On 11 September 2014 the Cypriot Tax Department issued Circular 188 notifying taxpayers of a particular change concerning the Cypriot pleasure boat regime (PBR).
The amendment concerns the reduction of the overall profit margin percertage the lessor is expected to achieve from the lease agreement down from 8% to 5%. The profit margin is therefore distributed as follows:
- 2.5% (instead of 4%) on the total value of the pleasure boat (PB) is added to the total amount of leasing installments on which the VAT liability is calculated.
- 2.5% (instead of 4%) of the total value of the PB is added to the final payment as a result of which the ownership of the PB is transferred to the lessee.
The above reduction makes undeniably the Cypriot PBR even more attractive.