Cyprus - Amendments to Income Tax Law in relation to tax dispute resolution mechanisms for the elimination of double taxation on income and capital

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On 5/12/2019, Council Directive (EU) 2017/1852 was transposed to Income Tax Law with the passing of Law 151(I)/2019.

The Law allows a person resident in a Member State for tax purposes to object on any matter that is disputed between member states, as a result of the application and interpretation of agreements that provide for the elimination of double taxation on income and capital. Such agreements are the bilateral tax treaties and the Union Arbitration Convention (90/436/EEC)

The objection needs to be submitted within 3 years from the date of receipt of first notification of the action resulting in, or that will result in, the question in dispute, irrespective of any other measures taken under national laws in any of the member states involved.

The objection needs to be submitted to all the member states involved. This can be accepted both in Greek or English language.

Within 2 months of receipt of the objection, the Tax Commissioner needs to inform the affected person and the relevant competent authorities of the receipt of the objection and the language to be used for the resolution of the dispute.

Within 6 months from the date of receipt of objection or date of receipt of additional information requested, whichever is the latter, the Commissioner decides whether to accept or reject the objection and informs the affected persons and relevant competent authorities. The Commissioner has the authority to decide unilaterally.

If no decision is taken within 6 months, then it is considered that the objection has been accepted.

The Law is in effect as from 1/7/2019 and it applies to objections received as from 1/7/2019 on a disputed matter relating to income or capital earned in a tax year commencing on 1/1/2018 or later. The Law allows the competent authorities to agree to apply this mechanism to objections submitted prior 1/7/2019 or to earlier tax years.

The Law provides for the issue of regulations by the Council of Ministers for the practical application of the Law.

Regulations to be issued relate to the following matters:

  • Specification of procedure for the submission, examination and decision of objections.

  • Procedure for friendly resolution

  • Dispute resolution by an advisory committee

  • Appointment of advisory committee and independent persons

  • Specification of procedure for the preparation of a list of independent persons with standing

  • Appointment of alternative dispute resolution commission

  • The apportionment of expenses

  • Procedure of submission of information and other evidence by the affected person and the
    hearing procedure

  • Procedure of delivery of opinion by the advisory committee or the alternative dispute
    resolution commission

  • Application of sanctions in case of a breach of confidentiality

  • Procedures for the strike off of a person from the list of independent persons in case he ceases to be independent.

9- 13 November 2020 -CATA 41st Annual Technical Conference.

The 41st Annual Technical Conference will be hosted in Nicosia, Cyprus between 9 -13 November 2020, at the Landmark Hotel.

 For further information please visit: https://www.mof.gov.cy/mof/tax/taxdep.nsf/index_en/index_en?opendocument and select the conference banner,

 

 



 



 



 











 



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Article by Athina Stephanou



Athina Stephanou