T&L D-briefs - September 2024
In this issue, we:
- Present the ECJ decision on the Apple’s €13 billion tax case;
- Share recent local key tax developments;
- Inform you about the Digital Operational Resilience Act (DORA);
- Remind you of the Annual confirmation of beneficial ownership.
International Tax Developments
Apple’s 13 billion Tax Case
The Court of Justice of the European Union (“CJEU”) has earlier this month ruled in favour of the European Commission, concluding an eight-year long legal battle with significant implications for multinational corporations and EU tax policy. The judgment requires Ireland to recover over EUR 13 billion from two Irish subsidiaries of the Apple group, accepting the Commission's argument that the subsidiaries received unlawful State Aid. The case revolves around tax rulings issued by the Irish Tax Authorities, which allowed two Apple group subsidiaries to allocate all sales profits to their head offices outside Ireland. With Ireland only taxing the local branches, the result was an effective tax rate of 0.005%. The Commission contended that this allocation was contrary to the Arm’s Length Principle, leading to the selective advantage granted to the Apple group companies. The CJEU's final judgment upheld the Commission's 2016 findings, emphasizing the need for careful Transfer Pricing documentation with proper functional analyses and adherence to the OECD Transfer Pricing Guidelines.
The ruling reinforces the importance of compliance with State Aid rules and OECD authorized approaches to Transfer Pricing, and potentially influencing future tax disputes involving multinational corporations.
Local Tax Developments
The Tax Tribunal recently published its decision on the transfer of accumulated tax losses post reorganization
The Commissioner of Taxation denied the transfer of accumulated tax losses from the transferring companies to the receiving company following a reorganisation. As per Article 27 of the Income Tax Law, in case a reorganisation qualifies as a tax free, any accumulated tax losses of the transferring company can be transferred to the receiving company after taking into consideration the provisions of Article 13 of the ITL. In accordance with Circular 2008/12, Form T.D.88 along with relevant supporting documentation should be submitted, in order for the CTA to examine whether the reorganisation qualifies as tax-free.
According to the facts of the case, a Company was merged with two other companies and as a result the surviving company claimed the accumulated tax losses of the transferring companies in its income tax return in the year following the year the reorganisation took place. However, Form T.D.88 along with relevant supporting documentation was not submitted to the CTA. As a result, the reorganisation was not approved and the Tax Tribunal agreed with the position of the CTA to deny the transfer of accumulated tax losses from the companies that were dissolved to the surviving company.
Termination of the temporary application of the zero VAT rate for essential items
On 25 September 2024, the Cyprus Tax Department announced that the imposition of the zero VAT rate on supplies of certain basic items shall remain into effect until 30 September 2024 and shall not be further extended. Therefore, as from 1 October 2024, the VAT rates that were applicable before the issuance of the relevant Decrees shall apply.
Legal Developments
DORA – What you need to know
The article delves into the essential principles of the Digital Operational Resilience Act (DORA), shedding light on its applicability, crucial deadlines, and primary obligations. DORA is a pivotal legislative framework aimed at enhancing the operational resilience of the financial sector across the EU. The article provides valuable insights into the scope of DORA, its impact on relevant entities, and the key obligations and timelines that organisations need to navigate.
Business and other corporate matters
Annual confirmation of information in the Register of Beneficial Owners
Between 1 October to 31 December of each year, all entities registered under Companies Law, are required to confirm the details of their beneficial owners, senior management officials, or due diligence, depending on the applicable requirements. This is conducted through the electronic system accessible only to entities registered in the Government Gateway Portal (Ariadni). For more details, click on the link below.
Mark your calendar!
31 OCTOBER 2024 |
30 NOVEMBER 2024 |
Electronic submission of the income tax return for tax year 2022 for individuals (TD1) extended from 31 July 2024. |
Electronic submission of the income tax return for tax year 2022 for companies (TD4) that have an obligation to file a summary information table (SIT) extended from 31 March 2024. Electronic submission of the SIT |
Archive
The previous T&Legal D-briefs are available below.
T&L D-brief January 2024
T&L D-briefs November 2022
T&L D-briefs September 2022
You can also find the rest of our archived videos on Youtube.
Contact Us
For general queries and comments on Tax Webcasts, please send an email to cyprusTLdbriefs@deloitte.com.
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