‘A very big and increasing presence of Israeli businesses in Cyprus’

In response to the ongoing investigation by the Israel Tax Authority (ITA) into Israeli assets in Cyprus, officials from Cyprus’ finance ministry and accounting associations have both acknowledged that the increasing presence of Israeli businesses on the island might have triggered the ITA to cast a deeper look into the situation.

Finance ministry spokesperson Michalis Papadopoulos said ITA’s operation is a direct product of the increased presence of Israeli nationals on the island, while, however, stressing that Cyprus does not play a direct role in it.

“We are aware of ITA’s operation aimed at identifying assets, income and companies owned by Israeli nationals in Cyprus,” Papadopoulos said.

“However, it falls solely under the Israeli government’s authority. Our tax department is not involved in the operation.”

He added that the tax department stands ready to assist if requested but has not yet been called upon.

On his part, the head of the accountants’ association (Selk) Nikos Chimarides also highlighted the growing presence of Israeli businesses in Cyprus, particularly in sectors like fintech, investment, real estate and foreign exchange trading.

“It is a fact that there is a very big and increasing presence of Israeli businesses in Cyprus,” Chimarides said. “Clearly, they consider Cyprus a place where they can do business.”

He also pointed out that similar trends are observed in Greece, especially in the tech sector.

Chimarides then addressed the issue of tax compliance among Israeli businesses, confirming that they do pay their taxes in Cyprus.

However, he also added that Cyprus lacks a double tax treaty with Israel, which has been a longstanding issue.

“We have been trying for years to get the Israelis to the negotiating table and agree to a treaty, but they haven’t obliged. It is still a priority for our government,” Chimarides explained, underlining the importance of establishing such a treaty for clarity and fairness in taxation matters.

ITA’s operation, according to its chairman Shay Aharonovich is part of a wider campaign against tax evasion and the black economy in Israel.

Talking to Israeli news outlet Globe, a source close to ITA said that the investigation includes analysing travel patterns of businesspeople between Cyprus and Israel, examining offshore companies linked to Israelis, and leveraging information sharing agreements with several countries to uncover connections between Israeli individuals or entities and Cypriot companies.

The publication also estimated that between 10,000 to 20,000 Israelis reside in Cyprus.