Changes In Tax Regime For Directors And Other Officers

The Cyprus Tax Department has issued a circular¹ explaining changes to value added tax (VAT) for persons who are appointed as directors or other officers of companies. In the event that a lawyer, accountant or other professional is appointed as a director, treasurer or secretary of a company and continues to practise his or her profession or participate in any other economic activity after being appointed, then such services constitute an economic activity which is subject to VAT.

However, the circular provides for a number of exceptions. For example, if a person accepts such a position in a banking institution based on the Central Bank of Cyprus's directive to licensed credit institutions on the evaluation of the capacity and suitability of the members of their directors and administrative body, then this does not constitute an economic activity. Such economic activity is already strictly prohibited by Central Bank regulations.