European Commission Warns Cyprus Over Delayed Tax Information Exchange Rules
Commission Issues Reasoned Opinion to Cyprus Over Tax Information Exchange Rules Infringement
The European Commission has escalated infringement proceedings against Cyprus, issuing a reasoned opinion for failing to fully transpose EU tax cooperation rules. Cyprus now has two months to comply or face potential financial penalties at the EU Court of Justice.
Infringement Proceedings and the Reasoned Opinion
The European Commission has issued a reasoned opinion to Cyprus as part of infringement proceedings over the country's failure to fully transpose the Directive on administrative cooperation in the field of taxation. Cyprus is among three member states, alongside Belgium and Bulgaria, that have not yet adopted or notified all the national measures required to implement the Directive, which updates the EU framework for administrative cooperation on tax matters.
Requirements of Directive (EU) 2025/872 and Pillar 2
The Directive (EU) 2025/872 requires member states to standardise the collection of the top-up tax information return and ensure the automatic exchange of the information contained in those returns. The filing obligation forms part of the implementation of the EU's Pillar 2 Directive, which establishes a global minimum level of taxation for multinational enterprise groups and large domestic groups.
Delays in Information Exchange
According to the Commission, tax authorities across the European Union should have begun exchanging the relevant information from June 2026. However, Cyprus' incomplete transposition of the Directive has prevented the full application of the new framework.
Next Steps and Potential Financial Penalties
The Commission had already sent Cyprus a letter of formal notice in January 2026. As the shortcomings have not been fully addressed, it has now moved to the next stage of the infringement procedure by issuing a reasoned opinion. Cyprus has now two months to respond and adopt the necessary compliance measures. Failing a satisfactory response, the Commission may refer the case to the Court of Justice of the European Union and request the imposition of financial penalties.
