Cyprus has significantly strengthened its tax framework to align with international standards on transparency, substance, and anti-avoidance. Key reforms include implementing General Anti-Abuse Rules (GAARs), adopting the OECD’s BEPS Action Plan, and transposing the EU Anti-Tax Avoidance Directive (ATAD) into domestic law, among other.
The country has also recently introduced a two-phase withholding tax (WHT) regime targeting outbound payments to EU non-cooperative jurisdictions for tax purposes and low-tax jurisdictions, alongside enhanced documentation requirements and treaty renegotiations. Emphasizing “substance over form” and genuine economic activity, Cyprus aims to combat aggressive tax planning, ensure compliance, and preserve genuine treaty benefits, urging companies to review their structures in light of these legal developments.
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