In light of the recent outbreak of Coronavirus (COVID-19) in Cyprus, the government, further to taking all necessary measures to contain the spread of the virus (132 confirmed cases as of 26 March 2020)*; announced a number of further measures to support the country’s economy and introduced a €700 million budget to support the viability of businesses during this critical period.
Key direct tax, VAT and other measures include the following:
1. Indirect Taxation (VAT)
- Temporary suspension of the obligation to pay VAT until April 30th, for undertakings whose turnover did not exceed €1 million in 2019 or has fallen by more than 25%. Arrangements shall be made so that the relevant VAT payments are made no later than November 10th.
- Temporary reduction of VAT from 19% to 17% for a period of two months (1 April – 31 May).
- Temporary reduction of VAT from 9% to 7% for a period of three and a half months (1 April – 15 July).
2. Direct Taxation
- Extension of the deadline for submission of the Tax Returns for the year 2018 from 31st March to 31st of May.
- Special arrangements to those enrolled to the government’s programme of Schedule Debts.
3. General Healthcare System (GESY)
Non-payment of the additional contribution for a period of two months. The suspension applies for the period from April 1st to May 31st.
4. Other business measures
A Support Plan for Small Businesses, amounting to €10 million, for businesses employing up to 5 people, under the condition that they keep employing their employees and have suffered a loss bigger than 25% of their turnover. The Plan foresees a subsidy of 70% of the workers’ salary.
5. Banking Sector
- Release of €1.4 billion of capital to support restructuring on existing business and household loans.
- Easier and immediate provision of loans to businesses and households to cope with today’s financial difficulties.
- Short-term loan restructuring to affected customers.
- More favourable interest rates and charges.
6. Companies Sector
The Registrar of Companies has implemented the following measures in support of companies incorporated and existing in Cyprus:
- Extension of the obligation to pay the annual levy for 2020 until 31 December 2020 without the imposition of any penalties.
- No penalties will be imposed for the late filling of certain notifications – such penalties will be imposed from 2021 onwards.
- Extension of the obligation to submit annual returns for 2020 by 28 January 2021 without the imposition of any penalties.
- Suspension of the process of deregistration of companies which failed to submit their annual returns until January 2021.
*Prohibitions and Measures currently in Place
On March 15, the government of the Republic of Cyprus determined that the country is facing a state of emergency and implemented measures to address the continued outbreak of COVID-19. Some of the prevention and protection measures currently in force are outlined below:
- As of March 24th until April 13th, subject to certain exceptions, all unnecessary movement is prohibited.
- As of March 21st, all flights to the Cyprus airports have been banned for a period of 14 days (with the exception of cargo, humanitarian and repatriation flights).
- Entry into Cyprus is allowed to certain citizens who, upon their arrival, submit a medical certificate that they have been tested for coronavirus by certified medical centers from their country of origin.
- Private and public sector businesses that provide services to the public continue their operations provided that the number of customers, including employees, do not exceed one person per 8 square meters of usable space.
Royal Pine and Associates Limited is in constant monitoring of the effects of COVID-19 and will issue further announcements if necessary. Our team can further assist you in case you need any clarifications or advice on how the above measures may affect you or your interests.
The authors of the article are Anastasia Sarkisian and Maria Vira.
Anastasia is a legal consultant at Royal Pine & Associates. She is qualified lawyer with experience in the corporate field and admitted member at the Cyprus Bar Association.
Maria is the Head of Financial Services at Royal Pine & Associates. She is a qualified accountant with eight years solid experience in the corporate industry. Maria is an extremely dedicated, innovative and talented accounting professional.
* This publication has been prepared as a general guide and for information purposes only. It does not purport to be comprehensive or to render legal advice.