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20 October 2022

Cyprus Tax Authority issues clarification regarding Competent Authority Agreement with United States for exchange of CbC reports

  • The Cypriot Tax Department has publicly announced that the bilateral Competent Authority Agreement (CAA) for the exchange of Country-by-Country (CbC) reports between Cyprus and the United States (US), which is still under negotiation, is expected to be effective for Reporting Fiscal Years (RFYs) starting on or after 1 January 2022..

  • Accordingly, a Cypriot Constituent Entity (CE) whose Ultimate Parent Entity (UPE) is a US tax resident, will have an obligation to proceed with the filing of the CbC report locally in Cyprus for its RFY ending on 31 December 2021, even if a CbC report has been or will be submitted in the US.

On 13 October 2022, the Cypriot Tax Department publicly announced that the bilateral CAA for the exchange of CbC reports between Cyprus and the US, which is still under negotiation, is expected to be effective for RFYs starting on or after 1 January 2022.

Therefore, the secondary filing mechanism for a Cypriot CE of a multinational enterprise group with a US tax resident UPE will be triggered for RFYs starting on or after 1 January 2021, but before 1 January 2022.

Accordingly, a Cypriot CE whose UPE is a US tax resident, will have an obligation to proceed with the filing of the CbC report locally in Cyprus for its RFY ending on 31 December 2021, even if a CbC report has been or will be submitted in the US.

The Cypriot Tax Department has further noted that in cases where notifications have already been filed in Cyprus by Cypriot CEs for RFYs starting on or after 1 January 2021 and before 1 January 2022, such notifications must be revised accordingly if they are affected by the announcement. If such notifications are revised before 31 December 2022, no penalties will be imposed.

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For additional information with respect to this Alert, please contact the following:

Ernst & Young Cyprus Limited, Limassol

Document ID: 2022-6004

 
 

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