Cyprus (DAC 7) implementation regarding tax transparency rules for digital platforms

ADDED 2024-01-15

On the 3rd of November 2023 the "Law amending the Administrative Cooperation in the Field of Taxation Laws" (Law) was published in the Official Gazette of the Republic of Cyprus.

The Law puts into implementation the European Council Directive (EU) 2021/514 of 22 March 2021 (DAC 7), amending Directive 2011/16/EU on administrative cooperation in the field of taxation, and introduces new obligations for Platform Operators.

Additionally, the Law has amended a number of other provisions of the Law on the Administrative Cooperation in the Field of Taxation, with regard to the provisions of CRS/DAC2 and DAC6.

Outline of Obligations for platform operators

The Cyprus Law covers the following activities: renting immovable property, providing personal services, selling goods, and renting any mode of transport. 

The law dictates that platform operators must:

  • Register with the Cypriot Tax Department (CTD) or notify the CTD if they are already registered in another European Union (EU) Member State
  • Carry out specific due diligence procedures and report to the CTD certain determined information on the sellers as required in the Law

In any event of non-compliance, Member States will be expected to impose penalties which are effective, proportionate and dissuasive.

Next Steps for Clients

DAC7 requires digital platform operators to perform extensive due diligence on reportable sellers, in order to collect and verify their identification, and thereby report this information on an annual basis to the member state in which they have been registered for this specific purpose.

The list of reportable information includes, among other things:

  • details of the reporting platform operator and the platform itself; and
  • personal details of the reportable seller, including:
  • the tax identification number;
  • value-added tax identification number;
  • residence;
  • overview of amounts paid or payable to sellers form the reportable activities;
  • platform fees; and
  • commissions or taxes withheld or charged by the digital platform operator during each quarter of the reportable period.

Any such information collected should be provided to the member state where the reportable seller resides, or to the member state in which the immovable property is located, no later than the 31st January of the relevant year following the reportable period.