The Cyprus Parliament has approved the a number of tax reforms which they were subsequently passed into laws with there publication in the Government gazette on Thursday 16th July 2015. The reforms reaffirms Cyprus’ credentials as a leading International Business centre. The key amendments were: • Exemption from Special Defence Contribution (SDC) for dividends and interest received by foreign individuals that relocate to Cyprus and become Cyprus tax residents. This amendment is aimed to encourage relocation to Cyprus by high net worth individuals and executives. The new term of domicile is introduced in the Special Defence Contribution law.

Only domiciled Cyprus tax residents will be subject to Special Defence Contribution which includes the 17% SDC on dividends received and 30% on interest received as passive income. So in order for the SDC to apply on a person he has to be more than 183 days in a calendar year in Cyprus and also have a Cyprus domicile. 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 except where a) 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. b) The person has not been a Cyprus tax resident for a period of 20 consecutive years prior to the introduction of the law. If the person was a tax resident of Cyprus for at least 17 years out of the last 20 consecutive years, will be considered as domiciled in Cyprus.

• Notional interest tax allowable deduction on share capital and other corporate equity A notional interest payable deduction will be allowed from a Company’s or Cyprus permanents establishment tax computation as of 1st 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 1st of January 2015. The notional interest will be 3 percentage points above yield of the 10 year Cyprus Government bond. The bond yield is the one applicable as at the year end of the relevant tax year.

• The Land Registry Laws and Capital Gains tax Laws were amended with a 50% reduction on land registry transfer fees until the end of 2016 as well as capital gains tax exemption for immovable property purchased by the end of 2016. This will serve as an incentive to prospective buyers and stimulate the Cyprus property market. Please contact a member of our staff for further clarifications if necessary.