- July 1, 20266:59 am
As reported before, legislation has been brought in line with EU Directive 2022/2523 of 14 December 2022, otherwise known as Pillar 2 Directive (the ‘Directive’).
With two announcements issued on 15 June 2026, the Cyprus Tax Department (TD) provided clarifications on the operation of the central filing mechanism, the notification requirements as well as the relevant deadlines for the first reporting year concerning the Pillar 2 legislation. The TD also waived the imposition of administrative penalties for certain filings and payments due by 30 September 2026.
By way of background, Cyprus is a signatory to the OECD Multilateral Competent Authority Agreement (MCAA), which facilitates the central filing and automatic exchange of Global Anti-Base Erosion (GloBE) Information Returns between participating jurisdictions. Cyprus is also expected to transpose DAC9, the European Union (EU) Directive on Administrative Cooperation, enabling central filing of a Top-Up Tax Information Return (TTIR) with EU Member States.
As per a FAQ paper issued recently on the Pillar 2 Directive, it was clarified that all EU Member States should treat Cyprus as having a qualified IIR in effect, that Cyprus can receive top-up tax information returns from 31 May 2026 and that it is committed under EU law to exchange information under DAC9 with other Member States by the first exchange deadline. If an MNE opts to file its top-up tax information return centrally in Cyprus, other Member States should not require a separate domestic filing, a provision which is in line with the requirements of DAC9.
The TD has clarified that multinational enterprise (MNE) groups within the scope of the Pillar 2 provisions or Large-Scale Domestic (LSD) groups may elect to use the Central Filing Mechanism provided by the relevant legislation for fiscal years beginning between 31 December 2023 and 31 December 2024.
MNE Groups may submit the TTIR in Cyprus if the Ultimate Parent Entity (UPE) or the Designated Filing Entity is located in Cyprus. In such a case, the filing obligation of all other Cyprus Constituent Entities is deemed fulfilled. Alternatively, if the TTIR is submitted in another EU Member State, or in a third country (excluding Turkey) that is included in the OECD Common Understanding list dated 18 May 2026, the filing obligation of Cyprus Constituent Entities for a TTIR is deemed fulfilled, provided the relevant notification requirement is met.
If a MNE Group does not elect for the Central Filing Mechanism, either:
• each Cypriot Constituent Entity is generally required to submit a TTIR in Cyprus; or
• a Designated Local Entity may be appointed to file the TTIR on behalf of all Cyprus Constituent Entities.
Revised TTIRs may also be submitted based on the provisions of the legislation.
The TTIR should be submitted within 18 months from the last day of the reporting fiscal year, or by 30 June 2026 (whichever is later).
If Cyprus is the filing jurisdiction, the Ultimate Parent Entity or Designated Filing Entity may submit a revised TTIR that covers all Cyprus Constituent Entities. If central filing occurs abroad, Cyprus Constituent Entities are relieved from filing a revised TTIR locally.
If the TTIR is submitted in another EU Member State, or in a third country:
• each Cyprus Constituent Entity must notify the TD, via the “Notification Filed by a Constituent Entity” Form, providing the name and Taxpayer Identification Number of the entity that submits the TTIR and the name of the jurisdiction in which it is located; and
• if a Designated Local Entity in Cyprus files on behalf of all Cyprus Constituent Entities, only the “Notification by a Designated Local Entity” Form is submitted.
Each Cyprus Constituent Entity or Joint Venture must file the “Constituent Entity Notification” unless a Designated Local Entity in Cyprus files on behalf of all Cyprus Constituent Entities, in which case only the “Designated Local Entity Group Notification” needs to be filed. Entities must notify the Tax Department of any changes regarding previously submitted notifications. Notification is also required if either:
Submission of Forms
• an entity ceases to be part of the Group; or
• the MNE Group falls outside the scope of the legislation.
The relevant forms must be submitted within 18 months from the last day of the reporting fiscal year, or by 30 June 2026 (whichever is later).
IIR Top-Up Tax Payable Return
A Cyprus parent entity liable for top-up tax must submit the “Income Inclusion Rule Top-Up Tax Due Return” within 30 days from the TTIR deadline. The return must be submitted even if the tax payable is nil. Payment of top-up tax must also be made by the same deadline.
Revised IIR Return
A revised form may be submitted within the latest of:
• 18 months from fiscal year-end;
• 30 June 2026; or
• 30 days from submission of a revised TTIR.
All notifications and returns are submitted via the Tax For All (TFA) Portal, either by the Constituent Entity or by an authorised representative with an active TFA account.
Administrative Penalties
The TD announcement states that, if notifications, returns or payments which are due before 30 September 2026 are filed and any top-up tax due is paid by 30 September 2026, no statutory administrative fines, interest or surcharges shall be imposed.
Therefore, for financial years ended 31 December 2024 no statutory administrative fines, interest or surcharges will be imposed if filing and payment are made by 30 September 2026 (as per the legislation notifications are due by 30 June 2026 and returns or payments are due by 30 July 2026).
