for supplies made in the said countries.

    The MOSS scheme will be available to taxable persons established in the EU (Union Scheme) and taxable persons not established in the EU (Non Union Scheme). Under the Union scheme, the Member State of identification has to be the member state in which the taxable person has established its business. However, if the taxable person does not have its business establishment in the EU, it can choose any member state in which it has a fixed establishment. Under the non-Union scheme, the taxable person is free to choose its Member State of identification.

    Under the Union scheme, the taxable person will maintain the same individual VAT identification number with which it is identified for its domestic VAT returns for the MOSS purposes. Under the non-Union scheme, whereby the taxable person can choose any Member State to be the Member State of identification, the said State will allocate an individual VAT identification number to the taxable person.

    A Guide was prepared by the European Commission in October 2013, providing the necessary guidelines for the MOSS scheme in  relation to Registration, Deregistration, Exclusion and Quarantine period, VAT groups, VAT returns, Payments and Corrections. The guide even though not final, can provide more thorough understanding and significant insight to the MOSS scheme and its practical application.

    Further to the above, a survey was made by Taxand with regards to the invoicing requirements in 2015 for businesses registered in various countries in relation to the provision of services to non-business customers.

    According to the findings, taxable persons registered under MOSS in Bulgaria, Croatia and Greece will need to issue invoices to non-business customers.

    On the other hand, in Cyprus businesses under MOSS will not need to issue invoices to non-business customers. It should also be noted that according to the report prepared on 26 June 2014 from the Commission to the Council it is recommended that member states refrain from the option to require an invoice on B2C supplies covered by the new place-of-supply rules.

    Zoe Kokoni
    zoe.kokoni@eurofast.eu
    +357 22 699 222

    Katerina A. Charalambous
    katerina.a.charalambous@eurofast.eu

    Mini One Stop Shop (MOSS)

  • 25/07/2014 - by Eurofast Taxand

    The seminar will be held at the Eurofast offices in Nicosia (Cypress Centre, Chytron 5, 1302 Nicosia ) on July 29, 2014 at 11am.

    Speaker at the event will be Mr. Imad Abou Nasr, Regional Executive of Eurofast in the Middle East based in Erbil and responsible for operations.

    During the seminar Mr. Abou Nasr will discuss the tax & legal framework, procedure of registering companies, and payroll, employment solutions and work permits for independent contractors. Investment opportunities in Erbil will be discussed in the areas of oil and gas, energy, agriculture, infrastructure and healthcare. The seminar will be followed by a cocktail reception.

    Due to limited seating registrations will be accepted on a "first come-first served" therefore please confirm your participation by July 28, 2014 by email or telephone to Angela Neophytou by email at angela.neophytou@eurofast.eu or by phone at 22 699 222.

    Eurofast Seminar: Doing Business in Erbil (Northern Iraq)

  • 11/07/2014 - by Eurofast Taxand

    Until 2013, the tax was levied on an annual basis according to the market value of the property at 1 January 1980. All owners of property in Cyprus whose 1980 value exceeds €12,500 are liable to pay an annual tax to the Inland Revenue based on the total 1980 value of all immovable property in their name on the 1st day of January.
     
    Based on last year changes, one of the measures which were taken was to reform the fiscal framework of real property. Specifically scales were created in order to calculate the tax for each person or company.

    On 2nd of July 2014, the government submitted a bill suggesting properties worth up to €200.000 to be excluded from the immovable property tax and also to reduce the tax rated. It is expected that 54% of the property owners will be excluded from paying property tax in contrast with last year 40% property owners which they were excluded from the property tax.

    It was also suggested that the tax to be levied would be calculated in accordance with today’s market value. The matter has been subject to intense debate in Parliament. As of the date of writing, 10 July 14 the Cyprus Parliament has finally passed the new law which once again is based on the 1980 valuations. Various Political parties of Cyprus had strongly objected in using the 2013 valuations.

    Zoe Kokoni
    zoe.kokoni@eurofast.eu
    +357 22 699 222

    New Bill for Immovable Property Tax in Cyprus

  • 07/07/2014 - by Eurofast Taxand

    The rationale behind the European company was to create a company having its own legislative framework, which would allow companies incorporated in different member states to merge or form a holding company or joint subsidiary, without facing the legal and practical constraints arising from the existence of different legal systems. A European Company would therefore provide greater mobility for businesses in the integrated EU market and a simpler way for running businesses under a single European label.

    Law 98(I)/2006 introduced the European Company in Cyprus.

    The formation of a European can be achieved by either:

    -  A merging  of two or more public or European companies from at least two different member states;
    -  A creation of a holding European company by two or more public or private limited liability companies, including European companies, from at least two different member states or if it had for at least two years a subsidiary or branch in another member state;
    -  A set up of a subsidiary by two or more companies, including European companies, from at least two different member states or an existing  for at least two years  subsidiary or branch in another member state; or
    -  A conversion of a Cyprus public company, having a subsidiary for at least two years in another member state.

    The requirements for the creation of the European company are the following:

    -  The Minimum required  share capital  must be at least  EUR 120,000.00 (or equivalent in any other currency);
    -  The registered and head office can be situated in Cyprus, but this is not mandatory, it can be different addresses;
    -  It must be registered in the local Commercial Registry and the registration is published in the European Companies’ Official Journal;
    -  The statutes of a Cyprus European company must include its name, registered office and objects of the company. They must also state whether there is a one-tier or two-tier board structure and the number of the members-    Accounting and audit is obligatory; and
    -  SE to be included on the name of the European Company.In relation to the transfer of seat it is important to note that there is no restriction on moving the seat from one member state to the other. In Cyprus the concept of continuation is more important than winding up during the re-domiciliation process as long as this is permissible under the domestic legislation of the new jurisdiction.  

    A special resolution of the shareholders (taking the decision) is mandatory and must be filed at the Cyprus Registrar of Companies.. In addition the following shall apply:

    -  The legislation protects Creditors’ rights in case of the company’s relocation.
    -  The company is entered into in a single national register.The effective date is when the company is registered under the commercial registry of the new member state.

    If an SE wishes to transfer its seat from Cyprus to a jurisdiction outside the European community then the company must follow the procedure of winding up and publish it in the European Official Journal.

    A determining factor for establishing an SE is the tax system of the host country.

    It follows from the above that the tax system of Cyprus makes it an exceptionally ideal and striking location for an SE, as it is a combination of favourable tax rates , a vast network of double tax treaties and a straight-forward tax legislation. Following the complete implementation of the EU Merger Directive by Cyprus pre-existed companies in other Member States can now transform into a Cypriot SE devoid of any tax charge.  

    Zoe Kokoni
    zoe.kokoni@eurofast.eu
    +357 22 699 222+357 22 699 222

    European Company (Societas Europaea) in Cyprus.

  • 26/06/2014 - by Eurofast Taxand

    The ECM constitutes a Multilateral Trading Facility (“MTF”) which operates under the Regulative Decisions adopted by the CSE and it has proven to be the most successful MTF that the CSE has initiated.  The ECM is seen as a "non-regulated market" as it does not come under the continuous and cumbersome conforming obligations imposed to regulated markets by the Cyprus Securities and Exchange Commission (“CySec”).

    Raison d'être


    Its raison d'être is to support the raising of capital for small and medium-size enterprises (SMEs) as well as to enable the easy, fast and affordable admission to public trading.  What distinguishes the latter from the main listing on the CSE, are its simplified listing requirements and trading criteria. 

    Listing methods

    Listing a company on the ECM can effectively be achieved in two ways.  Through a public offering, seeking for more than 2.5 million Euros and addressed to more than 100 persons. In this case a prospectus must be prepared and approval from CySec shall need to be obtained.  Alternatively, the offering can be done through a private placement, that is to say addressed to institutional investors only (strategic or other) or to less than 100 persons and for less than 2.5 million Euros. The approval of CySec is not required in this case but instead, an Admission Document must be submitted to the CSE.  Listing may also be achieved through a combination of the above two.

    An advantageous alternative

    The ECM constitutes an alternative method to raise finance which can be easily obtained at the time of a flotation or later on through subsequent share issues.  Taking into consideration that the regulations imposed upon listed companies on the ECM are lighter, corporate transactions may be carried out in a more cost efficient way.  Moreover, it offers greater marketability since the mere existence of a public market promotes share transactions that were not possible before.  In addition, higher and improved value, through positive share price performance and enhanced corporate profile, substance, recognition and credibility may be some of the advantages offered by the admission on the ECM.  There is no minimum share capital requirement to be dispersed to the public, no criterion as to the minimum market capitalization and no criterion for the minimum shareholders equity.  Last but not least, the ECM constitutes a gateway to a regulated market.

    It should not be misunderstood however, that the ECM is free of any supervision.  On the contrary, the Securities and Exchange Commission indirectly supervises the ECM through its supervision on the CSE as a market operator which operates the ECM.

    Russian CFC Rules

    The Russian Ministry of Finance has recently published a draft law on anti-offshore measures which introduces, amongst others, the concept of controlled foreign companies’ rules (CFC rules).

    The implementation of the said CFC rules essentially empowers the Russian tax authorities to tax international corporate and private structures directly or indirectly controlled by Russian tax residents.  The proposed rules provide, inter alia, that a controlled foreign company is a legal entity whose shares are not listed on a stock exchange approved by the Russian Central Bank.  Therefore, if a Company is listed on a reputable and recognized market, then such a company will simply not fall under the onus imposed by the proposed CFC rules.  

    Conclusion

    In conclusion, Russian tax residents who own companies listed on the Cyprus ECM will be safeguarded by the application of the forthcoming Russian CFC rules.  Having the aforesaid in mind and in combination with the easy of accessibility through its simplified requirements, its reduced regulation, additional capability to attract capital, cost efficiency, marketability and creditability, paired with the enhanced substance that listed companies are offered, listing on the ECM is undoubtedly an alternative which is worthwhile to consider.  

    Antonis Michaelides
    antonis.michaelides@eurofast.eu

    Michalis Zambartas
    michalis.zambartas@eurofast.eu
    Tel : +357 22 699 222

    The Cyprus Emerging Companies Market. A safeguard to CFC rules?

 

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