ARTICLE
3 December 2018

Implementation Of Directive (EU) 2017/1852 Of 10 October 2017 On Tax Dispute Resolution Mechanisms

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Elias Neocleous & Co LLC

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Elias Neocleous & Co LLC is the largest law firm in Cyprus and a leading firm in the South-East Mediterranean region, with a network of offices across Cyprus (Limassol, Nicosia, Paphos), Belgium (Brussels), Czech Republic (Prague), Romania (Budapest) and Ukraine (Kiev). A dynamic team of lawyers and legal experts deliver strategic legal solutions to clients operating in key industries across Europe, Asia, the Middle East, India, USA, South America, and China. The firm is renowned for its expertise and jurisdictional knowledge across a broad spectrum of practice areas, spanning all major transactional and market disciplines, while also managing the largest and most challenging cross-border assignments. It is a premier practice of choice for leading Cypriot banks and financial institutions, preeminent foreign commercial and development banks, multinational corporations, global technology firms, international law firms, private equity funds, credit agencies, and asset managers.
The draft law and regulations replicate the Greek language text of the directive almost verbatim.
Cyprus Tax

The Cyprus Tax Department has published draft legislation to implement Directive (EU) 2017/1852 for consultation. The draft legislation comprises an amending law, which adds two new articles to the Income Tax Law of 2002, and regulations to be issued under the second of those articles.

The draft law and regulations replicate the Greek language text of the directive almost verbatim. They allow taxpayers faced with double taxation disputes to initiate a procedure requiring the Tax Department and its counterpart in Cyprus and the other EU member state concerned to make efforts to resolve the dispute amicably within two years. If no solution has been found at the end of the two-year period, the two tax authorities must establish an advisory commission to arbitrate. If they fail to do so, the taxpayer can bring an action before the national court to enforce the obligation.

The advisory commission will comprise three independent members and representatives of the two countries' tax authorities in question. It will have six months to deliver a final, binding decision. This decision will be immediately enforceable and must resolve the dispute.

The new law is intended to take effect from 1 July 2019. It will apply to any appeal submitted from that date on disputes relating to tax years beginning on or after 1 January 2018, and, if the tax authorities concerned agree, to appeals already in existence.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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