The Tax Department recently issued a circular clarifying the taxation of insurance agent earnings.(1) A representative of an insurer who is not in an employment relationship with that insurer will be treated as a commercial enterprise whose revenue is derived from fees or commission for the conclusion of insurance contracts. If their annual revenue exceeds €70,000, the intermediary must maintain accounting records and prepare audited financial statements as required by Article 30 of the Assessment and Collection of Taxes Law 1978.
If the intermediary does not maintain accounting records, a general deduction of 25% of their net commission (ie, commission received minus commission paid) on new contracts and renewals is allowed in respect of expenses, in line with past practice. However, if the intermediary maintains accounting records, even though they may not be required under Article 30 of the Assessment and Collection of Taxes Law, expenses actually incurred relating exclusively to the undertaking are deductible, even if they exceed 25% of their revenue.
For further information on this topic please contact Elena Christodoulou at Elias Neocleous & Co LLC by telephone (+357 25 110 110) or email (firstname.lastname@example.org). The Elias Neocleous & Co LLC website can be accessed at www.neo.law.
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