Personal scope of application As per 26 June 2022

Are there any deviations from the Directive in defining the intermediary?

2021/06/17

The Cyprus definition is the same as the Directive definition.

How is an intermediary defined? Is there a differentiation between a corporate entity and an individual person?

2021/06/17

A law/tax firm and/or the individual tax advisor can be qualified as intermediaries according to the Directive.The definition of the "intermediary" is the same as in the Directive.

Can a corporate tax department (or its members) within a MNE or within a group of entities qualify as an intermediary?

2021/06/17

No concrete legal guidance.

How are the actions of designing, marketing, organizing, making available for implementation or managing the implementation of a tax arrangement defined?

2021/06/17

No specific regulation.

Have the legal preconditions regarding the territorial nexus for an intermediary been implemented in accordance with the Directive?

2021/06/17

In order to be an intermediary, a person shall meet at least one of the following additional conditions (territorial nexus):1. Be resident for tax purposes in a Member State;2. Have a permanent establishment in a Member State through which the services with respect to the arrangement are provided;3. Be incorporated in, or governed by the laws of, a Member State;4. Be registered with a professional association related to legal, taxation, or consultancy services in a Member State.

Are there any other conditions apart from those of the Directive, such as the territorial nexus of a tax arrangement to a certain Member State, which trigger a reporting obligation of an intermediary (e.g. including intermediaries from outside the EU)?

2021/06/17

Same conditions as in the Directive.

In which cases is the relevant taxpayer obliged to report? Are there deviations from the Directive?

2021/06/17

The relevant taxpayer is obliged to report if:1. If no (EU) intermediary is available (arrangement developed in-house);2. The intermediary is protected by legal privilege.

Are there any other persons beside intermediaries or relevant taxpayers obliged to report?

2021/06/17

No.

Are there any deviations from the Directive in defining the relevant taxpayer?

Mechanism to avoid multiple reporting

Which measures have been taken to avoid multiple reporting obligations referring to an intermediary obliged to report in several countries? Are there deviations from the Directive?

2021/06/17

No deviation from the DirectiveThe intermediary notifies the tax administrator about the arrangement if:1. Is a Cyprus tax resident;2. Has a PE in Cyprus through which provides services in relation to a given arrangement;3. Is incorporated in or governed by the laws;4. Is registered in Cyprus in professional associations related to legal, tax, or consulting services.

Which measures have been taken to avoid multiple reporting obligations referring to more than one intermediary obliged to report? Are there deviations from the Directive?

2021/06/17

No deviation from the DirectiveAn intermediary shall be exempt from filing the information if it has proof, in accordance with national law, that the same information has already been filed by another intermediary in Cyprus or in another Member State.

Which measures have been taken to avoid multiple reporting obligations referring to a relevant taxpayer obliged to report several countries? Are there deviations from the Directive?

2021/06/17

No deviation from the DirectiveThe relevant taxpayer notifies the tax administrator about the arrangement if:1. Is a Cyprus tax resident;2. Has a PE in Cyprus through which provides services in relation to a given arrangement;3. Receives income or generates profits, although the relevant taxpayer is not tax resident for tax purposes and has no PE in any Member State;4. Carries on an activity, although the relevant taxpayer is not tax resident for tax purposes and has no PE in any Member State.

Which measures have been taken to avoid multiple reporting obligations referring to more than one relevant taxpayer obliged to report? Are there deviations from the Directive?

2021/06/17

No deviation from the DirectiveThe relevant taxpayer shall be exempt from filing the information if it has proof, in accordance with national law, that the same information has already been filed by another intermediary in Cyprus or in another Member State.

How does the National Tax Authority expect the conditions for exemption from filing a report to be met?

2021/06/17

No guidance yet from the Cyprus Tax Department.

Material scope of application

Are national tax arrangements subject to reporting under the Directive?

2021/06/17

No.

Which taxes are affected? Are there deviations from the Directive?

2021/06/17

No deviation from the Directive.Only applies to Income tax, SDC, Capital GainsNo application to VAT, custom duties, excise duties, and compulsory social contributions.

Does the hallmark catalogue deviate from the Directive? If yes, to what extent?

2021/06/17

No.

Which hallmarks are linked with the main benefit test?

2021/06/17

The same hallmarks as in the Directive are linked with the main benefit test.

How is the main benefit test defined?

2021/06/17

That test will be satisfied if it can be established that the main benefit or one of the main benefits which, having regard to all relevant facts and circumstances, a person may reasonably expect to derive from an arrangement is the obtaining of a tax advantage.

How is a tax advantage defined?

2021/06/17

The tax advantage is the benefit that could arise as a result of tax evasion, in particular the achievement of a lower tax in other states or jurisdictions.

Are there any deviations from the Directive in defining a cross-border arrangement?

Is there a white list defining arrangements explicitly excluded from a reporting obligation? If yes, please provide details.

Are there any deviations from the Directive in defining associated enterprises?

Reporting process

When is a cross border arrangement made available for implementation (e.g. handover of contract documents)?

2021/06/17

No specific legal guidance.

When is a cross-border arrangement ready for implementation?

2021/06/17

No specific legal guidance.

When has the first step in the implementation of a cross-border arrangement been made?

2021/06/17

No further definition as it has provided in the Directive.

Which information should be included in the report? Are there deviations from the Directive?

2021/06/17

No deviation from the DirectiveInformation to be included in the report:1. Names, date and place of birth, country of residency and TIC both for interested taxpayers and intermediaries as well as the associated persons to the taxpayer;2. Detailed information of the reasons that makes it reportable cross border arrangement;3. Summary of the content of the transaction and of the related business activities;4. Date of completion or of the date that the 1st step is expected to be completed;5. The related articles in the law applying to the transaction;6. The value of the transaction;7. MS of the interested taxpayer and other MSs that might be concerned about the transaction;8. Identify information of any other person in the MS that might be affected and the MSs that are connected with.

What does the reporting process look like? Are there deviations from the Directive?

2021/06/17

No deviation from the Directive.

Is the entire report to be provided by the intermediary/relevant taxpayer? Who must provide the report?

2021/06/17

No deviation from the Directive.

What are the respective deadlines for the intermediary and the relevant taxpayer to file the report? Are there deviations from the Directive in terms of filing the information within 30 days?

2021/06/17

No deviation from the Directive.

Which numbers are assigned by local tax authorities to the cross-border arrangements?

2021/06/17

Not yet announced.

What is the reporting deadline for arrangements the first step of which was implemented between 25 June 2018 and 30 June 2020?

When is the reporting deadline for arrangements for which the event triggering the reporting obligation lies between 1 July 2020 and 31 December 2020?

When is the reporting deadline for arrangements for which the event triggering the reporting obligation lies after 1 January 2021?

Penalties

In which cases are penalties imposed?

2021/06/17

There is no suggestion yet in general or for failure to comply with the provisions of the Directive, however, any individual member state may adopt its own provisions for penalties or other sanctionsThe amount of a penalty will depend upon the nature of the violation and is up to €20,000 per violation.

What are the penalties?

2021/06/17

There is no suggestion yet in general or for failure to comply with the provisions of the Directive, however, any individual member state may adopt its own provisions for penalties or other sanctionsThe amount of a penalty will depend upon the nature of the violation and is up to €20,000 per violation.

Is a distinction made between penalties imposed on intermediaries/relevant taxpayers/other persons obliged to report?

2021/06/17

No.

What are the penalties in case of redundant reports? A redundant report is a report, which was filed, although there is no obligation to file one.

2021/06/17

No such sanctions.

Do the penalties differ with regard to incomplete, incorrect, missing or late reports? Are there any gradations?

2021/06/17

No such sanctions or gradation.

Are arrangements the first step of which was implemented between 25 June 2018 and 30 June 2020 treated differently in the means of penalties?

Other aspects

Do already other reporting regimes on cross-border arrangements exist?

2021/06/17

No.

Are there any other special deviations from the Directive? 

2021/06/17

No.

What is the name of the national Tax Authority responsible for DAC6?

Do any other obligations apart from reporting a reportable cross-border arrangement exist under the national DAC6 legislation? (i.e. indication of the arrangement in the tax return)

Professional privilege/secrecy

Who is primarily obliged to report? Is there a primary reporting obligation of the intermediary or the relevant taxpayer? Is there legal privilege and in how far has it been considered for allocating the reporting obligation?

2021/06/17

The primary reporting obligation lies within the intermediary. However, the reporting obligation shall pass to the user (relevant taxpayer) in the cases described in item 7.

Does the reporting obligation breach a legal professional privilege under national law?

2021/06/17

The legal and professional privilege applies only where the person concerned is practicing as an advocate as defined in the Cyprus Law Advocates and provided that the advocate informs without delay every other intermediary, the relevant taxpayer about their respective reporting obligations.

Does the national law make reference to professional privilege or professional secrecy?

What is the difference, as per the national law, between professional privilege and professional secrecy?

To which categories of intermediaries does the professional privilege or professional secrecy apply?

In the context of the reporting obligation, under which conditions are the intermediaries entitled/obliged to make use of professional privilege or professional secrecy?

In cases in which professional privilege or secrecy applies, please describe the procedure for notification.

Does the national law provide specific conditions to waive professional privilege or professional secrecy?

Petros Nacouzi
Partner