On November 29, the Cyprus Tax Department published clarifications on non-disclosure penalties for cross-border transactions under DAC6.
The Cyprus Tax Cooperation Law provides for the following administrative penalties for non-compliance with DAC6 obligations:
- Non providing information on reporting activities - from 10,000 to 20,000 euros
- Delay in providing reportable agreement information
- Delay up to 90 days - from 1000 to 5000 euros
- Delay of more than 90 days - from 5,000 to 20,000 euros
For failure to submit or delay in filing a notice of refusal (release) from the obligation to provide information on an agreement subject to reporting - the same penalties as above. Submission of incomplete or false information about agreements to be reported - from 1,000 to 10,000 euros. Failure to provide data, documents and information requested by the competent authority within the specified time period (within 14 days) - from 1,000 to 10,000 euros. continuing violations - up to an additional 20,000 euros.
The Explanatory Circular of the Cyprus Tax Authority sets an annual administrative fine limit of € 120,000. It applies to every intermediary / taxpayer, this limit does not apply in case of willful default or fraud. Penalties can be reduced by up to 50% if reporting violations for a particular year are corrected by the intermediary / taxpayer tax return deadline for that particular year.
An important provision of the clarifications is the following point: in the event that the intermediary / taxpayer applied an incorrect interpretation of the law on cross-border transactions, no fines will be imposed if the interpretation was reasonable.
The limitation period is 6 years from the end of the relevant tax year, and may be extended to 12 years in the event of willful default or fraud.
