Cyprus delays 15% tax on multinationals

Cyprus has yet to enforce the new EU rules introducing a minimum effective tax rate of 15% for multinational corporations operating within EU member-states.

Alongside nine other countries, Cyprus was expected to have implemented the new framework from January 1, 2024, unanimously agreed upon by member-states in 2022, formalizing the EU’s adoption of the Pillar 2 rules as part of the global tax reform agreement in 2021.

According to a Brussels official, the European Commission has initiated a countdown to issue a reasoned opinion to Cyprus. Infringement proceedings are legal actions through which the Commission calls on member-states to comply with EU law. The process could culminate in the Commission taking the matter to the EU court and imposing fines.

The rules apply to every large group, including the financial sector, with combined financial income exceeding €750 million annually and with a parent or subsidiary company established in an EU member-state. In Cyprus, such companies number around 15-20.

The Commission says the 15% tax on multinationals brings greater fairness and stability to the tax landscape in the EU and globally.