From Cyprus: Cyprus to Implement EU’s Anti-Tax Avoidance Directive

Source: Nakis Kyprianou - UnityFour Cyprus Ltd., a collaborating firm of Andersen Global

Cyprus is currently in the process of implementing the European Union (EU) Anti-Tax-Avoidance Directive (ATAD), which basically aims at preventing multinational companies sheltering their profits in low or no tax jurisdictions.

ATAD is the European Union’s answer to the Organization for Economic Co-operation and Development (OECD) Base Erosion and Profit Shifting action plan, commonly referred to as BEPS. It aspires to ensure that taxes are paid where the value is created. To achieve these goals, ATAD sets out identical rules for all the players of the game and multinational companies in particular. EU countries, including Cyprus, are obliged to implement ATAD on the required dates, January 1, 2019 and January 1, 2020.

Specifically, it is expected that the relevant provisions relating to Interest Limitations, Controlled Foreign Corporation (CFC) rules, and General Anti-Abuse Rules (GAAR) will be included in the local legislation and will be retroactively effective as of January 1, 2019.

For exit tax rules as well as for hybrid mismatches, the relevant provisions are expected to be voted within 2019 with an effective date of January 1, 2020.