Category Archives: News

Working Groups with ICPAC

The Cyprus Fiduciary Association, in its effort to raise the standards of the fiduciary sector and the provided services, has been in contact with the Institute of Certified Public Accountants of Cyprus (ICPAC) in an effort to unify the largest possible number of ASPs under a single regulatory body and under a single representative voice. To that end, CFA has come to an agreement with ICPAC to form certain working groups that would assist in the development of mutual trust between the two bodies and be the beginning for common understanding and common vision.

The first two working groups created were the following:

1. Review of the regulatory regimes under the 3 supervisory bodies
To identify the differences among the 3 regimes in order to find the ways to eliminate them and create a level-playing field.

2. Preparation of a strategic plan for the fiduciary sector
To create a common vision for the fiduciary sector in Cyprus and draft a detailed strategic plan to be implemented along with the government. Our intention is to involve as many stakeholders as possible during this process.

The kick-off meetings of the two aforementioned groups were held on Friday, March 13th, and Wednesday, March 18th, respectively. Both meetings revealed the common understanding and common targets that providers of the same services share among themselves, irrespectively of their supervisory body. In both cases, we have defined the working mode of our groups and set a specific action plan for the near future.

WealthPro Cyprus, Nicosia 2016 – Program

Bosco Conference is organizing their annual B2B conference & expo WealthPro Cyprus, Nicosia 2016:

  • Date: 16 – 17 of November 2016
  • Place: Hilton Cyprus Hotel 5*, Nicosia

The Cyprus Fiduciary Association supports the event as a Media Partner of the Conference.

Sponsors and Partners

  • Bank of Cyprus
  • Kelley Drye & Warren LLP
  • Zugimpex Group
  • IN Fiduciary Services Group
  • Microgen Financial Systems
  • CIM Bank
  • Piraeus Bank
  • Saxo Bank
  • Apollo Group
  • First Class Homes
  • Pirineu Administrative Servei
  • Oneworld Mid East Global Business Services
  • Capital Système Investissements

The conference program will include speakers from the following countries and companies:

  • Cyprus – Bank of Cyprus
  • USA Kelley Drye & Warren LLP
  • Andorra – Pirineu Administrative Servei
  • Slovakia – Zugimpex
  • United Kingdom – Microgen Financial Systems
  • Cyprus – Piraeus Bank Ltd
  • New Zealand IN Fiduciary Services
  • Seychelles – Аpollo Business Solutions Ltd
  • Switzerland – Capital Systeme Investissements
  • Hong Kong – Cheuram Consulting Group Ltd
  • Switzerland – Centre for International Fiscal Studies SA
  • Switzerland – Main Partner AG
  • Malta – Exante Limited
  • Cyprus – Laveco Limited.

Participants of the seminar will represent companies such as: LX Management Services, Citadele Bankas, Aragonia Construction, PMPC, Bank Of Georgia, East-West United Bank, EMG Group, Corporate Management And Consulting, Michael Kyprianou (Middle East), Halsey Group, IC Group, International Legal Services, ABC International & Co, NEX Consultants, Credit Foncier, Neue  Bank, Premier Trust, Int. Shipping Services Corp … find more.


They are representing countries such as:
• Singapore • Lithuania  • Ireland • Czech Republic • Georgia • Luxemburg • Denmark • Seychelles • UAE • Ukraine • Latvia • Russia • Liechtenstein • Switzerland • UK • USA • Andorra • Seychelles • Hong Kong • Malta • Cyprus

Don’t miss your chance to win great prizes!

You can be one of the lucky winners of 2 season tickets to all Bosco Conference’s events in 2017 and save more than 3000 EUR!

Participation conditions: 250 EUR, 10% discount for 2nd participant and 15% for 3rd and more. 

WealthPro Cyprus, Nicosia 2016 (draft program)

Bosco Conference is organizing their annual B2B conference & expo WealthPro Cyprus, Nicosia 2016:

  • Date: 16 – 17 of November 2016
  • Place: Hilton Cyprus Hotel 5*, Nicosia

The Cyprus Fiduciary Association supports the event as a Media Partner of the Conference.

Topics will include:

  • Cyprus Economy and the Banking System – latest developments, Bank of Cyprus
  • S. Tax Considerations for Inbound Investments in U.S. Real Estate, Kelley Drye & Warren LLP, USA
  • The Principality of Andorra, Pirineu Administrative Servei, Andorra
  • Slovakia – the complementary jurisdiction in tax planning, Zugimpex, Slovakia
  • Piraeus Private Banking: The new Cyprus experience, Piraeus Bank Ltd
  • Current trends in the family office space, Main Partner AG, Switzerland
  • Hong Kong Companies as an Excellent Tool for International Business Structures, Cheuram Consulting Group Ltd, Hong Kong
  • Delivering operational efficiency and control through investment in technology, Microgen Financial Systems, United Kingdom
  • The future of Great Britain and EU after Brexit: Apocalypse now or big opportunity? Centre for International Fiscal Studies SФ, Switzerland
  • New Zealand structures for asset protection – Privacy and reporting requirements, IN Fiduciary Services , Singapore
  • How to fail and win in Wealth Management, Exante Limited, Malta and more from Dubai, Hungary, Lichtenstein, Luxembourg, Russia, Netherlands.

Who will you meet? 250 delegates from EU and CIS countries. They represent: banks, relocation and asset management companies, law firms, tax consulting companies, corporate services providers, wealth and lifestyle management, private investors.

Participation conditions: 250 EUR, 10% discount for 1st participant and 15% for 2nd and more The organizers are currently working on the conference program and would greatly appreciate your feedback. They welcome everyone who would like to deliver a presentation, exhibit, sponsor or attend the event. Please click here for further information.

Don’t miss your chance to win great prizes!

You can be one of the lucky winners of 2 season tickets to all Bosco Conference’s events in 2017 and save more than 3000 EUR!

 

 

VAT Seminar: Holding companies and VAT: From A to Z (21 February 2018)

The Cyprus Fiduciary Association is organising one (1) independent half-day seminar (4 hours) titled “Holding companies and VAT: From A to Z”.

The seminar represents the ultimate A to Z guide for all professionals that handle VAT for Cyprus companies and other legal entities, such as accountants at all levels, financial controllers, tax consultants, tax managers and more. The Cyprus holding company is perhaps the most important tool offered in tax planning at the Cyprus level. The VAT treatment and potential VAT implications of such a holding entity have become increasingly complicated mainly due to decisions of the European Court of Justice.

When does a Cyprus holding company carry out economic activities for VAT purposes? When is a holding company obligated to apply the reverse charge principal, and when is it not? To what extent can a holding company claim input VAT? Are dividends considered to be an exempt form of income for VAT purposes?

  • Wednesday, 21 February 2018 – Columbia Plaza Venue Centre, Limassol

Please find below the brochure of the event along with the respective registration form. The registration deadline is Tuesday, February 20th.

CFA 2018 Seminar 1 – Brochure

CFA 2018 Seminar 1 – Registration Form

Update on CFA activities

During the 3rd AGM of the Cyprus Fiduciary Association that took place on Tuesday, 16 June 2015, at the Hilton Park hotel in Nicosia, the president of the Association, Mr George Savvides, provided an overview of the Association’s activities over the last 12 months:

New Members

  • During 2014, CFA managed to have 31 new Administrative Services Providers (ASPs) joining the Association, representing a total increase of 80% in its members.
  • This had as a result, the decrease of the Annual Membership fee by 25% on a permanent basis, in line with the long-standing commitment by the Board of Directors.
  • Today, the Cyprus Fiduciary Association has 71 member-firms, employing more than 1,200 professionals and representing around 40,000 client entities.
  • The majority of our members are supervised by the Cyprus Securities & Exchange Commission, but there is a growing number of members regulated by the Institute of Certified Public Accountants and the Bar Association, distinguishing the Cyprus Fiduciary Association as the only professional body dealing exclusively with the fiduciary sector.

Cooperation with CySEC and other bodies

  • The Association assisted CySEC in the development of its Risk Based Supervision Framework that is used to assess the risk profile of Administrative Service Providers (ASPs). Through our feedback and comments we have helped the Commission make this model more effective in formulating the true risk profile of regulated entities.
  • We have frequent communication with CySEC on issues related to the licensing, monitoring and training needs of the ASPs, as we are filtering through the various issues and queries of our members and other service providers, which are contacting us on a daily basis. We are thus doing our bit in reducing the, admittedly huge volume of communication CySEC has to deal with.
  • We have managed to establish closer cooperation and relationship with the Institute of Certified Public Accountants of Cyprus on issues related to the fiduciary sector. We have formed two common working groups to jointly work on establishing and promoting a level-playing field for all ASPs in Cyprus, and for assisting in the creation of a strategic plan for the sector, securing the contribution of all stakeholders. The working groups have met several times so far and the development of their deliberations will be communicated as their efforts progress.

CFA Committees

  • The Association continues to provide the opportunity to its members for participation and contribution to the developments in the sector through its committees. Appointed in February 2015, the existing committees have set their Action Plans for the next two years, which were approved by the Board of Directors. The following are some of the major tasks currently assumed by our committees:
  1. International Business
    a. Product development and service innovation
    b. Establishing common ground with local bodies
    c. Developing cooperation with related international associations
  2. Tax & VAT
    a. Following developments on the Base Erosion and Profit Shifting (BEPS) Project and assessing how they affect Cyprus
    b. Assessing the tax obligations of trusts
    c. Keeping members informed on tax developments
  3. Legal and Corporate Affairs
    a. Reviewing and commenting on new laws and regulations related to the sector
    b. Upgrading our Policies and Procedures Manual
    c. Representing the Association in working groups related to the Department of Registrar of Companies
  4. AML & Compliance Affairs
    a. Following-up and reporting on Foreign Account Tax Compliance Act (FATCA) developments
    b. Comparing CySEC KYC requirements for ASPs to the respective provisions in the Netherlands, Luxembourg and Jersey
  5. Professional Development
    a. Development of seminars and other educational events in cooperation with the General Manager
    b. Implementing the board’s plans for the future development of qualifications for the professionals of the fiduciary sector

Educational seminars and events

  • For the first time since its establishment, the Association prepared an annual Educational Plan for 2015, which was communicated to our members and other ASPs, but also to other organisations related to our sector, including accountants, lawyers and banks.
  • The Board of Directors decided that the training and education offered should be specific and practical. To this end, the board identified the following three educational pillars under which seminars are categorised: a) AML & Compliance, b) Directorship & Trustee services, c) Corporate Administration.
  • The targeted seminars, early planning and practical approach of trainings, have received a very positive feedback by sector professionals, securing high participation rates but also very positive evaluation comments.
  • 2014 was the year that marked the organisation of our very first big-scale conference. Entitled “Cyprus International Business Sector: They Way Forward” the event was delivered by high calibre and experienced presenters from Cyprus and abroad and managed to attract impressive participation in terms of number, background, profession and seniority of attendees. What has been really pioneering though was the outcome of the conference, the way this was utilised and its indented assessment process, which will be analysed later on.
  • As one of our main targets is to bring our Members closer together, we have established an annual social event to which we invite the top management of all our member firms for a gala dinner, during which they can exchange views and discuss issues of common interest.

New CFA website

  • As part of our effort to provide continuous assistance and information to our members, we have launched our new website within May 2015. The website is addressed to CFA members and all other stakeholders who have an interest in the fiduciary and the wider international business sector in Cyprus. Information about the Association and its members, educational events, the fiduciary sector and Cyprus as an international business centre is presented in a user-friendly and plain manner.

The 4th Professional Services Forum (17 November 2017)

On November 17th 2017, the Cyprus Fiduciary Association organised at the Hilton Park Hotel (Nicosia) the Fourth Professional Services Forum called “International Trends of Professional Services to International Businesses and HNWI and the Future of the Sector in Cyprus”.

The Forum aimed to bring together peer-level leaders from the tertiary sector of the Cypriot economy to present and discuss the latest developments and trends in the field. Now an established annual event, this year’s conference took a new approach to incorporate professionals from the broader spectrum of the industry. Cyprus is recognized as an international centre of excellence for the provision of professional services and this year’s event wanted to provoke constructive thinking within the local sector to help maximize the industry’s potential. The governing bodies of major corporations must reassess their corporate strategies in their continuous and ever-challenging quest to minimize costs and augment their returns. One of the themes of this year’s conference was to explore new sectors and new geographical opportunities within the professional services field in Cyprus.

The speakers presented topics of key interest to the International Business sector providing an overview of the international developments in wealth management of high net worth and ultra high net worth individuals, through the overview of international tax trends and transfer pricing. In addition, there was an analysis of the international and local data that have defined the Professional Services sector in recent years. Speakers also emphasised on the global private banking trends, tax regulatory implications and investment trends and the dynamic of Cyprus as a business and investment centre.

The 4th Professional Services Forum brought together banking and financial institutions, accounting/ audit/ tax companies, asset management, investment companies and law firms, as well as various international Financial Centre Executives.

For more information on the 4th Professional Services Forum, you may visit the website of IMH who was the coordinator of the event.

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Temporary Tax 2015

Computation of Temporary Tax – Year of Assessment 2015

According to article 24 of the Assessment and Collection of Taxes Law No.4 of 1978, as amended, the official deadline for submission of the 2015 Provisional Tax Return (Form I.R.6A 2015) and payment of the first instalment of tax is 31st July 2015. The second instalment of provisional tax is payable on or before 31st December.

Now represents a good time to contact clients in order to obtain the necessary information to prepare the Return accordingly, arrange for any necessary transfer of funds to cover the payment due and to submit the form in due time.

In the case there is no taxable income or any temporary tax due, the form must not be submitted as the Inland Revenue Department will not take receipt of it.

Penalties for Late Submission, or No Submission

In accordance with article 50A(e) of the Assessment and Collection of Taxes Law No.4 1978, as amended, persons who pay their tax after the dates stipulated in the law, are subject to a 5% fine and late payment interest will also accrue.

Effects of Low Estimation of Chargeable Income and of Overpayment

Section 26 of the Assessment and Collection of Taxes Law No.4 of 1978, as amended, stipulates:

  • The imposition of a surcharge amounting to 10% of the difference between the tax as finally determined and the temporary tax assessed where the temporary chargeable income assessed is less than 75% of the chargeable income as finally determined;
  • The refund of any overpayment of temporary tax together with interest, computed in accordance with the applicable public interest rate, per annum based on the completed months from the 1st January of the year following the assessment year for which the provisional tax is concerned.

Revised Computation

Revised computations can only be submitted at the Tax Department Collection Offices by the 31st December of the tax year. In case the temporary tax due is revised upwards, backdated interest will be applied to any underpaid instalment.

Payment of Tax

Payments can be made by cheque, credit card, cash or via electronic transfer through the Central Bank. Cheques are to be made payable to the ‘Commissioner of Taxation’ and duly crossed. Payments are to be made at any of the following Collection Offices:

Nicosia – Lordos Mansion. Corner Byzantium-Aipeias and Argyrokastrou Str., 2064 Strovolos. Tel. 22407725
Limassol – 3, 16th June Street, 3022 Tel. 25803827
Larnaca – 42 Georgiou Griva Digeni Avenue, 6045 Tel. 24803502
Paphos – Νeofytou Nicolaides Block C, 8011 Tel. 26804425
Famagusta – Ippokratous 2, 5380 Dherinia. Tel.  23812146

 

Tax & VAT Committee

Joint Consultation Paper under article 17 & 18 (4) of EU Directive 2015/849 – Chapter 5: “Sectoral Guidelines for wealth management” (summary)

Using enhanced due diligence (EDD) when serving high-net-worth individuals

The provision of wealth management services to high-net-worth individuals is often considered a high risk activity with regards to money laundering. This is because transactions tend to be complex and of high value, clients are usually particularly influential and wealthy people (often they are PEPs) who expect maximum confidentiality and secrecy in their dealings.  Many such clients originate from states where corruption is rife, the economies are dominated by oligarchs and controls are weak.

Whenever we categorize a client receiving wealth management services as high-risk we should consider using the following EDD measures:

  • obtaining additional information about these clients and updating it at least on an annual basis, and even more frequently if risk dictates. In addition to standard steps, we could also insist on visiting the clients concerned at their home or place of business;
  • establishing the approximate net worth of the client concerned and also the sources of it and of funds. We need to ask for evidence as to how this wealth was obtained (income, capital gains, dividends, inheritance etc). Such evidence may comprise, whenever appropriate, written confirmation of salary signed by employer, original/ certified true copy of contract of sale, original/ certified true copy of will or grant of probate, written confirmation of inheritance signed by lawyer, trustee or executor, internet search of company registry to confirm the sale of company and so on;
  • establishing the destination of funds;
  • ensuring that there exist valid and legitimate reasons behind the usage of complex business structures such as trusts and private investment vehicles and that the identity of the ultimate beneficial owner is not hidden;
  • scrutinizing business relationships than would be typical in mainstream financial service provision, like retail banking or investment management;
  • obtaining senior management approval of all new clients and of existing clients according to their risk categorization;
  • ongoing monitoring of transactions to establish whether these are in line with the economic profile of the clients or whether they deviate from it. Unusual transactions should, in accordance with their size, be promptly scrutinized by relationship managers or compliance staff or senior management;
  • monitoring public reports or other sources of intelligence to identify information that relates to clients, their connected persons, acquisition targets or third party beneficiaries to whom the client makes payments;
  • ensuring cash or cash equivalents are only handled at bank counters, and never by relationship managers.

AML & Compliance Affairs Committee

 

Offsetting Note

Discretionary “off-set” of liabilities due to the Tax Department, or other governmental departments, against refundable amounts

Based on Article 13 of the Accounting and Financial Management and Financial Control of the Republic Law N.38(I)/2014, the Accountant General has the discretion in the course of processing a repayment to a physical or legal entity, to withhold funds which are due to any Ministry or Department, or Independent Department or other Special Treasury of the Republic of Cyprus.

According to the above, if a legal entity is entitled to a VAT refund or a Tax refund, the Authorities may examine whether there are any outstanding balances either to the VAT or Tax Authorities, or to other governmental departments. In instances that a liability does exist, the Authorities may off-set/settle any such balance(s) by way of deduction from the refundable amount, before proceeding with the refund of any remaining funds.

Tax and VAT Committee

Meeting with the Central Bank of Cyprus (3 May 2017)

Representatives of the Cyprus Fiduciary Association had a meeting with Mr Marios Neoptolemou, Head of the On-Site Inspection Function of the Supervision Division of the Central Bank of Cyprus (CBC), and his team, on Wednesday, May 3rd, at the offices of the CBC. The meeting was requested by CFA following the ‘Think Tank’ meeting of the Association on April 5th, in order to inform the people in charge at the CBC of the various issues faced by the fiduciary sector.

The representatives of CFA initially gave an overview of the mission and targets of the Association and explained the role and activities that CFA undertakes. After congratulating Mr. Neoptolemou on his new duties, the president of CFA, Christos Michael, emphasized the significant role of the Central Bank of Cyprus as the most experienced and established regulator in Cyprus, and stated that CBC needs to facilitate the coordination and development of the regulation in financial services in Cyprus.

Mr Marios Neoptolemou, after thanking CFA representatives for their visit, stated the need for continuous development in the country’s monitoring activities, since, despite the efforts and the introduction of strict compliance regulations, Cyprus is still under the spotlight.  CBC, as  the main representative of Cyprus  abroad, has to be very careful on how it treats developments in this respect. Mr Neoptolemou gave an update on the following matters:

  • The adoption of the 4th EU AML Directive in the existing Cyprus AML Law is almost completed and the 2nd draft is already under consideration.  All major amendments regarding Beneficial Ownership, the Risk Assessment procedure, and the implementation of the UBO Registry, will be adopted. Especially for the latest, Mr Neoptolemou said that, although not confirmed, the Trust Registry most probably will be maintained by the three regulatory authorities (CySEC, ICPAC, CBA), and for companies the most favoured scenario is that it will be maintained by the Registrar of Companies. It is expected that the registries will be available to the FIUs (Financial Intelligence Units), Regulators and any other person able to demonstrate legitimate interest, although no final decision on the access rights was made.
  • After the circular of CBC in April 2016 in regard to the need of Commercial Banks to have a Face to Face meeting with their clients (a measure to assist in the restoration of the international  image of Cyprus) the evaluation of the ASPs is now more simplified in terms of the annual review and no further evaluation is now required.
  • The 10% UBO threshold, which applies in Cyprus (as opposed to the 25% implied in the EU directive) will only be addressed upon the finalization of the 5th EU AML Directive, which addresses the issue again. As per Mr Neoptolemou, it would not be wise to proceed with any amendment at present. The issue is expected to be resolved by the end of the year.

The two parties agreed that a common ground for the risk assessment of the clients of all ASPs and the Banks needs to be developed in order to minimize the differences in this respect among ASPs of any of the 3 regulators. Mr Neoptolemou mentioned that there is an extended Technical Committee with the participation of all regulatory authorities and that this issue can be discussed there. The assistance of the Central Bank  is considered important in this respect. Mr Neoptolemou also mentioned that the complications of having 3 regulatory authorities for ASPs were noted during the National Risk Assessment (NRA) process. The NRA is at the finalisation stage and the Central Bank with the FIU are leading the project.

On another note, Mr Neoptolemou stated that the Banks would need to ensure that there is a rational for complicated shareholding structures and this should be supported with the relevant  information i.e. tax advise etc.

CFA representatives also enquired whether there are any initiatives/ projects by the Central Bank of Cyprus or other authorities for utilisation of new technologies like Blockchain and Smart contracts for the benefit of Cyprus as a jurisdiction, bringing as an example the Delaware state of the US. Mr Neoptolemou advised that there are some talks about the utilisation of new technologies but are currently at a primitive stage.

Finally, Mr Neoptolemou stated that any matters arising from the implementation of the 4th EU AML Directive, should be promoted with the proper consultation, guidelines and training from all Regulatory Authorities in order to assist the regulated entities and their employees.