Cyprus: (1) Citizenship (2) Permanent Residency (3) Real Estate (4) Tax Residency and Tax Incentives Greece: In General & Investment Opportunities 1
Key Benefits: Free Movement of People: The Successful Applicant can travel freely, reside and work within the EU. All family members can obtain the Cyprus Citizenship: The spouse of the Successful Applicant, his/her children under the age of 18 and the adult dependent children (for ages over 18 and up to 27 years old). Free Movement of Capital: Ability to transfer any amount of money from any EU Member State to another, purchase property in any EU Member State of choice and invest in any activities of the Applicant s choice. Free Movement of Services: Establishment and free movement of services individual citizens and companies can offer services without hindrance in all EU Member States. Free Movement of Goods: All goods produced in the Member States of the EU can be transferred freely between the Member States. 2
Economic Criteria 1. A privately owned residence in Cyprus with a purchase price of at least 500.000 (excluding VAT). 2. A minimum of 2 million investment for: the purchase or construction of buildings, or the construction of other land development projects (residential or commercial developments or developments in the tourism sector), or the construction of other infrastructure projects. 3. A purchase, participation or establishment of companies or businesses, located and operating in the Republic of Cyprus, with investments amounting to at least 2 million. 4. A purchase of units of at least 2 million from Alternative Investment Funds (AIF) established in the Republic of Cyprus, licensed and supervised by the CySec and whose investments are made exclusively in the Republic of Cyprus. 5. A combination of the above investments, provided that the total investment will amount to at least 2 million. 6. Cap set on the investment in Cyprus Government Bonds 3
Other Terms: Clean Criminal Record. Individuals whose property is frozen within the EU or in the sanctions lists, cannot be considered as having a clean Criminal Record. The Applicant must hold a residence permit in the Republic of Cyprus in order to obtain the Cypriot Citizenship. If the Applicant does not already hold a residence permit, he may apply for the permanent residency on the basis of Regulation 6(2) of the Aliens and Immigration Law, simultaneously with the application for naturalization. In the event that the application for permanent residency is submitted solely for naturalization purposes, then the terms and conditions of the Citizenship Scheme apply and no additional requirements are imposed. The investments mentioned above must be maintained for at least three years from the date of naturalization. Privately owned residence must be retained for ever. The investments, for the purposes of the Citizenship Application, need to be concluded with fresh funds by the investor coming from abroad. 4
Permanent residency scheme to attract non EU residents Key Benefits: gains the right to permanently reside in Cyprus has the right to apply for a tax ID and tax residency certificate provided certain parameters are met. exempt from immigration entry procedures, for example a Visitor s Visa Extended to the Applicant s spouse, children under 18 years of age, and financially dependent children up to 25 years old. As from February 2016 the parents of the Applicant can also obtain Permanent Residency as dependents. The Permit is granted for an indefinite duration. 5
Fast Track Procedure under Regulation 6(2) Conditions: Purchase one or two new real estate properties with total purchase value of at least 300.000 (excluding VAT). The properties can potentially be 2 residences, or 1 residence & 1 office or 1 residence & 1 shop. Proof of Payment of 200.000 (excluding VAT) should be paid to the Vendor before filing the application. The Applicant should be able to prove that he/she has at his/her disposal a secured annual income of at least 30.000. This annual income is increased by 5.000 for every dependent person in the family and by 8.000 for every dependent parent. 6
Fast Track Procedure under Regulation 6(2) A bank deposit of 30.000 in a Cypriot Bank, pledged for 3 years. Proof that all invested funds derived from abroad. Applications are reviewed by the Civil Registry and the Migration Department and the Minister of Interior grants the final approval. The process may take up to 2 months. 7
For Citizenship and Permanent Residency For Investment purposes or as a second home Plenty of projects for residential and commercial use new or used with a good return on investments including hotels, hotel apartments, solar energy parks, plots for construction and development Cyprus banks repossessed properties (https://www.remuproperties.com/ https://www.hbreonline.com/home) Careful due diligence necessary to acquire property with clean title deed without mortgages, proper planning and final permits Land Registry, title deeds secure undisputed ownership. 8
Big Projects in Cyprus Limassol Marina Agia Napa Marina Melco-Hard Rock Casino Resort Limassol high-rise developments 9
183+ days within Cyprus Or new 60 day rule The tax is imposed on a yearly basis on taxable persons. Those defined as Cyprus Tax residents are liable on their worldwide income. Non Cyprus Tax Residents are liable on their Cyprus source income only. An individual is considered as tax resident if the aggregate number of days in Cyprus is exceeding 183 in the year of assessment. 10
60 Day Rule Parameters: Individual must not reside in another state for one or more periods that exceed 183 days of the same tax year and Must not be a tax resident of another state But Must Reside in Cyprus for at least 60 days in the tax year. i. Exercise business in the Republic, and/or is employed in the Republic and/or is an officer in a company that is tax resident in Cyprus at any time in a given tax year. ii. Has a permanent residence in the Republic that is owned or rented by the individual. If at any given time during the tax year, even though all of the above parameters are adhered to, the individual terminates his business activities or employment or office he will not be considered as a resident of the Republic for that year 11
INCENTIVES FOR FOREIGN NATIONALS RELOCATING TO CYPRUS If a person which was not tax resident in Cyprus previously and it s earnings exceed 100,000 per year, then 50% of his income will be exempt from tax for the next 10 years. For employments commencing as from 1 January 2015 the exemption does not apply in case the said individual was a Cyprus tax resident for 3 (or more) tax years out of the 5 tax years immediately prior to the tax year of commencement of the employment nor in the preceding tax year. In certain cases it is possible to claim the exemption where income falls below 100.000 per annum. 12
INCENTIVES FOR FOREIGN NATIONALS RELOCATING TO CYPRUS A 20% or 8550 (whichever is smaller) exemption, for 5 years, of the income of a person that was not tax resident of Cyprus before and starts employment in Cyprus. For employments commencing during or after 2012 the exemption applies for a period of 5 years starting from the tax year following the year of commencement of the employment with the last eligible tax year being 2020. This exemption cannot be used concurrently with the above exemption. Pensions received from overseas by a tax resident individual that exceed the amount of 3420 euro are taxed at 5%. The taxpayer may opt to be taxed in the normal way where the taxation of the pension is higher with this special tax exemption 13
Amendment to Special Defense Contribution (SDC) Law and introduction of Domicile definition. Interest (30% SDC) and dividends (17% SDC) received by non domiciled individuals are exempt from SDC even if they are tax residents of Cyprus (but are not domiciled of Cyprus) A person is considered having his domicile of origin in Cyprus if he has his regular place of abode in Cyprus as per the Wills and Succession Law (domicile of origin or domicile of choice) except where: The person has a domicile outside of Cyprus as per the Wills and Succession Law and has not been a tax resident in Cyprus for a period of 20 consecutive years preceding the tax year. If the person is a tax resident of Cyprus for at least 17 years out of the last 20 consecutive years, will be considered as domiciled in Cyprus. Careful planning can result to zero tax 14
1) Intellectual Property Box (IP BOX) Regime. Income of a Cyprus company from qualifying IP assets is 80% exempt A 20% capital allowance is provided on the IP asset for a period of 5 years Qualifying IP assets : asset that was acquired, developed or exploited patents (Patents Law), computer software, as well as IP assets which are non-obvious, useful and novel and from which the income of a taxpayer does not exceed, in a 5 year period, 7.500.000 per annum ( 50.000.000 for taxpayers forming part of a Group). Must be certified as such by an appropriate authority in Cyprus or abroad Excludes marketing related IP such as trademarks including brands, image rights and other intellectual property rights used for the marketing of products or services sufficient substance and connection between expenses the IP asset and the IP income in order to benefit with the IP box regime 15
Intellectual Property Box (IP BOX) Regime. The following formula applies to determine the qualifying profits that can benefit from an IP regime under BEPS: [(Qualifying expenditure + Up-lift expenditure 30%)/Total expenditure] x Overall IP Income = Qualifying Profit Qualifying expenses: Research and Development expenses including wages, direct costs, supplies, non related parties outsourced expenses Do not include cost of acquisition of the IP, interest, immovable property, related party expenses Uplift expenditure is added to above costs and is the lower of 30% of the qualifying expenditure The total amount of acquisition and outsourcing to relates parties for R&D relating to the IP 16
2) Notional Interest Deduction A notional interest payable deduction will be allowed from a Company s or Cyprus permanents establishment tax computation as of 1 st of January 2015. The interest will be calculated on any new capital (share capital and share premium) introduced in a Cyprus company or a Cyprus permanent establishment after the 1 st of January 2015. The notional interest will be 3 percentage points above yield of the 10 year Government bond of the country where the funds are employed. The bond yield is the one applicable as at the year end of the relevant tax year. The deduction will relate to profits generated from the new share capital introduced. On the actual tax computation any taxable profit relating to the share capital introduced will be reduced by the notional interest payable for the capital introduced by a maximum of 80%. Advantageous as the Cyprus company will have the beneficial ownership of its income (avoiding back to back schemes) and also have a substantial tax deduction 17
3) New Back to Back Loan requirements Minimum accepted profit margin on back to back loan schemes between related entities as agreed in July 2011ceased to apply from 1/7/2017. New circular defining the relation of the companies and which companies can apply it. As a general rule the arm s length principle is to be applied to define the acceptable margin and the circular goes as far as detailing the necessary requirements to satisfy it, with a comparability analysis, contractual terms, functional analysis. Simplification measures are also defined for a Cyprus company having a purely financing intermediary role within a group of related companies, with a minimum after tax return of 2% on the assets required. 18
New Back to Back Loan requirements A deviation from the simplification measures is allowed provided a Transfer pricing Analysis is filed with the tax department for a ruling. Minimum requirements of the TPA include: a description of the computation of equity allocation required to assume the risks, the precise scope of the transactions analysed and a general description of market conditions, a complete list of the searched potentially comparable transactions, a rejection matrix for rejected potentially comparable transactions together with justifications of such rejections, the final list of comparable transactions which have been selected and used to determine the arm s length price applied to the intra-group transaction(s) accurately delineated, a list of all previous agreements on TP concluded with other countries in relation to the transactions in question, a list of all the previous agreements concluded with the entity/ies under analysis which are still in effect at the time of the submission of the request, a projection of the income statements for the years covered by the request. 19
Other incentives VAT schemes for private yachts and aircrafts. For yachts a Reduced VAT rate of up to 90% depending on the length of the yacht and if motor or sailing yacht. For aircraft a reduced rate of up to 80% depending if the maximum take off weight and the type of aircraft (piston, turbo or jet). 20
In General: Greece has always been welcoming people from all over the world who are attracted to the unique opportunity of enjoying the perfect climate, the exquisite landscape, its marvelous beaches, the fresh and delicious food, the relaxed atmosphere combined with the world - famous cultural and historical sights, and travelling activities, sailing being one of the most popular. Greece has passed through a difficult period of an economic crisis which seems to have reached its bottom. The country has never stopped attracting visitors individuals foreigners who have been increasingly coming for relaxation and new experiences, including the business oriented ones. As a member of the EU and Eurozone, Greece offers access to high-growth and emerging regional markets, being an excellent gateway without any trade barriers to more than 140 million consumers in Southeast Europe and the Eastern Mediterranean. 21
Opportunities in Greece: Residential Real Estate, tailor-made to the wishes and necessities of the person in interest; Commercial Real Estate rented by booking agencies for hotel management etc; Special Residence Permits allowing residing, moving and studying across Europe (Schengen Zone): Golden Visa : 5 year residence permit for EUR 250.000 investment in real estate, with a possibility of prolongment, available for family members, takes about 6 months; Permits for financially independent persons: for 2 years with further prolongment for additional 3 years; Residence permit for entrepreneurs: a complex, but suitable procedure for specialized businesses; Take over or Modernization of existing business especially in the areas of tourism, agriculture and shipping industry); British, American, French and German schools and colleges in Athens, that have access to European universities; Franchise opportunities for sale or joint ventures. 22
Our Services: Stelios Americanos & Co LLC through its office in Athens and in cooperation with its Greek partners provides a full set of services securing ones private and business expectations in Greece: General support in finding the proper Real Estate opportunity for purchase or rent, communication with real estate agents and/or the seller and due diligence over the property; General and full legal support in acquisition of any type of Residence Permit; Legal support to set up a Greek entity and assist any type of Direct Investment; Tax advice and support; Litigation on civil and commercial matter; 23
Thank you. www.americanoslaw.com Tel: +357 22465500 stelios@americanoslaw.com 24