Nicosia, November 29th, 2021
The interpretative Circular 55, the purpose of which is to set out various clarifications on the administrative fines imposed for non-compliance with the DAC 6 reporting obligations, has been issued by the Cyprus Tax Department following the transposition of DAC 6 EU Council Directive 2018/822 into domestic legislation and the disclosure of the related Guideline in the form of a Decree.
The Decree includes the following potential administrative fines:
-From € 1000 to € 5000 penalty fee for a submission delay of less than 90 days, from € 5000 to € 20.000 penalty fee for a submission delay of more than 90 days for failure or delay to submit the assessment of a Reportable Cross-border Arrangement (RCBA) by the intermediary or taxpayer.
-From € 1000 to € 5000 penalty fee for a submission delay of less than 90 days, from € 5000 to € 20.000 penalty fee for a submission delay of more than 90 days for failure or delay to notify for the application of a waiver by the intermediary or taxpayer.
-From € 1000 to €10.000 for submission of incomplete and/or misleading information by the intermediary or taxpayer.
-From € 1000 to €10.000 for failure to submit information within the prescribed deadlines of an authority.
-Increase up to €20.000 for failure to pay the administrative fine and continuation of the infringement.
The Circular provides for clarifications in relation to the above-mentioned fines:
-Annual limit on penalties of € 120,000 per intermediary or taxpayer for all RCBAs having a reporting deadline within a calendar year unless the penalty arises because of the intermediary/relevant taxpayer’s intentional default. For intermediaries of the same group, this limit will apply to only one of the Cyprus intermediaries.
-Reduction for failure to report of 50% reduction of administrative fines in certain cases of failure to report/incomplete or misleading reporting/omission to notify, before any DAC 6 audit is carried out by the Tax Authority, provided that this filing is completed before the statutory deadline for the submission of the tax return of the relevant intermediary/taxpayer for the calendar year for which the reporting should have taken place.
-Cases of inaccurate Law interpretation by the intermediaries/taxpayers due to insufficient or late issuance of guidelines by the Tax Authority, unless there is intentional default by the intermediaries/taxpayers
-Books & Record Keeping minimum period means the intermediary/relevant taxpayer must keep books and records relating to a RCBA for at least 6 years from the end of the tax year to which the RCBA relates, otherwise a penalty may be imposed within the tax year to which the RCBA relates, or within 6 years from its expiration. In case of being guilty of willful default or fraud, the period of 6 years shall be increased to 12 years.