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Income tax statements mandatory for all

Every resident of Cyprus will soon have to submit an annual tax statement regardless of whether their income falls below the tax threshold of €19,500; failure to pay will be a criminal offence.

Income tax statements mandatory for all EVERY Cyprus resident with an income of any size is soon to be obliged by law to submit an annual income tax statement, said Finance Minister Harris Georgiades.

Speaking to reporters, the Minister said that a bill has been approved by the cabinet which foresees that everyone is obliged to submit an income tax statement to enhance the state’s capacity to “exercise effective tax control”.

The amendment means every citizen is legally obliged to submit a tax statement whether their annual income is under the taxable threshold of €19,500 or not.

“This is a procedure that takes only a few minutes and can be done online. The changes will give the government a complete picture of the tax base and to identify tax evaders effectively.”

A second provision of the draft bill will see all businesses required to accept plastic money as payment.

“Customers will not be obliged to pay by card, but if the consumer so wishes, businesses are obligated to accept a credit card. This measure will encourage electronic payments and enhance tax control,” said Georgiades.

Failure to pay income tax a criminal offence

The new legislation will also make the failure to pay income tax a criminal offence, in line with VAT provisions.

The Minister was also asked about where things stand with civil servants’ salaries and the court case brought against the government before an Administrative Court, which ruled civil service salary cuts in 2012 unconstitutional.

Georgiades said that he did not wish to comment on the issue, as a Supreme Court decision is pending on the matter.

Readers' comments

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  • The Bear says:

    With regard to your mention of MEU2, I refer you to the very first paragraph of the MEU3-related link you provide where the usage of MEU3 as a ‘permanent residence card’ (emphasis on ‘permanent’ but note the distinction being made between ‘card’ and ‘certificate’) by non-EU family members of an EU citizen is set out.

    Note also that para.10 of that document refers to penalties regarding the ‘permanent residence card’ rather than ‘permanent residence certificate’. I’d wondered if you were mis-quoting this source when saying that the penalty applies to failure to apply for ‘permanent residence certificate’.

    Also see the relatively recent ‘No Deal Scenario’ pdf downloadable from http://www.moi.gov.cy/moi/CRMD/crmd.nsf/All/C482CD407E0903D8C225830E00384072 and, in particular, 2.1.1 on page 8.

    I can see that the administrative hassle of getting an MEU3 if you already hold MEU1 may possibly turn out to be worthwhile (though I can’t agree that it’s mandatory) but I’m truly shocked that so many from the UK don’t even hold MEU1 – that astounding statistic puts everything else in the shade! Everyone at BHC must be tearing their hair out!

    Ed: Currently, holders of MEU3s have a yellow certificate:

    MEU3 Cyprus

    I think the confusion comes from it being both a Certificate AND a Card.

    I’ve included page 8 from the ‘No-deal Scenario’ below. As I read it, if you have a Residence Card or Residence Certificate and there is a no-deal Brexit, you will have the benefit of free movement. However, if you do NOT have a Certificate of Registration, Residence Card or Certificate/Card of Permanent Residence, if a No-deal results in the end of free movement, you may need a visa to travel (but we will only know when the lunatics running the asylum in Westminster get their act together.)

    2.How it Works?

     

    2.1 Before the UK leaves the EU (today – 31.10.2019 or as per date decided by EU)

     

    2.1.1. Residence Documents

    Current free movement rules apply. Upon application, provided that the free movement requirements are met, one of the following current documents are issued (also known as yellow slips):

    • Certificate of Registration (MEU1)
    Document certifying the residence for European Union citizens and for their family members who are also European Union citizens.

    Residence Card (MEU2)
    Document certifying the residence for family members of a European Union citizen who are not nationals of a Member State of the European Union.

    Certificate of Permanent Residence (MEU3)
    Document certifying permanent residence for European Union citizens and for their family members who are also European Union citizens.

    Card of Permanent Residence (MEU3)
    Document certifying permanent residence for family members of a European Union citizen who are not nationals of a Member State of the European Union.

    UK nationals and their family members:

    i. Who reside in Cyprus and are holders of a residence document: Current free movement rules apply.

    ii. Who reside in Cyprus and are NOT holders of a residence document: Current free movement rules apply. Upon application, one of the current residence documents (Certificate of Registration, Residence Card or Certificate/Card of Permanent Residence) will be issued, provided that the free movement requirements are met.

  • The Bear says:

    Drifting a tad off-topic for this news article but although MEU1 and MEU3 are different animals they are both ‘residence documents’ for the purposes of the law (passed but not yet implemented) as it relates to UK nationals already holding one or other of them in that either allows an application to be made for the new type of residence document after 01/01/21 per MoI’s document (v2 published in September) which covers both the ‘no agreement’ and ‘agreement’ circumstances.

    My observation was only that I’ve seen no sufficiently formal and precise source to say that a UK national holding MEU1 ‘must’ apply for an MEU3 after 5 years residence – and the FCO ‘recommending’ applying for MEU3 certainly suggests to me that it isn’t mandatory to do so. I was quite clearly not saying one shouldn’t but only that I haven’t read an authoritative source unequivocally stating that MEU1-holders ‘must’.

    When you wrote that “failure to comply with the requirements to apply for a Permanent Residence Certificate shall render the person concerned liable to a financial sanction up to €2,562.90” then I wonder if you may be mis-quoting your source as I believe I recognise that sanction in connection with a Permanent Residence ‘Card’ (for family members of an EU citizen who are not themselves EU citizens) but not in connection with a Permanent Residence ‘Certificate’.

    Ed: The description of the MEU1 (Registration Certificate) and MEU3 (Permanent Residence Certificate) together with details of the financial sanctions can be found on the Civil & Migration Department, by following the links above.

    Non-EU family members of an EU citizen apply for a residence certificate using the MEU2. (The financial sanction for failing to comply is the same as those for the MEU1 and MEU3).

    The MEU3 gives you a 100% certainty that you can remain in Cyprus as a permanent resident regardless of any Brexit scenario. I don’t understand why people are not prepared to get one if they’re legally entitled?

    (More than half the Brits living in Cyprus don’t even have the MEU1 despite the fact that the old brown ARC books, stamps in passports & old Immigration Permits issued pre Cyprus joining the EU are obsolete.)

  • The Bear says:

    Point of information: rather conveniently, when submitting the DT-I I was able to buy the stamp required on the same floor of the Tax Office itself in Limassol. The exemption from UK tax of pension sources was backdated to when I started to live here permanently.

    I’d understood that one “can” apply for permanent residence (MEU3) after 5 years of continuous residence and the gov.uk guide still states that. It may be advisable to convert an MEU1 to MEU3 if one fears that a requirement may crawl out of the woodwork but I haven’t yet seen anything of formal standing to say one “must”.

    Ever since registering at the Tax Office once I’d been here 6 months, they have consistently insisted that I must submit a return regardless of level of income. I’ve queried this each year and they have always insisted. It’s almost as if they make it up as they go along but finally they have legal justification for their position.

    Ed: The MEU1 and MEU3 are different animals:

    The MEU1 is a Registration Certificate, which is submitted by a European Union citizen and family members who are also citizens of a Member State, within four months from the date of entry into the Republic. It merely advises the Cyprus government of your presence in the Country and entitles the EU citizen to reside in Cyprus, work and purchase or inherit property. Failure to comply with the registration requirement renders the person concerned liable to a financial penalty up to €2,562,90

    The MEU3 is a Permanent Residence Certificate, which is submitted by a European Union citizen and family members also citizens of a Member State, after a five-year period of uninterrupted legal residence in the Republic of Cyprus. Note that failure to comply with the requirements to apply for a Permanent Residence Certificate shall render the person concerned liable to a financial sanction up to €2,562.90.

    An MEU3 holder has the rights of a Cypriot citizen, including: the right to reside permanently in Cyprus, the right to own any number of properties, the right to vote in local elections; the right to social welfare, and the right to GESY health care, etc. These rights can only be lost after a two year absence from Cyprus.

    Once the UK leaves the European Union, British expatriates will no longer be EU citizens. So it could prove impossible to obtain a MEU1 (or MEU3) after Brexit. Hence the UK Foreign & Commonwealth Office strongly recommends that you obtain an MEU3 after a five-year period of uninterrupted legal residence in the Republic.

  • Gary says:

    I’ve recently applied and received my MEU3. However, at present, 100% of my income is taxed in the UK. Does this new legislation apply to me?

    Ed: If you spend more than 183 days in Cyprus in any tax year (which runs from 1 January to 31 December), you must register with the Tax Department and pay tax on your world-wide income to the Cypriot authorities.

    Assuming you spend >183 days/year in Cyprus, the answer to your question is YES.

    (The tax on income in Cyprus is MUCH lower than the UK – so in all probability you will be better off.)

  • Mollimoo says:

    Does this mean we will have to approach all our sources of income individually, private & state pension, investments etc, to inform them of our new tax info or do we just tell the Inland Revenue in UK?

    Ed: I assume that you’re not registered with the Cyprus Tax Department? This became obligatory earlier this year.

    You need to get a DTI Individual Form and complete the relevant parts. You will also need revenue stamps from a main post office.

    Take the DTI form to the Tax Office; they will complete the form & send it to HMRC. After a few months, your pension, etc. will be paid without the deduction of UK tax.

    If you have a MEU1 & you’ve been resident in Cyprus for more than four years, you must apply for a MEU3.

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