D.A.C.6 Implementation in Cyprus

Volume 8 No 2    /    Read Article

By Nairy Merheje (Guest Author)

As a member of the E.U., Cyprus is subject to the same obligation as all other E.U. Member States to implement D.A.C.6., and the directive was transposed into law on March 18, 2021. As a smaller Member State and an island country, Cyprus faces special problems in ratcheting up the reporting mechanism.

• Enactment of the implementing legislation was postponed due to the COVID-19 emergency measures.
• The government department that will monitor the D.A.C.6 law implementation is yet to be fully staffed in view of the COVID-19 situation.
• Various lockdowns have challenged the Government’s capacity to provide appropriate training and briefing.
• Many medium to small professional firms likely will experience difficulties in installing and maintaining the necessary internet systems required for reporting.
• Outsourcing of reports to larger firms will lead to sharp increases in operating and compliance costs.

In her article entitled “D.A.C.6 Implementation in Cyprus,” Nairy Merheje, of Der Arakelian-Merheje LLC in Nicosia, explains how Cyprus intends to overcome these challenges so that the Cyprus government can target and capture potentially aggressive tax planning arrangements resulting in tax base erosion of one or more E.U. Member States.

The article is part of a nine-country survey of D.A.C.6 implementation published in the March edition of Insights, the international tax journal of Ruchelman P.L.L.C.   See more →