Cyprus introduces new tax measures as part of a national recovery and resilience plan

Cyprus introduces new tax measures as part of a national recovery and resilience plan

On July 26, 2021, the Council for Economic and Financial Affairs (ECOFIN) approved the Cyprus National Recovery and Resilience Plan (RRP). The RRP sets out measures to be supported by the Recovery and Resilience Fund (RRF). RRF is supported by NextGenerationEU, which will provide 800 billion euros across the European Union (EU) to help EU member states recover from the COVID-19 pandemic.

Regarding Cyprus, the RRS includes several reforms and investments, ranging from the affordability and overall sustainability of the health sector to the promotion of a green economy. The PRN also outlines measures to improve tax collection and combat aggressive tax planning. These measures include a set of stages for their adoption and evaluation.

In particular, the most important measures that will affect the Cyprus tax system include:

• Introduction of withholding taxes on outgoing payments of dividends, interest and royalties.
• Expanding the use of the tax scheme for investment in innovative companies.
• Introduction of green taxes.
• Introduction of specific measures to improve tax collection.

The above is for informative purposes only.  Further professional advice should be sought for each particular case. Our firm does not accept any responsibility for any loss or damage occurring by acting on the basis of this information.