Through an announcement issued on 19 November 2024 the Cyprus Tax Department clarified that the bilateral Competent Authority Arrangement (CAA) for the exchange of Country-by-Country (CbC) Reports between Cyprus and the United States of America which is currently under negotiation, is expected to be effective for fiscal years starting on or after 1 January 2024.
As a result, where the Ultimate Parent Entity of a Multinational Group of Enterprises (MNE) is tax resident in the United States of America, the secondary filing mechanism becomes effective for fiscal years starting on or after 1 January 2023 and before 1 January 2024.
Furthermore, where notifications for fiscal years starting on or after 1 January 2023 and before 1 January 2024 have been filed in Cyprus by Cypriot Constituent Entities of MNE Groups, which are affected by this announcement, such notifications may need to be revised in accordance with the provisions of the announcement. If such notifications are revised by 31 December 2024, no penalties will be imposed for the relevant fiscal year.
As an example, a local filing obligation should still arise in Cyprus in respect of a MNE Group’s CbC Reporting obligations for the fiscal year ending on 31 December 2023, even if a CbC Report has or will be submitted in the United States of America.
It is reminded that CbC Reporting applies to large MNE groups with annual consolidated group revenue of €750 million or more in the previous fiscal year.
A penalty of up to €10,000 in respect of Reports and €5,000 in respect of Notifications, may be imposed on a Cyprus company with a duty to report/notify for late filing. Under certain circumstances the penalty can increase up to €20,000.
