Multinational groups (MNEs) with entities in Cyprus must be aware of the approaching deadlines for Country-by-Country (CbC) Reporting obligations. These requirements are part of Cyprus’ alignment with global tax transparency standards set by the OECD, aiming to provide tax authorities with a detailed view of multinational tax structures and operations. This article offers a timely reminder and essential details for MNEs to navigate upcoming reporting deadlines effectively.
Key Deadlines for CbC Reporting in Cyprus
1. December 31, 2024 – Submission Deadlines
The following reporting obligations apply for entities with tax years ending on December 31:
– CbC Reports for the 2023 Fiscal Year: MNE groups with a fiscal year ending December 31, 2023, must submit their CbC Reports by December 31, 2024. This report includes financial data segmented by jurisdiction, detailing revenue, profit, tax paid, number of employees, and other relevant information for each country of operation.
– CbC Notifications for the 2024 Fiscal Year: Notifications must be submitted for the 2024 reporting year, notifying Cypriot tax authorities of the group entity designated to submit the CbC report, particularly if the ultimate parent entity (UPE) is not based in Cyprus.
Who Needs to Comply?
CbC Reporting obligations apply specifically to MNE groups with annual consolidated revenue exceeding €750 million. These requirements apply to Cypriot entities that are part of large international groups, with reporting obligations affecting:
– Ultimate Parent Entities (UPEs) that have controlling ownership of MNEs and are headquartered in Cyprus.
– Surrogate Parent Entities designated by the group to submit CbC Reports when the UPE is located in a jurisdiction without CbC agreements.
– Local Filing Entities: In cases where neither a UPE nor Surrogate Parent Entity is based in Cyprus, local Cypriot entities may still be required to submit secondary filings.
Submission Process and Penalties
Filing through the Government Portal: CbC Reports and notifications must be submitted electronically via the Cyprus government’s official portal at [gov.cy](https://www.gov.cy). Each entity needs an account on the portal and should ensure the account is registered accurately to avoid delays.
Potential Penalties: Non-compliance with CbC Reporting obligations can result in significant penalties, including:
– €10,000 for Late CbC Report Submissions: Failure to submit a required CbC Report can lead to fines of up to €10,000 per instance.
– €5,000 for Late Notifications: Late filing of CbC notifications may incur penalties of up to €5,000.
– Increased Fines for Repeated Non-Compliance: In some cases, repeated failures or deliberate non-compliance could raise penalties to €20,000.
To avoid these fines, MNEs are encouraged to proactively review their compliance status and ensure that any required registrations and filings are completed well in advance of the December deadline.
Why CbC Reporting Matters
CbC Reporting plays a vital role in supporting global tax transparency by providing tax authorities with detailed data on MNEs’ economic activities, profit distribution, and tax contributions across different jurisdictions. This information is crucial for tax authorities to assess whether profits are aligned with the actual economic activities occurring in each jurisdiction, thus curbing profit-shifting and tax avoidance strategies. For Cyprus, participating in CbC Reporting strengthens its alignment with international tax standards, enhancing the country’s standing as a compliant, transparent jurisdiction for multinational operations.
Preparing for Compliance
To prepare effectively, MNEs in Cyprus should consider the following steps:
1. Identify Reporting Entities: Ensure clarity on which entities in Cyprus are subject to CbC Reporting, especially if they serve as the UPE, Surrogate Parent, or as a local entity with secondary filing obligations.
2. Verify Financial Data Accuracy: Given the high level of detail required, MNEs must ensure the accuracy of their financial data for each jurisdiction. It’s crucial to segment revenue, profit, taxes paid, and employee data accurately across each operating country.
3. Establish Internal Deadlines and Workflows: Internal planning is essential. MNEs should set early deadlines and streamline workflows for preparing, reviewing, and submitting CbC Reports and notifications.
4. Utilize Automated Solutions Where Possible: Compliance software solutions can help MNEs manage CbC Reporting data efficiently, ensuring accuracy and consistency across jurisdictions while minimizing the administrative burden.
5. Seek Expert Guidance: For groups with complex structures or multiple reporting obligations across jurisdictions, consulting tax professionals can help ensure compliance and clarify any questions regarding Cyprus-specific requirements.
Looking Ahead: The Future of CbC Reporting and Tax Compliance
The trend toward increased tax transparency through frameworks like CbC Reporting is likely to continue. Global initiatives by the OECD, such as the Inclusive Framework on Base Erosion and Profit Shifting (BEPS), signal that further regulatory changes may be on the horizon. Therefore, MNEs should not only focus on immediate CbC Reporting deadlines but also prepare for a future of continued, enhanced transparency obligations across all jurisdictions.
By meeting these requirements and adopting best practices in tax reporting, Cyprus-based multinational groups can strengthen their compliance status, align with international standards, and minimize the risk of costly penalties. Early preparation is key to smooth and timely submissions, helping MNEs uphold Cyprus’ commitment to global tax transparency and maintain its appeal as a business-friendly jurisdiction in line with OECD standards.
For further assistance, contact our team to ensure your company is fully prepared for these upcoming CbC Reporting obligations. We’re here to support you every step of the way, from data preparation to submission, making compliance straightforward and efficient.
Please get in touch with our team at:
| Charles Savva Managing Director BA, MBA, TEP, CA [email protected] +357 22516671 | Mina Pieri Senior Manager FCCA, MBA [email protected] +357 22510207 | Makis Pavlou Account Manager FCCA [email protected] +357 22510257 |
