In September 2017 the Cyprus government approved an initiative to encourage the development of the film and audio-visual production industry in Cyprus by means of grants, tax incentives and other assistance.
Law 139(I) of 2018, which took effect on 11 December 2018, amends the Income Tax Law to provide tax exemption of income from production of films and audio-visual media in accordance with the government’s programme.
The amending law adds a new sub-paragraph to article 8 of the Income Tax Law providing up to 50 percent exemption from tax of income derived from production of films, series and others relevant audio-visual programs as described in the government programme. The deduction is limited to 35 percent of the eligible costs approved by the competent authority implementing the programme. Any restriction on the exemption resulting from the limitation to 35 percent of costs can be recovered over the next five years. No exemption is available if the taxpayer has received a grant under the programme.
In addition, small enterprises as defined in Article 17 of Regulation (EU) 651/2014 EU may claim an annual deduction of 20 percent of the cost of cinematographic infrastructure and technological equipment providing it is used in Cyprus for at least five years. Medium-sized enterprises may claim an annual deduction of 10 percent of such costs.
For further information please contact Constantinos Christofi or your usual contact at Elias Neocleous & Co LLC.