The EU Economic and Financial Affairs Council (ECOFIN) approved the European Commission’s (EC’s) positive assessment of the Cyprus Recovery and Resilience Plan (‘Cyprus RRP’) on July 28. The EC had assessed the Cyprus RRP on July 8.
On June 4, the Cyprus Tax Authority (CTA) announced an additional extension of the submission deadline for DAC6 reports (without penalties) to September 30, 2021 (the ‘Announcement’).
Also on June 4, the first tax treaty between Cyprus and the Netherlands, which was signed on June 1, 2021, was ratified by Cyprus. Certain legal procedures now need to take place in both States, following which the treaty will ‘enter into force.’ Once the treaty enters into force it will become effective on January 1 of the next calendar year. The treaty is based on the OECD Model Tax Convention on Income and on Capital.
The takeaway: The Cyprus RRP proposals are an indication of Cyprus’ commitment and willingness to continue cooperation in appropriate international fora for taxation, with respect to the competencies under the EU treaties and in light of the relevant global/EU developments. Taxpayers should monitor further developments on these matters so as to evaluate how these may affect their existing and new structures as well as their business.
In relation to the DAC6 extension, although no penalties should arise for filings submitted by the end of September 30, 2021, taxpayers and intermediaries need to monitor their historic (from June 25, 2018) as well as ongoing cross-border arrangements. It is prudent to commence the analysis immediately, tracking and collecting information on potentially reportable arrangements in order to comply with the Cyprus DAC6 transposition law.