In accordance with the Special Contribution for the Defence of the Republic Law N.117 (I) of 2002, Banking Organizations are obliged to deduct special contribution for the defence from interest paid or credited to accounts maintained by Cyprus residents.
Regarding the above mentioned Law, please find here below who are considered to be «Cyprus Residents»:
A «Cyprus Resident» must be
(a) Regarding individuals
- an individual who is resided in Cyprus for one or more periods which exceed in total 183 days during a tax year and also has domicile of origin in Cyprus
- despite the domicile of origin, an individual who has been a tax resident of Cyprus for at least 17 of the last 20 years before the current tax year
Please note that from the category of individuals who have domicile of origin in Cyprus the following are excluded:
- Individuals who have domicile of choice in a country other than Cyprus, provided that they were non-tax residents of Cyprus for period of at least 20 consecutive years before the current tax year
- Individuals who have been non-tax residents of Cyprus for at least 20 consecutive years immediately before 17 of July 2015 (effective date of the law).
(b) A legal person whose management and control is not exercised in Cyprus.
Persons who are considered «non Cyprus Residents» must first complete and sign the Declaration for Excemption from the Deduction of Defence Contribution on Interest upon their first account opening. If however, the tax status of a customer changes during next year, it is customer’s responsibility to provide the Bank with the relevant information. No further documents will be mailed.
Declaration to be completed and signed as follows:
Declarations forwarded by fax or previous years’ versions will not be accepted.
In case of joint accounts, Declarations must be completed and returned by each account holder separately; otherwise the Bank will be obliged to deduct Special Contribution of Defence.
If the said Declaration is not received by the Bank in due time, the Bank according to the regulations of the Tax Department will have to change the status of the account/s and impose a charge of 30% on the interest payable on customer’s account/s for the current year as Special Contribution for Defence.