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Regulation

At the end of 2022, the Council of Europe’s MONEYVAL expert committee issued a follow-up report on Cyprus’ improved compliance with Financial Action Task Force (FATF) standards on anti-money laundering (AML) regulations. The jurisdiction has made some improvements regarding the supervision of non-profit organisations and virtual asset service providers and in giving law enforcement more powers to investigate.
Cyprus’ redesigned register of beneficial owners of companies and other legal entities came online at the end of October 2023. Existing companies had to submit all relevant information by 30 September 2023. Under the new online system, entities will be allowed one month to confirm and complete this data; submit requests for exemption from disclosure of information to the general public; and submit their grounds for exercising customer due diligence. Automatic imposition of EUR200 daily fines will then commence.

The FATF June 2023 plenary meeting has noted that Gibraltar is one of nine jurisdictions that have missed the agreed deadlines for tightening their AML regulations. The FATF has advised all the jurisdictions to ‘swiftly demonstrate significant progress’.

In May 2023, both houses of the Netherlands’ parliament approved the country’s first-ever double taxation treaty (DTT) with Cyprus, signed in June 2021. Cyprus has already completed ratification and the DTT is expected to have effect from 1 January 2024. The DTT will abolish withholding taxes on cross-border interest and royalties payments and limit withholding tax on dividends to 15 per cent. It will also authorise the two countries to charge capital gains tax on disposals of property investment companies.
In October 2023, Cyprus’ government issued a draft law to implement the 15 per cent global minimum tax agreed under the OECD Pillar Two negotiations for large multinational companies. It includes an income inclusion rule effective for accounting periods from 31 December 2023 and an undertaxed profits rule effective for accounting periods from 31 December 2024.

Gibraltar’s implementation of the OECD Pillar Two global minimum corporation tax will take effect for accounting periods beginning no earlier than 1 January 2025, according to its 2023/24 budget. It is examining new incentives to attract large multinational groups, with a distinct new regime for companies within the scope of Pillar Two and a domestic minimum top-up tax.

Malta’s tax authority now has the legal right to pursue pending tax claims against companies that had been struck off the company register for failing to file their annual returns and accounts. The move follows three cases where the Commissioner for Revenue successfully sued the official Registrar of Companies. In each case, Malta’s Commercial Civil Court ordered the defaulting companies to be restored to the register under art.325(4) of the Companies Act. The Act allows any creditor to initiate proceedings to reinstate a company within a five-year deadline from the date of the notice of the strike-off’s publication.

The Malta Financial Services Authority (MFSA) has published proposed amendments to the rules for trustees of family trusts, with consultation closing in September 2023. The changes seek to clarify the MFSA’s criteria for deciding whether an applicant has sufficient family connection to be registered as a trustee under art.43B of the Trusts and Trustees Act. Under the proposals, applicants will also have to explain why they chose Malta as the trustee jurisdiction and the fit-and-proper assessment will be broadened to cover parties other than directors.

Cyprus has amended its residence-by-investment scheme to require applicants to prove they have invested at least EUR300,000 when filing their application, rather than by making a partial payment in advance. Applicants who reside outside their country of citizenship must now also submit police clearance certificates from both that country and their country of residence when filing their applications. The minimum threshold for annual earnings from outside Cyprus has been raised from EUR30,000 to EUR50,000, plus EUR15,000 for a dependent spouse and EUR10,000 for each dependent child. Applicants’ adult children, parents and in-laws are no longer eligible to apply for dependent permits.