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Cyprus – Revised Decree on Country-by-Country Reporting

As we have previously reported, a decree was issued on 30 December 2016 by the Ministry of Finance of the Republic of Cyprus (the ‘Ministry’) on Country by Country (CbC) reporting. The decree has transposed in to national legislation the EU Directive on mandatory exchange of tax related information, which is based on Action Point 13 of the Base Erosion and Profit Shifting (BEPS) project of the OECD.

On 26 May 2017 the Ministry issued a revised decree replacing the one initially issued. The changes introduced by the revised decree are as follows:

  • The obligation of a Cyprus tax resident Constituent Entity of a Multinational Enterprise (MNE) Group, which is not the Ultimate Parent Entity (UPE) or the Surrogate Parent Entity (SPE), to file locally a CbC Report under the secondary mechanism, will not apply for fiscal years commencing before 1 January 2017.

Therefore, a Cyprus tax resident Constituent Entity subject to CbC as per the above, will be obliged to start reporting for fiscal years commencing on or after 1 January 2017.

  • The concept of Equivalent CbC Report is introduced, requiring a Cyprus tax resident Constituent Entity of an MNE Group to file a partial CbC Report under the secondary mechanism (e.g. where there is no UPE or SPE filing), in cases where the UPE does not provide all required information to the Cyprus tax resident Constituent Entity.

The Equivalent CbC reporting obligation also applies with respect to fiscal years beginning on or after 1 January 2017.

  • A requirement to maintain books and records supporting the information disclosed in the CbC Report is introduced.

Action to be taken by MNE Groups

MNE Groups should take the following steps to ensure compliance with the requirements of the revised decree:

(1) Assess whether they fall within the provisions of CbC Reporting based on the €750m consolidated group revenue threshold and if they do to also assess the reporting deadlines and relevant penalties in Cyprus and in other jurisdictions in which they operate.

(2) Determine which entity of the group will be the Reporting Entity.

(3) Ensure that they have the necessary systems in place for collecting information needed for completion of the CbC Report.

(4) Consider any implications related to the information to be reported such as those concerning Transfer Pricing.

Fiducenter can assist in performing the different assessments and considerations mentioned above and in complying with CbC reporting requirements.


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