HMRC Recognizes Cyprus Stock Exchange

by Robert Lee, Tax-News.com, London

26 June 2009

The Cyprus Stock Exchange has been designated as a recognised stock exchange for the purposes of HM Revenue and Customs tax treatment, the UK tax authority announced on June 24.

The designation takes effect from June 22, 2009 under section 1005 (1) (b) Income Tax Act 2007. The CSE is also regarded as a recognized stock exchange for Inheritance Tax purposes from the same date.

Securities admitted to trading and listed on the EU regulated markets of the Cyprus Stock Exchange (those regulated under Title III of the Markets in Financial Instruments Directive (MiFID) will meet the HMRC interpretation of ‘listed’ as set out in section 1005.3a and b Income Tax Act 2007. However, securities traded on the soon-to-be launched Emerging Companies Market will not meet the HMRC definition of ‘listed’.

The term 'recognized stock exchange' occurs throughout the UK Tax Acts and in various tax regulations. For example it is used in connection with close companies in section 415.1b Income and Corporation Taxes Act 1988, and in the definition of investments which may be held in Individual Savings Accounts (ISAs).

The definition of a recognized stock exchange is given in section 1005 Income Tax Act 2007. It includes the London Stock Exchange and Plus-listed market and any such stock exchange outside the UK as is designated in an Order of the Commissioners of HM Revenue and Customs.

HMRC said that recognition under section 1005 Income Tax Act 2007 is for tax purposes only and does not constitute any form of recognition or approval for regulatory or other purposes.

HMRC recognizes stock exchanges in a number of ‘offshore’ (the term being used loosely) jurisdictions including Bermuda, the Cayman Islands, the Channel Islands, Hong Kong, Ireland, Luxembourg, Malta, Singapore and Switzerland.

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