Cyprus enacts Law implementing DAC7 transparency rules for digital platforms

The Cyprus government gazetted, on 3 November, the Law amending the Administrative Cooperation in the Field of Taxation Laws, which implements the sixth amendment to the European Council Directive on Administrative Cooperation and Automatic Exchange of Information in the Field of Taxation (Directive 2011/16/EU), known as DAC7.

DAC7 enables EU member states and tax authorities to track the activity of taxpayers on online platforms and simplifies the collection of indirect taxes by local tax administrations by introducing tax transparency rules.

The Cyprus Law covers the following activities: renting immovable property, providing personal services, selling goods, and renting any mode of transport. The first DAC7 reporting deadline is 31 January 2024.

The Law also introduces certain changes to the existing legislation on administrative cooperation in tax matters and amends the common reporting standard (CRS/DAC2) and DAC6 laws to comply with data protection requirements.

The amendments to the CRS Law clarify that a Cyprus reporting financial institution must inform each individual concerned that information relating to that individual will be collected and transferred in accordance with the Law and transmit to each individual concerned all the information that the individual is entitled to receive from the data controller.

The amendments to the DAC6 Law delineate and codify the internationally agreed standard of ‘foreseeable relevance’ for exchange of information and clarify the legal framework for requests for information concerning groups of taxpayers that cannot be identified individually.

The Law also, for taxable periods starting on or after 1 January 2025, extends the mandatory automatic exchange of information to information on Cypriot real estate owned by individuals and entities resident in another EU Member State, and introduces joint audits by the competent authorities of two or more EU Member States as a new tool for administrative cooperation.

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