Double tax treaty

[bombaelefant]

Hello everyone,


We are a Cypriot company (LTD.) working in the construction business for years, mostly in Sweden.
Since the company has a permanent establishment in Sweden, we are required to pay all the payroll related taxes (social security, personal income tax) to Sweden.

There is a project coming up which will be located in Norway, roughly two months long, with 8 employees (they are from Hungary). The project is about rebuilding the interior design of a marine ship.

Due to the length of the Norwegian project, there will be no permanent establishment in Norway, therefore we are not required to pay taxes to Norway, but of course, we need to pay taxes somewhere. As Sweden would be an expensive option (31,25% social security tax and 15%-26% income tax) we are looking for other options. Even though our company is registered in Cyprus we are not so familiar with the Cypriot employment taxes. Do you guys know, how should I do my employment related taxes in Cyprus? Also, How much does the company adn also the employee needs to pay to the Cypriot authorities? As far as I know, social security tax is 7,8% for both the company and the employees as well.

As I mentioned before, roughly 2 month long project with 8 employees from Hungary.

The gross salary would be the minimum in Norway:

Normal working hours:
Semi-skilled workers: 170 NOK + 33.9 NOK (hourly supplement which is not taxable)
Unskilled workers: 162 NOK + 32.5 NOK (hourly supplement which is not taxable)

Overtime working hours:
Semi-skilled workers: 255 NOK + 33.9 NOK (hourly supplement which is not taxable)
Unskilled workers: 243.75 NOK + 32.5 NOK (hourly supplement which is not taxable)

Thank you in advance.

 

[Becky]

Welcome to the forum

A company based in Cyprus, with a PE in Sweden, employing Hungarians to do a job in Norway? Eek. That's a pretty complex situation, I would recommend engaging a professional who specialises in international tax services.

 

[bombaelefant]

Hi Becky, thanks!
Yeah, its a bit tweaked. However, I could figure out all the tax-related costs, a good source if anyone needs it: https://www2.deloitte.com/content/d...uments/Tax/dttl-tax-cyprushighlights-2018.pdf

Now the question is if my workers can register themselves online or they need to be present in Cyprus in order to pay all the payroll related taxes to the Cypriot tax authorities. If they need to register themselves IN PERSON then it is a blocker since they are from Hungary.

The other question here if the workers (and the company after the workers) really should pay the taxes to Cyprus or to Sweden (where they are working most of the time), or to Hungary where they are from..