Alignment of domestic law with EU Directive 2016/881 of 25 May 2016 amending Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation

Law 33(I) of 2018 amends the Law Regarding Administrative Cooperation in the Field of Taxation of 2012 to 2017 to bring it into line with the latest EU directive on mandatory automatic exchange of information in the field of taxation .

The amendments to the law include a new definition of “automatic exchange” identical to the revised definition contained in article 1 of the EU directive and the addition of a new article requiring any Ultimate Parent Entity of an Multinational Enterprise (MNE) group that is resident for tax purposes in Cyprus, or any other Reporting Entity as defined in Annex III of the law, to file a country-by-country report within 12 months after the end of each fiscal year of the MNE group in accordance with the detailed provisions set out in Annex III. The first fiscal year for which a country-by-country report must be filed is the first one beginning on or after 1 January 2017.
The required format of the country-by-country report is set out in Annex III and comprises aggregate information relating to the amount of revenue, pre-tax profit or loss, income tax paid, income tax accrued, share capital, accumulated earnings, number of employees, and tangible assets other than cash or cash equivalents with regard to each jurisdiction in which the MNE group operates and an identification of each constituent entity of the MNE group stating its main activity, the jurisdiction in which it is tax-resident and, if other than the jurisdiction of tax residence, the jurisdiction under the laws of which it is organised.
The Cyprus Tax Department, as competent authority under the law, is required to automatically notify its counterpart in any other EU member state of the information relating to any constituent entity resident there within 15 months after the end of the reporting period.
In addition, the new law makes all the other detailed technical amendments contained in the amended directive.
For further information on this matter please contact Elena Christodoulou or your usual contact at Elias Neocleous & Co LLC.