On 18 March 2021, the Cyprus Parliament passed a law amending the Cypriot Law on Administrative Cooperation in the Field of Taxation, implementing the EU Directive on the mandatory disclosure and exchange of information on reportable cross-border arrangements (referred to as DAC6).

Key points to be noted about DAC6:

• DAC6 applies to all kind of taxes except for VAT, customs duties, excise duties and compulsory social contributions.

• DAC6 places an obligation on Intermediaries or Taxpayers to report to their respective national Tax Authority.

• An Intermediary is defined as:
  
  • any EU-established or resident person that designs, markets, organizes or makes available the implementation of a reportable cross-border arrangement, or
  • any EU-established or resident person that designs, markets, organizes or makes available the implementation of a reportable cross-border arrangement, or
• The obligation to report lies with all Intermediaries involved in the arrangement/transaction.

• An Intermediary shall be exempt from filing information provided there is a proof that this information has already been filed by another Intermediary.

• The reporting will be done by Taxpayers only if there is no Intermediary or if the Intermediary qualifies for exemption under the confidentiality rule (i.e. if he is subject to legal confidentiality or has notified the reporting obligations to any other Intermediary or the Taxpayer concerned).

It is expected that the new Law will be published in the official Government Gazette soon and it will come into effect retroactively as from 1 January 2021.

It is also worth noting that DAC6 has a retroactive application, being in force as of 25 June 2018. This implies that Intermediaries and Taxpayers must review the necessary information relating to transactions implemented on or after that date, in order to fulfil their reporting obligations.

At present, we expect for the final text of the Law to be made publicly available and a Ministerial Decree clarifying the interpretation of key terms and provisions of the Law to follow.

M. Target Group remains at your disposal for any questions or clarifications.