Year 2022 is here and it is time to start planning ahead for tax payments.

It is advisable that you follow this tax diary and comply with your tax obligations in order to avoid paying unnecessary penalties and interest.

Tax diary can be downloaded using the following link

Our experienced tax team is available if you need professional consulation.

NOTE: Tax information contained in our publication is accurate as of the day of release.

We kindly remind you that under the provisions of the Income Tax Law, every Company resident in the Republic is deemed to have distributed 70% of its profits after taxation (as adjusted for DDD purposes) in the form of dividends within two years from the end of the tax year in which such profits were generated. The amount of deemed distribution is reduced by any actual dividends paid out of the profits of the relevant year at any time.

SDC – Special defense contribution is imposed to the extent that the ultimate direct/indirect shareholders of the company are Cyprus tax resident and domiciled individuals at the rate of 17%.

GHS – General healthcare system contribution is imposed to the extent that the ultimate direct/indirect shareholders of the company are Cyprus tax resident individuals at the rate of 2.65% (gross emoluments earned by individuals subject to GHS are capped to EUR 180,000 per annum).

Both SDC and GHS on deemed dividend distribution for profits generated in the year 2019 are payable by the company for the account of the shareholders by 31/01/2022.

Late payment of the SDC and GHS due will be subject to interest at the current rate of 1.75% per annum and to a 5% penalty on the tax due. An additional penalty of 5% on the tax due may be imposed if the tax remains unpaid two months after the above due dates.

We are at your disosal to assist you with the calculations, the administration of the payment and the submission of the relevant declarations.

15% corporate minimum tax

The bill introduces a new 15% minimum tax on corporations to help pay for climate and health care measures. The tax applies to companies that generate $1 billion in annual earnings. The Joint Committee on Taxation (JCT) estimates the tax will raise $313 billion in revenue over the next decade. Exemptions from the tax demanded by Sen. Kyrsten Sinema (D-Ariz.) to secure her 'yes' vote include: Exemption for companies that use accelerated depreciation to help pay for new investments. Exclusion of small businesses that are subsidiaries of private equity firms.Prescription drug pricing reformThe bill allows Medicare to negotiate prices for some drugs for the first time. This is a policy Democrats have attempted to enact, over objections from the pharmaceutical industry, for many years. The provisions are expected to save $288 billion over 10 years according to analysis by the CBO.Enhanced IRS tax enforcementThe Inflation Reduction Act of 2022 allocates $80 billion to increase enforcement by the IRS. Supporters of the measure hope that additional employees and better technology will allow the IRS to catch more tax cheats, especially among the ultra-wealthy. The CBO believes this could boost IRS revenue by at least $124 billion over the next decade.Stock buybacks will be subject to an additional tax once the legislation becomes law. A 1% excise tax on buybacks is expected to generate $74 billion by 2031.In a bid to recoup tax revenue lost to private equity, the act imposes a limit on losses businesses can deduct from their taxes. These measures are designed to prevent wealthy individuals from reducing or even wiping out their income tax liability.Energy security and climate change investmentThe largest investment made by the Inflation Reduction Act of 2022 is for energy security and climate change. It totals $369 billion and consists of the following:3Business Incentives and Tax Credits Incentives to businesses to deploy lower-carbon and carbon-free energy sources. Tax credits for energy production and investments in wind, solar, and geothermal energies. Tax credits for investment in battery storage and biogas. Tax credits for investments in nuclear energy, hydrogen energy coming from clean sources, biofuels, and technology that captures carbon from fossil fuel power plants. Bonuses for companies based on worker pay and the manufacture of steel, iron, and other components in the U.S. New tax credit rules make EV tax credit hard to get:3 EV must be made in North America. Eliminates credits for pricey EVs, i.e., Hummer EV, Lucid Air, and Tesla Model S and Model X. Lowers tax credit on new EVs with battery minerals sourced from countries other than the U.S.Business and Consumer Incentives Incentives to companies and consumers who make cleaner energy choices. Tax credits for residential clean energy costs including rooftop solar, heat pumps, and small wind energy systems. 30% credit through 2032—phases down after 2032. Electric vehicle tax credits of up to $7,500 on new EVs and $4,000 on used. Tax credit for energy efficiency in commercial buildings. Grants and loans to help companies reduce emissions of gas methane from oil and gas. Fees levied on producers with excess methane emissions. $27 billion toward additional incentives for clean energy technology. Some provisions of the Inflation Reduction Act of 2022 actually increase fossil fuel production on public lands.Use of Public Lands New requirements to hold lease sales that open up new oil and gas production.Affordable Care Act extensionThe legislation extends financial assistance to help people enrolled in ACA through 2025.

The Lithuanian State Tax Inspectorate (STI) has announced that over 39,000 taxpayers who have been included in the affected-by-COVID-19 list have already concluded more than 14,000 interest free tax– loan agreements with STI.

Lithuanian taxpayers, included into the list of affected-by-COVID-19 and having tax debts to STI accrued before August 31 2021, are eligible for interest–free set out of those debts up until December 31 2022. The deadline to apply for this incentive was August 31 2021. 15,000 applications have been received.

Taxpayers also have an option to extend the repayment of tax debts for a maximum period of 5 years, however, starting as of January 1 2023, unpaid tax debts will bear an interest of 0.01 % per day.

It is worth to mention that taxpayers, included into the list of affected-by-COVID-19, having tax debts to STI and not applied for the above incentive, are required to settle their tax debts in full not later than until 31 October 2021. As of November 1 2021 all unsettled tax debts will be charged with interests and enforced by STI.

The competent authorities of the United States and Malta signed a competent authority arrangement (CAA) confirming their understanding of the meaning of pension fund for purposes of the United States–Malta income tax treaty (Treaty). The competent authorities have entered into this agreement after becoming aware that U.S. taxpayers with no connection to Malta were misconstruing the pension provisions of the Treaty to avoid income tax on the earnings of, and distributions from, personal retirement schemes established in Malta.

The CAA confirms the U.S. and Malta competent authorities’ understanding that (except in the case of a qualified rollover from a pension fund in the same country) a fund, scheme or arrangement is not operated principally to provide pension or retirement benefits if it allows participants to contribute property other than cash, or does not limit contributions by reference to income earned from employment and self-employment activities.



Because Maltese Personal Retirement Schemes Contain These Features, They Are Not Properly Treated As A Pension Fund
For Treaty Purposes And Distributions From These Schemes
Are Not Pensions Or Other Similar Remuneration.

The IRS put taxpayers on notice earlier this year that it was reviewing the use of Maltese personal retirement schemes and that some U.S. citizens and residents are relying on an interpretation of the U.S.-Malta Income Tax Treaty (Treaty) to take the position that they may contribute appreciated property tax free to certain Maltese pension plans and that there are also no tax consequences when the plan sells the assets and distributes proceeds to the U.S. taxpayer. Ordinarily gain would be recognized upon disposition of the plan's assets and distributions of the proceeds.

The IRS is actively examining taxpayers who have set up these arrangements and recognizes that other taxpayers may have filed tax returns claiming Treaty benefits as a result of their participation in these arrangements. These taxpayers should consult an independent tax advisor prior to filing their 2021 tax returns and take appropriate corrective actions on prior filings.

The IRS also cautions taxpayers against entering into any substantially similar arrangements that would seek to misconstrue the provisions of a bilateral income tax treaty of the United States to avoid income tax. IRS enforcement, both the civil and criminal divisions, is committed to pursuing abuse and those who market and participate in abusive transactions.

The CAA is available on irs.gov and will be published in the Internal Revenue Bulletin.

Have an IRS Tax Problem?

Interests in some foreign accounts holding digital assets such as cryptocurrency would have to be disclosed to the Internal Revenue Service under a proposal put forth Monday by the U.S. Department of the Treasury.

The proposal outlined in Treasury's ''Green Book'' explanation of tax policies would impose a reporting mandate for foreign digital asset accounts under Internal Revenue Code Section 6038D(b).

The Mandate Would Apply To Taxpayers Who Have
More Than $50,000 In Cryptocurrency,
Financial Accounts And Other Assets Held Overseas.

The proposal would cover any account housing digital assets maintained by a foreign digital asset exchange or asset service provider, and Treasury would be permitted to issue regulations expanding the scope of the accounts, according to the Green Book. The proposal would be effective for returns that have to be filed starting in 2023.

Section 6038D, created by the Foreign Account Tax Compliance Act, already requires reporting from anyone holding an interest in at least one specified foreign financial asset with a total value of at least $50,000, according to the Green Book. Treasury said in the Green Book that mandating people to specifically report offshore holdings of accounts with digital assets, subject to big penalties if they don't, is vital to curbing potential use of digital assets for tax avoidance.

''Tax Compliance And Enforcement With Respect To
Digital Assets Is A Rapidly Growing Problem,''
Treasury Said In The Green Book.

The Green Book also calls for increased reporting from financial institutions and digital asset brokers for purposes of exchanging information with foreign governments. Some financial institutions would have to report the account balance for all accounts housed at U.S. offices and held by foreign individuals, according to the Green Book.

Furthermore, if adopted and combined with existing law, the proposal would force brokers to report gross proceeds and other required details regarding sales of digital assets with respect to customers and substantial foreign owners in the case of some passive entities, the Green Book said.

That proposal would allow for the automatic exchange of information with other countries and provide Treasury with details on U.S. taxpayers who directly or through passive entities engage in digital asset transactions outside the country, according to the Green Book.

Treasury also wants to allow actively traded digital assets and derivatives or hedges of them to be marked to market if dealers or traders elect to under rules similar to those applying to actively traded commodities, the Green Book said.

The Green Book was released the same day President Joe Biden's administration released its budget proposal, which calls for raising the corporate tax rate to 28% and imposing a minimum tax rate of 20% on taxpayers whose incomes top $100 million.

The digital assets proposals in the Green Book together would raise about $11 billion, according to Treasury. In total, the Biden administration's budget is proposing $2.5 trillion in revenue increases.

An American couple who lived in Australia is not owed tax refunds for claimed foreign earned income exclusions because they failed to properly file their returns with the Internal Revenue Service, the Federal Circuit ruled in Brown v. U.S., case number 21-1721, in the U.S. Court of Appeals for the Federal Circuit, on January 5, 2022.

George and Ruth Brown can't claim approximately $13,000 in refunds from the IRS for tax years 2015 and 2017 because they failed to sign their amended returns directly and didn't tender power of attorney to a legal representative, the appeals court said.

The Browns failed to comply with the signature and verification requirements under Internal Revenue Code Section 7422(a), the three-judge panel said in a published, unanimous opinion.


''The Browns Admit That They Neither Signed Their Refund Claims Nor Tendered Powers of Attorney To Permit Their Tax Preparer To Sign The Claims On Their Behalf,''
U.S. Circuit Judge Alan David Lourie Said In The Court's Opinion.



The Browns lived in Australia for the 2015 and 2017 tax years, during which time George Brown worked for the American company Raytheon, according to the opinion.





John Anthony Castro, an attorney who worked for the Browns, filed three amended tax returns on their behalf that sought refunds relating to the foreign earned income exclusion — outlined under IRC Section 911, which is meant to exclude foreign-sourced income from taxable income.

In a decision letter from April 2019, the IRS explained to the Browns that they wouldn't be receiving the refunds they requested and that as an employee of Raytheon, George Brown may have permanently waived his right to the foreign earned income exclusion by signing a closing agreement with the company, the opinion said.

In June 2019, the Browns filed suit against the government in the Court of Federal Claims, arguing their refunds had been inappropriately denied. In response, the IRS asked the court to dismiss the case, citing a lack of subject matter jurisdiction, which the court granted.

The appellate court, however, found that the lower court incorrectly ruled that the ''duly filed'' requirement in Section 7422(a) is a jurisdictional matter. Instead, the higher court concluded, it's more of a ''claims-processing rule.''

The Browns were also incorrect in arguing that the IRS had somehow waived the signature and verification requirements of Section 7422(a) by merely processing their refund claims, the appellate court ruled, saying those requirements derive from statute and the IRS doesn't possess the power to waive them.

Have an IRS Tax Problem?

According to Private Wealth, Private Trust Companies are state-chartered organizations that provide fiduciary services to members of a family. It can only do business with the family, not outsiders. They are a unique option available to wealthy families to help them address key issues and challenges of intergenerational wealth transfer.

The private trust company is established to serve as a trustee and is limited to one family. It enables the wealthy family to put all the trust assets together in one structure.

According to Vince Annable, CEO and Founder of VFO Advisory Group and author of The Household Endowment Model: Wealth Planning for Affluent Families,

“With A Growing Number Of States Enacting Legislation Supportive Of Private Trust Companies, They Are
Gaining In Popularity Among Wealthy Families.

These entities usually provide these families with wealth planning and family governance at a level otherwise unavailable.”

While single-family offices and private trust companies are distinct entities, the private trust company can fill some of the roles of a family office such as investment management and administrative services including record keeping. The relationship between single-family offices and private trust companies is set by the wealthy family. For example, the two entities can operate independently where the private trust company obtains back-office services from the single-family office through a service contract.

The private trust company’s board of directors is composed of trusted professionals of different ages and tenures who have a very solid understanding of the interests and concerns of the wealthy family. This approach produces a form of “institutional memory” that better ensures the ongoing agenda of the wealthy family is addressed.

“With A Private Trust Company, The Family Usually Has Extensive Flexibility And Control Over Decision Making,”

says Homer Smith, Executive Director of the Integrated Family Office Practice and Founder of Konvergent Wealth Partners. “For example, the wealthy family can choose who is on the board of the private trust company and how voting on important matters works.”

When there are meaningful family-owned assets in trusts such as privately held business interests, there is a strong likelihood of the decisions that are made to be more attuned to the wealthy family’s interests at the time. Additionally, when the board includes different technical specialists (e.g., lawyers, accountants, wealth managers), they are likely to make better decisions because of their familiarity with the wealthy family and the specific assets.

Many times, family members are on the investment committee of the private trust company. This gives them influence over the ways the family monies are allocated. This level of involvement is often significantly greater than the level of possible involvement with traditional trustees. If the single-family office is managing the monies in the trusts, the wealthy family is still very much involved in the process.

Privacy is also enhanced as the wealthy family can often control the flow of information. The people chosen to be on the board, for instance, are all loyal to the wealthy family. According to Aaron Yen, Senior Partner, Ascendent LLP, “For non-US citizens, the privacy issues surrounding private trust companies can be particularly attractive. They can be effective in bringing assets into the United States while maintaining a high level of privacy.”

While there are substantial benefits of private trust companies to wealthy families, they are a long-term commitment. Sometimes family members take on certain responsibilities. Also, many times, trusted professionals are brought in to assist. Like single-family offices, private trust companies are family businesses. Consequently, avoiding potentially dipterous complications requires a succession plan. It is usually wise to address succession within the private trust company when it is established.

On May 30, 2018 we posted The Us Is Now The 2nd Largest Tax Haven And Is Scheduled To Be Blacklisted By The Eu!, where we discussed that the U.S. is the world’s second-largest tax haven, behind Switzerland and just ahead of the Cayman Islands, according to a report released May 15, 2018.

Now according to the Tax Justice Network the U.S. is considered the best country in the world in which to hide income from tax and government authorities, according to this year's index unveiled on Tuesday May 18, 2022 listing the most financially secretive jurisdictions.

The U.S. has risen to the top of the index that identifies jurisdictions „most complicit in helping individuals to hide their finances from the rule of law, according to the Tax Justice Network, a U.K.-based organization that says its goal is to fight injustice in tax systems.

The Financial Accountability and Corporate Transparency, or FACT, Coalition held a panel discussion to discuss the latest annual TJN index with officials from both organizations and Global Financial Integrity, a research group based in Washington, D.C.

A statement from the FACT Coalition suggested that the U.S. position at the top of the index is due to unaddressed loopholes and lax rules in U.S. anti-money laundering and tax laws.

The U.S. was considered the second-best jurisdiction in which to hide money based on the Tax Justice Network's 2020 data, but the FACT Coalition said the U.S. has since taken steps to try to improve its anti-money laundering enforcement. Those include enacting legislation known as the Corporate Transparency Act, which will establish reporting requirements for certain beneficial owners.

That legislation is designed to create a national beneficial ownership registry, and to combat, to the broadest extent possible, the proliferation of anonymous shell companies that facilitate the flow and sheltering of illicit money in the U.S.

Although that legislation has been enacted, the entirety of implementing regulations has yet to be issued by the U.S. Treasury Department, the coalition noted in its release. Treasury issued the first set of rules on the CTA in December.

We previously posted numerous blog posts regarding that US Taxpayers are receiving automated $10,000 Penalty Assessments for late filed Form 5471's, where we discussed that we have been receiving a lot of calls from taxpayers who have recently received penalty notices regarding late filed or non-filed Form 5471. (See also, We Can Help You Eliminate Your $25,000 Late Form 5472 Penalties for $5,000 Per Penalty!)

The Internal Revenue Service imposes an automatic penalty of $10,000 whenever an individual or company is late in filing an information return disclosing their interest in a foreign corporation, regardless of whether there is any associated underreported of income or tax deficiencies.

U.S. persons including businesses with at least a 10 percent interest in a foreign corporation or who are officers of a foreign corporation in which any U.S. person owns or acquires a 10 percent interest are required to file a Form 5471 with their tax return to disclose their ownership.

The IRS has begun to automatically applying the $10,000 penalty for each Form 5471 that was filed after the due date.

There are basically two remaining ways to defend against these automatic assessments and request penalty abatement for filing an international information return after the due date:

1. Follow the Delinquent Information Return Procedure - The taxpayer can file through the Service's procedures for delinquent international information returns. This procedure is appropriate for taxpayers who can establish reasonable cause for their failure to file or whose failure to file has caused no or nominal tax non-compliance. In our opinion the Delinquent Information Return Procedure is no longer available after November 9, 2020, as it curretly provides:

Taxpayers may attach a reasonable cause statement to each delinquent information return filed for which reasonable cause is being asserted. During processing of the delinquent information return, penalties may be assessed without considering the attached reasonable cause statement.

This is nothing like FAQ #18, in our opinion, which originally established the Delinquent Information Return Procedure. So basically this is nothing more than a delinquent filing with the Reasonable Cause Defense for the assessment of the penalty. (See #2 Reasonable Cause Defense).

Also in our opinion you should be prepared to go to the appeals division of the IRS, to get this penalty abated, based upon reasonable cause.

2. Reasonable Cause Defense - Under Section 6038 of the tax code, which lays out the information reporting requirements for individuals and businesses with an interest in foreign corporations and the penalties for delinquent filing, penalties may be abated if a reasonable cause exists for the failure to file. However, neither the statute nor the applicable regulations define a reasonable cause standard for the abatement. Treasury Regulations Section 301.6651-1(c) provide a definition of what constitutes reasonable cause for failure to file corporate income tax returns and says that ''if the taxpayer exercised ordinary business care and prudence and was nevertheless unable to file the return within the prescribed time, then the delay is due to reasonable cause.''

3. Ask for a First-Time Offender Abatement (FTA) - Generally, an FTA can provide penalty relief if the taxpayer has not previously been required to file a return or has no prior penalties (except the estimated tax penalty) for the preceding three years with respect to the same IRS File (IRM §20.1.1.3.6.1). With respect to a Form 5472 late-filing penalty, the IRM provides for an FTA if an FTA was applied to the taxpayer's related Form 1120 late-filing penalty or no penalty was assessed on the related Form 1120 (IRM §21.8.2.20.2).

Statute of Limitations Issue- Though a $10,000 penalty may discourage some from filing in international information return after the deadline, there is a greater exposure to not late filing and information return and that is that the statute of limitations for tax returns which is generally three years does not apply for returns that are missing the information reports and the statute remains open indefinitely. Under the indefinite statute of limitations, not only can the IRS make adjustments to items related to the international information returns, but they also can examine any other area on the tax return.

2020 was a record year for Americans giving up their citizenship:

A record 6,705 Americans gave up their citizenship in 2020
A 260% increase from 2019 when 2,577 Americans gave up their citizenship
Renunciations triple despite U.S. consulates being closed for large parts of the year due to COVID-19
This is the highest year on record; the previous record was 5,411 cases in 2016

There are an estimated 9 million U.S. Americans living overseas. Every three months the U.S. Government publishes the names of all Americans under the IRS rules (section 6039g), who give up their citizenship.

2020 Saw 6,705 Americans Renounce Their Citizenship,
260% More Than 2019 When 2,577 Americans Renounced.

This number possibly would have been higher if U.S. Embassies worldwide had not been closed for large parts of the year due to COVID-19 regulations. If this trend continues 2021 renunciation numbers will be record-breaking.

Surprisingly enough, it's not only politics that drive renunciations but also a law called Foreign Account Tax Compliance Act (FATCA). This law forces banks outside the U.S. to report all American account holders under threat of astronomical fines. Banks now want to rid themselves of U.S. clients as they pose a liability. Many Americans living outside the U.S. are therefore forced to renounce and provide a Certificate of Loss of Nationality (CLN) to keep their banking services.

U.S. citizens that renounce must pay a $2,350 government fee and appear in person at the U.S. Embassy in their country of residence. In addition, a complete tax return must be filed and exit tax might be owed. Despite these obligations, there has been a growing trend of U.S. citizens renouncing.

''The onerous and costly tax reporting obligations also play a big role. People with a U.S. citizenship or Greencard must file their taxes regardless of where they live in the world every year. They also need to report every single bank account (FBAR), even if they are only authorized to sign, which feels intrusive for many.''

Ironically, the U.S. stimulus checks of $1,200 + $600 are also being used towards the cost of renouncing, a difficult, irreversible decision with a profound impact on an individual's life, especially in these difficult, special times.

According to Law360, a Swiss couple owe accuracy penalties totaling $500,000 for 2006 and 2007 because their amended returns were submitted after a summons, the U.S. Tax Court said on August 31, 2022 in the case of Johannes et ux. v. Commissioner, docket number 14410-15, in the U.S. Tax Court.

Johannes and Linda Lamprecht Filed Their Amended Returns For 2006 And 2007 After The Internal Revenue Service Submitted A John Doe Summons To UBS That Applied To Them, The Tax Court Said.



Thus, their amended returns weren't qualified amended returns„ under Treasury Regulation Section 1.6664-2(c)(3)(i)(D) and the couple were liable for the penalties for understating income.



(3) Qualified amended return defined -

(i) General rule. A qualified amended return is an amended return, or a timely request for an administrative adjustment under section 6227, filed after the due date of the return for the taxable year (determined with regard to extensions of time to file) and before the earliest of - ...

(D)(1) The date on which the IRS serves a summons described in section 7609(f) relating to the tax liability of a person, group, or class that includes the taxpayer (or pass-through entity of which the taxpayer is a partner, shareholder, beneficiary, or holder of a residual interest in a REMIC) with respect to an activity for which the taxpayer claimed any tax benefit on the return directly or indirectly.

(D)(2) The rule in paragraph (c)(3)(i)(D)(1) of this section applies to any return on which the taxpayer claimed a direct or indirect tax benefit from the type of activity that is the subject of the summons, regardless of whether the summons seeks the production of information for the taxable period covered by such return; ...

The Tax Court also found that the IRS had complied with a supervisory approval requirement and that assessing the penalties wasn't barred by a statute of limitations.