CYPRUS Law and Practice Contributed by: Thanasis Korfiotis, Loizos Papacharalambous, Eleni Korfiotis and Georgia Charalambous, Koushos Korfiotis Papacharalambous LLC
6.4 Construction of Bankruptcy-Remote Transactions Under the Securitisation Law (as defined in 1.3 Applicable Laws and Regulations ), no proceed - ings taken in relation to the originator under the Resolution of Credit Institutions and Investment Firms Law, including any resolution, liquidation or dissolution proceedings, early intervention measures or reorganisation, and any proceed - ings affecting creditors’ rights, shall have any effect on: • the SPE (as defined in 6.1 Insolvency Laws ), including the rights thereof in relation to either the securitised exposures or the originator; or • securitised exposures, cash flows or any other assets in respect of the securitised exposures. 6.5 Bankruptcy-Remote SPE In Cyprus, it is customary to include limited recourse provisions in the securitisation docu - mentation. Generally, no taxation is imposed on an SPE due to the transfer thereto – from the originator – of the financial assets discussed in 1.1 Common Financial Assets . Tailored tax advice, which may vary depending on the type of securitisa - tion transaction, is obtained by tax practitioners who are directly engaged by the issuer and/or the sponsor (described in 2.1 Issuers and 2.2 Sponsors , respectively). 7.2 Taxes on Profit A Cypriot tax resident is obliged to pay tax – at the rate specified in Law No 118(I)/2002 (the “Income Tax Law”) – on income accruing or aris - 7. Tax Laws and Issues 7.1 Transfer Taxes
ing from sources both within and outside the Republic of Cyprus, in respect of its revenue in the form of, among other things, interest that constitutes part of its normal business activities. Therefore, an SPE would be liable for payment of such taxes if it is a Cypriot tax resident. Tailored tax advice is normally obtained by tax practition - ers who are directly engaged by the issuer and/ or the sponsor, as described in 2.1 Issuers and Where the SPE is not a Cypriot resident, with - holding tax (under the Special Contribution to the Defence Fund Law) could be imposed on any interest or dividend it receives if it is a tax resident (only) in a jurisdiction that has been classified by the EU as noncooperative for tax purposes, and if it receives dividends from any company that is a Cyprus tax resident. 2.2 Sponsors , respectively. 7.3 Withholding Taxes Tailored tax advice is normally obtained by tax practitioners who are directly engaged by the issuer and/or the sponsor, as described in 2.1 Issuers and 2.2 Sponsors , respectively. 7.4 Other Taxes Pursuant to the provisions of the Cypriot Stamp Duty Law, stamp duty is imposed on, amongst others, agreements and/or other kinds of docu - ments that refer to any asset that is in Cyprus, or to matters or things that will be performed or take place in Cyprus irrespective of whether these documents were executed in Cyprus or abroad. Where an agreement for which stamp duty is imposed is executed outside Cyprus, it shall have no admissibility in any court in Cyprus unless it is duly stamped. Therefore, the trans - fer of receivables documentation and financing/ securitisation documentation (both discussed in 3.2 Principal Warrantie, s) will as a matter of principle require the payment of stamp duty.
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