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01 December 2025

Cyprus tax authorities issue clarification note regarding bilateral agreement with United States

  • The Cypriot Tax Department publicly announced on 25 November 2025 that the bilateral Competent Authority Agreement for the exchange of Country-by-Country reports between Cyprus and the United States (US), which is still under negotiation, is expected to be effective for reporting financial years (RFYs) beginning on or after 1 January 2025.
  • A secondary filing mechanism for a Cypriot Constituent Entity (CE) of a multinational enterprise group with a US-tax-resident Ultimate Parent Entity applies for RFYs beginning during calendar year 2024.
  • Cypriot CEs that have already filed notifications in Cyprus for RFYs that began during 2024 must revise those notifications by the end of 2025 to avoid penalties.
 

Executive summary

The Cypriot Tax Department publicly announced on 25 November 2025 that the bilateral Competent Authority Agreement (CAA) for the exchange of Country-by-Country (CbC) reports between Cyprus and the United States (US), which is still under negotiation, is expected to be effective for Reporting Fiscal Years (RFYs) starting on or after 1 January 2025.

Detailed discussion

As a consequence of the announcement, the secondary filing mechanism for a Cypriot Constituent Entity (CE) of a multinational enterprise group with a US-tax-resident Ultimate Parent Entity (UPE) is triggered for RFYs that started on or after 1 January 2024, but before 1 January 2025 (i.e., during calendar year 2024).

Accordingly, a Cypriot CE whose UPE is a tax resident in the US, must file the Country-by-Country (CbC) report locally in Cyprus for its RFY ending on 31 December 2024, even if a CbC report has been, or will be, submitted in the US.

The Cypriot Tax Department has further noted that if Cypriot CEs have already filed notifications in Cyprus for RFYs starting on or after 1 January 2024 and before 1 January 2025, the notifications must be revised accordingly if they are affected by the announcement. If these notifications are revised before 31 December 2025, no penalties will be imposed.

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Contact Information

For additional information concerning this Alert, please contact:

EY Cyprus Advisory Services Limited, Transfer Pricing Services, Cyprus

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor

Document ID: 2025-2388

 

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