Cyprus Provisional Tax /
Self-Assessments Return
Cyprus Companies and Self-employed individuals must submit their 1st and 2nd temporary tax (provisional tax) returns before the 31st of July and 31st of December of each year, respectively. The temporary tax should be calculated based on the current year’s estimated taxable income and pay the corresponding temporary tax. The temporary tax payments must be made in two equal installments.
In case the first provisional tax payment was made based on an incorrected estimated yearly profit then the taxable income can be revised (upwards/downwards) any time prior to 31st of December of the current tax year.
However, in case the revised provisional tax declaration results in a refund, then the refund will only be returned after the examination of the submitted tax return by the Cyprus Tax department.
It should be noted that if there is no taxable income, then there is no requirement to submit a temporary tax return.
Final Tax Assessment
The final payment of any tax due is made via self-assessment which will bring the total installment payments to the level of the actual liability due (as per the actual tax liability determined).
The statutory deadline for the final payment of tax is the 1st of August of the year following the year of assessment (i.e. for the tax year 2020 payment must be made by the 1st August 2021). If the payment is not made by the 31st of August of the year following the year of assessment then a 5% penalty will be applied along with interest at 1.75% per annum for 2020. An additional 5% penalty may be imposed if the tax remains unpaid, two months after the statutory deadlines.
Payments
For timely tax payments (i.e. not passed their statutory deadlines), the tax must be paid electronically via https://www.JCCSmart.com by paying the amounts under code 0200 for the respective tax year.
JCC Smart is the card payment processing system that facilitates the electronic settlement of taxes through debit/credit cards.
For tax payments which are pass due their respective deadline, the tax can not be settled via JCC. For overdue payment, the tax must be recorded on the Tax Portal which will calculate the final tax and applicable penalties. Then the final tax can be paid through the tax payer’s bank portal by entering the reference number shown on the Tax Portal for each particular payment.
Penalties, Interest and Additional Tax
Interest: If the relevant tax installment payment is not paid by the end of the month from the date the payment is due, then there will be interest on the unpaid tax installment at 1.75% (for 2020) per annum which is calculated on a monthly basis.
Penalty – Monetary charge: If there is any delay in the payment of any of the aforementioned installments of provisional tax declaration, then there will be an additional 5% flat penalty (“monetary charge”) on the tax due that should have been paid with any of these installments. The 5% penalty charge does not carry any interest charges. The 5% monetary charge is imposed on the outstanding tax after the deduction of the temporary tax, after charging 10% additional tax but before the deduction of the self-assessment due on 1st August next year.
10% additional tax: If the total taxable income declared (and the corresponding temporary tax paid) is less than three quarters (3/4) of the taxable income (and total corporation tax) as finally determined, the taxpayer must pay, in addition to the normal tax, an amount equal to one-tenth (10%) of the difference between the final and the temporary tax.
5% additional tax: For all taxes outstanding on 1st October of the next year, there is an additional 5% monetary charge which does not affect the 5% monetary charge imposed on unpaid tax balances where the tax is not paid within a period of 30 days from the due date.
Tax Losses
Taxable losses brought forward from previous years cannot be carried forward after the lapse of five years from the end of the tax year during which the loss occurred (i.e. for tax year 2018, only the losses from 2013 and onwards can be utilized).
| Taxpayer | Due date for submission of the Income Tax return | Due date for self-assessment & payment | 5% additional tax for non-payment of the tax due | 5% surcharge for non-payment (monetary charge) of the tax due |
| Employed Individual | 30/4 following tax year | 30/6 following tax year | 1/8 following tax year | 1/8 following tax year |
| Employed individual online submission | 31/7 following tax year | 30/6 following tax year | 1/8 following tax year | 1/8 following tax year |
| Self-employed individual with no requirement to prepare financial statements | 30/6 following tax year | 30/6 following tax year | 1/8 following tax year | 1/8 following tax year |
| Self-employed individual with no requirement to prepare financial statements – online submission | 30/9 following tax year | 30/6 following tax year | 1/11 following tax year | 1/8 following tax year |
| Self-employed individual with requirement to prepare financial statements (Online submission only) | 31/3 of the year after the following tax year | 1/8 following tax year | 1/5 of the year after the following tax year | 1/9 following tax year |
| Companies (online submission only) | 31/3 of the year after the following tax year | 1/8 following tax year | 1/5 of the year after the following tax year | 1/9 following tax year |
Illustration/Example
Information relating to Cyprus incorporate company for the year ended 2018:
- During 2018 the company paid provisional tax of €252,000 by two installments of €126,000 each.
- On 31 July 2019 the company paid tax by self-assessment for the year 2018 amounting to €5,000.
- On 10 October 2020, the audit by the company’s auditors was completed and the preparation of the 2018 tax computation indicated taxable income of €3,550,000 for the year 2018.
- As at 31 December 2017 the company had taxable losses of €150,000 to carry forward.
- The company did not submit its tax return or pay all taxes due for the year 2018 until 28 May 2020.
Calculate total tax due, including all penalties and interest.
Solution
| Corporation Tax payable for the year 2018 | € |
| Taxable income 2018 | 3,550,000 |
| Tax losses for 2017 | (150,000) |
| Taxable income for 2017 after losses brought forward | 3,400,000 |
| Corporation Tax at 12,5% | 425,000 |
| Provisional Tax paid | (252,000) |
| 173,000 | |
| Additional tax 10% of €173,000 | |
| (Provisional Tax payment less than 75% of the amount due) | 17,300 |
| 190,300 | |
| Self-assessment tax paid on 31/7/2019 | (5,000) |
| Tax payable after the payment of self assessment | 185,300 |
| Additional tax of 5% of €190,300 (tax unpaid 1/5/2020) | 9,515 |
| Tax payable before interest | 194,815 |
| Interest at 3,5% p.a. on €185,300 for 9 months (completed months) | 4,864 |
| Interest at 3,5% p.a. on €9,515 from 1/5 to 28/5 (no completed months) | 0 |
| Total amount due as at 28/5/2020 | 199,679 |
| Penalty for late submission of tax return | 100 |
| Surcharge of 5% of late payment (5% * 185,300 – tax unpaid at 1/9/2019) | 9,265 |
| Total tax payable including all penalties and interest | € 209,044 |
Visit the MyCyprusTax for more information on how to submit you income tax form.
Visit the Cyprus Tax Department for more information on how to calculate your taxes.
