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Tag: #Accounting

VAT Regime for Dividends in Cyprus

Published: Olena Vydysh | 13/04/2018 | blog

The Cyprus holding companies are widely used in the context of international business structuring for the optimization of the channels of incoming and outgoing investment in/from the countries that have signed an agreement with Cyprus on avoidance of double taxation. Recently, the Tax Department has published a guide to VAT accounting for holding companies, which is designed to provide clarity with respect to the circumstances under which the Cyprus holding companies can receive taxable income. Definition of taxable activities The common position and practice regarding the regime for levying VAT on dividends remain unchanged. The simple acquisition and ownership of shares in other companies by a Cypriot company does not constitute a taxable business activity in the sense of exploiting assets for income generation. The reason for this approach is that the dividends received from such ownership of shares are considered to arise solely at the expense of ownership of shares, rather than from the form of business activity carried out for the purpose of income generation. Consequently, an enterprise that simply owns shares or a similar form of a stake in another organization is not...

Implications of Brexit for Customs and VAT Rules

Published: Olena Vydysh | 19/03/2018 | blog

In a press release of January 29, 2018, the Council of Europe announced the second set of additional directives on the negotiations detailing the position of the EU-27 (27 EU Members without the UK) regarding the transition period with respect to Brexit. These directives give the Commission the authority to initiate discussions with the UK on the terms of Brexit and establish a transition period, no longer than until December 31, 2020. During the transition period in the UK, full and constant application of the EU legislation is provided. However, the state will no longer participate in the EU administration and the decision-making process. On January 30, 2018, the EU Commission published a document warning the companies of the key challenges in the customs and VAT that they will have to be overcome when the United Kingdom is not a Member of the EU. If no other transition period is agreed between the EU and the UK, the European Customs and VAT regulations in the UK will no longer apply from March 30, 2019, as the UK officially announced its intention to leave the EU on March 29, 2017. This document provides a brief overview of the customs and VAT implications that will arise...

European VAT On Providing Services

Published: Olena Vydysh | 24/01/2018 | blog

The companies which have customers in the European countries have to determine the state in which their income is subject to VAT and related consequences with respect to the indirect tax. The supply of “services” is defined as something that is not a “commodity”. Each supply of services should be analyzed in the light of the rules of the place of delivery in order to ensure the right accounting of VAT by the right person in the proper jurisdiction. It is especially important on making global sales that may lead to VAT obligations, and the rules of the place of delivery are the starting point for this. As in the case of goods, there are different rules for determining the place of delivery (as well as, accordingly, the place of their taxation) for the services provided to the business (B2B) and services to the end user (B2C). As a general rule, the provision of B2B services is taxed at the location of the client. In this case, the customer must provide the VAT number to the service provider, otherwise such a transaction is considered as B2C. If the client is a resident of a third country (not EU Member State) and does not have a European VAT number, he must provide...

List of organizational and legal forms of non-residents is approved, with which operations will be controlled according to rules of tp

Published: Olena Vydysh | 14/09/2017 | blog

On July 27, the list of organizational and legal forms of foreign counterparties on the countries / territories was officially published (and therefore entered into force), operations with which can be recognized as controlled for the purpose of control of transfer pricing (TP). This list was approved by the Resolution of the Cabinet of Ministers of Ukraine No. 480 of July 4 of this year (hereinafter - the List) for the implementation of the provisions of the Tax Code of Ukraine on TP, namely the clause "d" 39.2.1.1 art.39, and it is another criterion for the recognition of the operation as controlled one. If we look more widely, this can be seen as the next step of our government within the framework of global campaign on de-offshoring, namely to fulfill the commitments to implement the BEPS plan (its minimum standard), which Ukraine assumed with the acquisition of an official BEPS membership from 1 January, 2017. The list includes more than 90 organizational and legal forms from 26 countries and territories. The absolute majority of organizational and legal forms on the list are partnerships (about 80% of total amount). There were also some forms of investment funds and...