Pillar Two: Global Minimum Tax on MNE and Large-Scale Domestic Groups – Cyprus officially transposes the EU Directive in the local law
On 12 December 2024, the Cyprus House of Representatives approved the transposition of the EU Directive 2022/2523 in the Cyprus national law, regarding the legislation on the Global Minimum Level of Taxation for Multinational Enterprise Groups and Large-Scale Domestic Groups.
This legislation ensures the application of a minimum tax rate of 15% for these groups with annual consolidated revenues of at least €750 million. The new provisions introduce a “top-up tax” which will be imposed on the applicable parties, whenever the effective tax rate in a specific jurisdiction falls below 15%.
Below is a summary of the law’s provisions, its applicable parties, and the effective application date:
| Provisions introduced | Application | Effective Application Date |
| Qualified Income Inclusion Rule (QIIR) | Applies to the results of the local Parent and its local subsidiaries | Fiscal years beginning on or after January 2024 |
| Qualified Undertaxed Profits Rule (QUTPR) | Imposes an additional top-up tax, not charged under CIT | Fiscal years beginning on or after 1 January 2025 |
| Domestic Minimum Top-Up Tax (DMTT) | Applies to constituent entities and joint venture entities located in Cyprus. It takes priority over QIIR and QUTPR. | Fiscal years beginning on or after 1 January 2025 |
Given the immediate implementation of the new provisions and the penalties for non-compliance, we recognize the urgency of taking swift action. Our team of experts is here to guide you through the complexities of Pillar Two regulations.
Contact us for more information.
Author’s comment: The long-awaited increase in the minimum tax rate to 15% across the EU has eventually been implemented in the Cyprus’ local law. However, its applicability is restricted to large international groups with significant size, activity, and revenue.
