CYPRUS: EU Commission takes aim at Cyprus over tax, transparency and data law compliance

The European Commission has launched infringement procedures against Cyprus concerning its implementation of three key pieces of EU legislation.

Firstly, Cyprus is one of six member states yet to implement the directive establishing a minimum 15% tax rate for multinational companies. The Commission issued a “reasoned opinion,” the second step in the infringement process, requiring Cyprus to respond within two months or face potential referral to the Court of Justice.

Secondly, Cyprus is among five other member states that haven’t fully transposed the directive requiring certain multinational companies to publicly disclose income tax information. A reasoned opinion was issued, again with a two-month response window before a possible Court referral.

Thirdly, Cyprus is among 18 member states that haven’t designated the authorities responsible for implementing the Data Governance Act, which aims to facilitate data sharing within the EU. The Commission issued a letter of formal notice, giving Cyprus two months to address the issue before potentially receiving a reasoned opinion.

These infringement procedures highlight concerns about Cyprus’ compliance with EU law in areas of corporate taxation, transparency, and data governance.

The Commission follows a series of steps in such cases. First, a letter of formal notice is sent, giving the member state two months to respond. If the response is unsatisfactory, a reasoned opinion outlining the breach is issued, with another two-month response window. Finally, if the issue remains unresolved, the Commission can refer the case to the Court of Justice, which has the power to impose fines.

The hope is that most infringements are resolved before reaching the Court stage.