Q&A on major topics raised * The COVID-19 situation is very dynamic. Please note that the below answers were valid as at the date of the response (2 April 2020).  Employment / Contractual Q: 60% of 2018 insurable units or 2019?  A: 2018. Q: In the partial suspension basic premises you stated that ''60% of the 2018 insurable units value (with exceptions), with a maximum of Eur1,214'', what does this mean? What are insurable units? To who does this apply?  A: It applies to every employee. Insurable income is converted into insurable units at the Social Insurance. This is not somehing that should bother you, what is important is that your employees should have insurable income within 2018. In case they don't, the reference will be the insurable income of January 2020 but the subsidy will be lower and the maximum limit will be less than Eur1.214 (the Ministry has not yet clarified how much exactly it will be). Q: If someone has already submitted his application for "Εδικό Επίδομα Ασθενείας" but changed their mind, what is the procedure they have to follow? What if this person wants to use their annual leave and be paid by the company?  A: They can cancel their application (e.g. email the Ministry). If employees want to use their annual leave they can of course do so, as long as they fall within the 10%, 25% or 40% of the suspension schemes. Q: Further to the application that the employer will complete and submit for “Ολική Αναστοκή Εργασιών,” do the employees need to complete any other forms? This will be an unemployment benefit – must each employer apply for this benefit on their own?  A: No, it is the employer who does the application. However, each employee must complete the IBAN registration form (the employee will get paid directly) on the Ministry's portal. Q: For partial work suspension: A company expanded its operations (personnel and revenue) in March 2013. Due to the current situation, the March/April 2020 revenue has reduced compared to January & February 2020, but due to the expansion, the revenue is higher than March/April 2019. Can the company benefit from the partial work suspension? Also what happens if the company has revenue but cannot collect because its customers’ cash flow was affected and cannot pay?  A: To our understanding no, it is not covered. We understand that "turnover" does not refer to cash collections but "sales". Q: Are employees from the hotel industry covered with the special scheme until 30.4 or until 12.4? We ask because, based on government announcements, hotels will remain closed until 30.4. A: All schemes apply until April 12 but will most probably be extended. Q: What is the treatment for group companies where the holding company’s revenue depends on the revenue of the subsidiaries? What revenue is considered to be the holding company's revenue?  A: It depends on whether the holding company receives revenues in the form of dividends or not. Q: For the partial suspension - does the employer cover the difference of the 60% benefit? A: Only if the employee continues to work. Q: On March 10th, we were hosting an event in Nicosia and Limassol on behalf of an international client, which was postponed the day before the event. Are we entitled to work suspension?  A: The nature of works that your firm is carrying out depend on whether any allowance may be claimed. In case your firm is in the business of hosting events, then the cancellation of this event together with any further cancellations must amount to a 25% or more reduction in revenues compared to the revenues of March and April 2019. Further, the suspension of works schemes are in force from 16/3, which is after the cancellation of your event. Q: Partial work suspension scheme - if an employer opts for this at a subsequent period, is it okay for the employer to agree with employees to work part time and not be dismissed?  A: The Plan strictly stipulates that employees should not be terminated for the specified period. If there is a mutual agreement between employer-employee to reduce working hours then it is ok. Q: I have a tourist business (based in hotels) and I only employ part time employees during the summer season. I pay Social Insurance, but mainly my personal income is from repayment of Directors Loans and Dividends. I have not earnt money since December 2019 and I can believe we will have very little Tourism revenue this year. Is there any financial help for me or my Tourist based business?  A: To our understanding tourist companies are covered by full suspension of business ex-post from 16/03, i.e. even if the Decree came later. Having part-time employee is ok, they are still covered (under full suspension and provided that you have 9 or less employees you will probably be covered at 100%, for all staff). Q: From your communication with authorities, how and for how long do you see the plans being extended? Hotels are staying closed until the end of April, yet plans are valid only up to 12/4.  A: We estimate that plans will be extended, at least for another month. Q: It seems that this situation will continue after the 13/04 and maybe for May - do we have any guidance from the government that the Schemes will be extended?  A: We estimate that plans will be extended, at least for another month. Q: Full work suspension scheme - (1) is a nursery which was under the decree but still continues working remotely (receiving income) eligible? (2) A restaurant stopped operations but started delivery, however the income has significantly decreased.  A: (1) If the business continues to have business activity (i.e. remote work) then it shall apply to participate in the Partial Suspension of Work Plan. What matters is that the company continues to have some activity, regardless of being big or small. (2) see answer in point 1. In both scenarios, the business must show that there is a 25% decrease in its turnover for March. Q: How is the max €1214 benefit for activities suspension calculated. Does it take into account the existence of any dependant?  A: The Government has put this hard ceiling. Q: Regarding the support to employees sent home due to reduction of turnover, in order for a company to be able to apply for the scheme the conditions are: -25% of the turnover of March AND April (compared to last year) PLUS must suspend the employment of a specific % of employees? Thus the questions are: 

1.  the reduction should be for BOTH March and April?
2.  there is a specific % of employees to be suspended in order for the subsidy of the salary to be claimed?

A: 1. To participate in the Partial Work Suspension Plan the business must have suffered a 25% decrease in its turnvover comparing to March 2019 and expect that this would also be the case for April. 2. If the Company employees more than 50 employees, then 60% of the personnel may participate in the Plan. If the Company employees up to 50 employees then, then 75% of the personnel may particpate in the Plan. There is no minimum percentage of employees that must be suspended in order to claim the subsidy. Q: Regarding the comparison of reduction in turnover by 25%, for newly-incorporated businesses, without PY comparison, do we compare to the previous month's turnover, i.e. February 2020?  A: According to the Plan, the comparison will be made with the previous months. It will not take only February into consideration. Q: For the partial suspend schemes, can the employees work while they receive the 60% from the government or their employer should pay them additionally for any time spent on work?  A: According to the terms of the Partial Suspension of Works Plan, the employee, provided that he consents, may continue working and receive the difference of his salary from the benefit or vary the above difference according to the working hours. Q: How should hourly paid employees/part timers be counted in the total number of employees to calculate the percentages? As 1 employee or pro rata?  A: As 1 employee. Q: If all flights to Cyprus still continue to be banned and foreigner employees were aboard more than 3 months.  Will they be able enter the country and continue their employment in Cyprus. A: As determined by the provisions of the relevant Aliens and Immigration Regulations, Non-EU Nationals cannot spend more than 3 consecutive months abroad, without their permits being revoked. Following the Covid-19 outbreak, for Non-EU Nationals that failed or will fail to return before the 90-days period to Cyprus, CRMD is considering taking measures allowing them to keep their status as legal immigrants or being able to proceed with a renewal, following simplified procedures once the situation is back to normal. It is noted that in case CRMD decides that their permits will be revoked due to the above, a new entry permit/valid visa will be needed to authorize them to re-enter Cyprus and re-apply for a residence and/or work permit. Q: What about the private schools and kindergartens? are they included in the packages and should parents pay school fees for the months March, April?  A: Both private schools and kindergartens are under the mandatory suspension of works regime and since they are eligible to apply for the Full Suspension of Works scheme, it is our understanding that they should not be receiving monthly subscription from the students. Q: We are applying for partial suspension, we have under 50 employees but more than 9 and we have some employees that cannot work at all due to the nature of work or are refusing to carry out their duties. Even though they will receive the benefit, what is the employer entitled to pay them?  A: For a business with up to 50 employees, the Plan will cover 75% of the personnel. Such percentage shall include the employees that cannot work remotely due to the nature of work and in general the most vulnerable employees. If the employee receives the special unemployment benefit he cannot be forced to continue working for the period he is receiving it. He must first consent. The Employer will be obliged to pay only the employees falling in the 25% and those employees falling under the 75% but consent to continue working. Q: What if we have an employee who is an employee in 2 of our companies and receives separate salaries for each company. Should we apply for each company separately and will the employee get the benefit under each company?  A: If the application will be made for the same reason (e.g. partial suspension) then we expect that the employee will receive his/her pay pro-rata for each company. Q: Our company has ceased all activity since March 13. However, we do not fall under any of the categories announced. Which application should we fill out? Is it the full suspension or partial suspension?  A: If the company does not fall under the compulsory suspension then it may only apply for the Partial Suspension of Work Plan. The Full Suspension of Work Plan is only for compulsory suspension according to the Decrees. It is stipulated in the terms of the Plan: Η επιχείρηση να τελεί υπό υποχρεωτική πλήρη αναστολή, σύμφωνα με τα Διατάγματα του Υπουργού Υγείας και τις σχετικές Αποφάσεις του Υπουργικού Συμβουλίου που βρίσκονται αναρτημένα στην ιστοσελίδα www.pio.gov.cy/coronavirus και δεν έχει διαφοροποιηθεί η φύση ή και ο τρόπος δραστηριοποίησής της.   ** UPDATE: Based on the new guidelines, the only exemption is the following: Companies whose operations are connected to those companies that shut down due to the Minister of Health Decrees will also be entitled to participate to the full work suspension plan, if they have experienced more than 80% reduction in turnover (as this is calculated based on the relevant guidelines). Q: If a company is a small real estate company and does not sell properties every month, however there is a reduction in the current year’s revenues compared with the prior year, can we claim this benefit or not and is related only to March/ April?  A:  If there is a 25% reduction in the business' turnover for March it may apply to the Partial Suspension of Work Plan. Q: If a Company has suspended its operations, and pending our question whether we shall enroll on the full or partial suspension scheme. Since we have announced suspension, can an employee apply for the Special Health Scheme as it belongs to "ευπαθεις ομαδες"? And, can 2 of our personnel apply for the Special Leave for Kids subsidy, again as we have suspended the operations?  A:  If they are eligible they can apply for the other benefits. An employee can only receive one benefit at a time. Q: What happens with rents of restaurants and Licence fees in the Malls? Are these suspended for as long as restaurants are closed?  A:  No. Regarding rents, the only thing suspended is the eviction procedures. Q: Would a redundancy due to outsourcing the accounting department be allowed during this period?  A: Termination due to redundancy requires notice to the employee, thus this does not fall within the exemption of "termination that requires no notice". If the Company intents to participate in the Plan then such termination shall not take place. Q: Regarding a partial stop of operations - If we need to keep employees for another 2 months can we apply and then, if we have issues later, give unpaid leave to employees?  A: No. You cannot give unpaid leave because this is contrary to the purpose of the non termination clause of the Plan. Participating in the Partial Suspension of Work Plan means that the employee must not be terminated for both the period of participation in the Plan and for an additional period equal to the period of participation in the Plan plus one additional month. Q: Can full time employees participated in the suspension plan work as part time employees following termination of the plan?  A: Only if the employees agree to the change of their employment terms i.e. reduction in working hours. Q: If an employee has resigned within the period for applying for partial suspension will there be any issue with the scheme approval.    A: Resignations do not hinder the company to enter the Plan. Q: Can a mother who works as an accountant which stays at home to take care of their child apply for child benefits or will be assumed that the nature of the job is to work at home?  A: She can apply for the Special Leave Benefit. It cannot be presumed that she is able to work from home. Q: Would  a redundancy due to the outsource of the accounting department would be allowable this period?  A: Termination due to redundancy requires notice to the employee, thus this does not fall within the exemption of "termination that requires no notice". If the Company intends to participate in the Plan then such termination shall not take place. Q: On the contract we have "trial period". We terminated the employment  on 3rd March. Is it a termination without notice? Are we eligible for the schemes?  A: Termination during the probation period does not require notice thus the business is eligible to participate in the Plan. Q: A company with 2 directors and 35 other staff - who else apart from the 2 directors should be included in the 10%?  A: The 10% should be the managers-shareholders, partners holding over 20% of the shares, general managers, managers. If none of the above applies then the company should include to the 10% the employees executing administrative tasks. Q: Our company has a number of foreign employees and some have families that need their work and residence permits prolonged. Also, some new applications need to be made. If the crisis lasts more than a few months, how will Migration treat such cases?  A: The CRMD officially informed that they will show leniency to cases affected by the outbreak.  • Non-EU Nationals that entered Cyprus under a tourist visa with the purpose to register themselves as Visitors or as employees/family members of employees, will be able to do so, provided that they fulfil the legal requirements, once the CRMD counters are able to receive new applications.

• Non-EU Nationals that failed to renew their permits due to the Covid-19 outbreak, will be able to do so once the situation is back to normal, without any measures taken against them for overstaying. It is noted though that in case they leave the country with an expired permit, they will not be able to re-enter unless they have a new entry permit or a valid visa.
• As determined by the provisions of the relevant Aliens and Immigration Regulations, Non-EU Nationals cannot spend more than 3 consecutive months abroad, without their permits being revoked. Following the Covid-19 outbreak, for Non-EU Nationals that failed or will fail to return before the 90-days period to Cyprus, CRMD is considering taking measures allowing them to keep their status as legal immigrants or being able to proceed with a renewal, following simplified procedures once the situation is back to normal. It is noted that in case CRMD decides that their permits will be revoked due to the above, a new entry permit/valid visa will be needed to authorize them to re-enter Cyprus and re-apply for a residence and/or work permit.

The employer cannot force the employees to take annual leave. Also, unilateral reduction of working hours is not permitted. Thus if the aim is to reduce working hours the employees should be duly informed and consent. Q: Can the salary or annual leave be reduced for the 10% that will remain on the payroll?  A: The salary cannot be reduced unless there is a mutual agreement with the employees to reduce their working hours. The employees cannot be forced to take their annual leave but if the elect to do so they can. Q: What about overdrafts? Can interest be suspended?  A: The suspension of instalment payments applies in relation to overdraft facilities as well. Interest is not suspended, it will be added to the total amount owed at the end of the suspension period.  **UPDATE: The suspension of instalment payments applies in relation to overdraft facilities as well. Interest is not suspended, it will be added to the total amount owed at the end of the suspension period. Q: Will interest rates on loans and/or overdraft accounts be reduced?  A: There is no provision in the law or the Ministry of Finance decree for the interest rates on loans and/or overdraft accounts to be reduced.  **UPDATE: There is no provision in the law or the Ministry of Finance decree for the interest rates on loans and/or overdraft accounts to be reduced. Q: If an employee has a 10 month contract ending in June what happens with the 2x+1 rule?  A: This is not termination, it is an expiry of contract thus there is no problem. Q: Regarding the plan stated that new employees, that started work in 2019 or 2020, will also be compensated, how will this compensation be computed?  A: This is stated in the terms of the Plan. The employee's salary in January 2020 will be taken into consideration or his previous salary. Q: Can the company participate in the Suspension plans if an employee working for 4 months left the Company on March 9th without submitting a written resignation and then also left Cyprus?  A: This is voluntary resignation. No termination has taken place thus the business is eligible to participate in the Plan. Q: At some point, the government said that up to 5 persons, this would be 70% - 30%. Was this deferred?  A: Yes. Q: Regarding companies with up to 50 employees that will participate in the Partial Suspension Scheme - can the remaining employees (25%) apply for other subsidies, such as Parental leave subsidy?  A: Yes. Q: If you only pay the interest of a loan and not the installments, are you eligible to make an application or is this considered an NPL?  A: Yes you are eligible to apply. Once the instalment payments are suspended, you may make any payments towards the princial and/or interest of your credit facilities on a voluntary basis. Q: Can we apply for unemployment benefit if we were not previously employed?  A: Yes. They will take into consideration the January 2020 salary or the previous salary. Q: Can you elaborate further on 're-purposing' of businesses? What qualifies as partial work suspension? If a retail shop has been forced to close down and has moved to sell online instead and is getting a small fraction of the usual sales, would this qualify as partial work suspension? Or would the % reduction in turnover be considered?  A: By repurposing we mean the situation where, even if your business closed down after the Decree but you continued to have other revenue streams due to new activities (e.g. you engaged in online sales) then you do not fall under full suspension and you can claim subsidies under partial suspension (provided that you fulfil the requirements). Regarding the second question: If the business continues to have business activity (i.e. online shopping) then it shall apply to participate in the Partial Suspension of Work Plan and show the 25% reduction in its turnover.   Tax - VAT        Q: From a Indirect Tax and VAT perspective, what are the main measures implemented?  A: VAT Temporary VAT payment deferral to 10 November 2020 suspending the additional 10% tax penalty, interest and criminal sanctions on VAT payable for taxable persons promptly submitting their VAT returns applicable for:

• The majority of entities (except from the list of sectors that have been expressly excluded in the amending law with reference to their economic activity coding) regardless of turnover volume, total outputs or their respective decreases
• VAT quarters December 2019 – 29 February 2020, January – March 2020 and February – April 2020
• The deferrals apply as long as those entities timely submit their VAT returns for the above quarters, i.e., by 10 April, 10 May and 10 June 2020 accordingly.

Major Excluded Sectors from above deferral comprise those that did not suffer material reduction during the crisis and collect normally VAT on sales in cash. Exempted business areas depend on economic activity coding found in  VAT Registration Certificates of taxable persons being:  35111, 36001, 47111, 47112, 47191, 47211, 47221, 47221, 47231, 47241, 47242, 47301, 47411, 47611, 47621, 47651, 47731, 61101, 61301, 61901 Proposed legislation on a reduction of VAT rates was withdrawn and not implemented. Customs and Excise Cyprus Customs Department has announced a possibility of a postponement of the payment for the excise duty on energy products, tobacco and alcohol, upon request from taxable persons. According to the Notification issued, the taxable persons may receive an extension of up to 1 month for the payment of the excise duties upon filing the relevant request to the Customs Director. In addition, in the cases of ‘’extreme need’’, the Customs authorities may grant an extension of up to 2 months. The above relief is available to persons who are ordinarily involved in the production, importation from outside the EU and intra-community acquisitions from other Member States, of energy products or/and tobacco products and/or alcohol and alcoholic drinks and (a) whose yearly turnover exceeds €3.500.000 and (b) they are paying the excise duties through the Thiseas electronic system. This is an important opportunity for importers and producers of the above categories of products to streamline their cash-flows in these stressful times. Q: In relation to the excluded categories from VAT payment deferral, what are the key provisions?  A: The VAT payment deferral to 10 November 2020 is not applicable for entities in the excluded categories (as per above list of economic activity coding for VAT purposes). Such entities need to both promptly submit their quarterly VAT returns and even settle their VAT payable earlier in instalments. An order issued by the Ministerial Council on Thursday afternoon 2 April 2020 (subject to an Minister of Finance Explanatory Notice expected to follow within week commencing 6 April)  states that:

• VAT registered or required to be registered entities falling in the excluded categories of the amending law need to,
• Pay for VAT quarters within the period 1 January to 31 May 2020, 30% of the expected VAT payable of their respective quarter (stagger),
• Within 15 days from the end of each calendar month within the above period 1 January to 31 May 2020. This means for instance that entities within assigned stagger 01 Jan 2020 - 31 March 2020 , they should make a 1st instalment of 30% VAT of payable of this stagger by - 15/04/2020 and a 2nd final instalment of the remaining 70% by the stagger VAT return submission due date i.e. 10/05/2020.

It is also worth noting that specific cases who fall into the excluded sector categories (i.e. have suffered reduction in business and have a large portion of revenue in credit instead of cash) with significant difficulties in funding VAT payment within the deadline should attempt specific communication with the Ministry/Tax Department in order to analyse their case and request special VAT deferral in order to avoid penalties Q: Regarding GESY, is it correct to apply reduced rates starting from March?  A: Apparently yes, only for whatever the SID collects. for all other categories increased rates should be applied. I expect that this will clear in the next few days.Please check with us in the next few days for developments on this matter. Q: Regarding GESY, the announcement was that if a Company already paid the reduced amount for March, then the low rates apply for March, April, May?  A: Indeed that was the initial announcement which was subsequently and on the same day withdrawn. The revised one provides that the SID will collect based on the reduced rates applied as of March. Q: Are there any plans by the government to extend the timeline of implementation of other further tax compliance regulations, like DAC6 for example?  A: No, such measures have been announced as being under consideration. Certainly for some of these the approval by the House of Parliament is required. Q: Regarding income tax,  is the only measure applied the postponement of filing due date of 31 March 2020 to 31 May 2020 for 2018 income tax filing? Are there any other changes for income tax?  A: The TD acknowledged that the deadline for submitting the 2018 TD4 and TD1 is 1 June 2020.  the ministerial decree also refers to extending the period of payment the 2018 due taxes as per the returns submitted to 1 June 2020. it is not clear to what the ministirial decree refers to given that the 2018 liability was due by 31 August 2019. this needs to be clarified by the TD. We remain available to discuss this in more detail. Q: What about companies that submit CD's to Social Insurance?  A: This documents/ records would have to be submitted in the relevant boxes that have been placed at the SID district offices and branches Q: Will Cyprus or Russia consider waiving tax residency rules for days count (or 183 days in Russia spent by a Cyprus tax resident due to flights hault)  A: This has not been addressed by the tax authorities. I suggest that this is examined in more detail given the specifics of your case. Q: How are all these changes affecting the transfer pricing application for Cyprus companies?  A: None of the tax measures announced so far touch on transfer pricing. We remain at your disposal to discuss this in further detail.   Registrar of Companies        Q: Why is the Company or registrar not accepting electronically submitted HE32 for the years before 2013?  A: This is because at this point in time their online system got updated to accept online submissions of HE32 and they have not extended it to apply for previous returns that were overdue by that time. Q: Can we register companies now? Are the courts open?  A: Yes, a solution has been found and incorporation is proceeding albeit with some delay.