The European Commission, in an FAQ, clarified that EU Member States must treat Cyprus as having a qualified income inclusion rule under the EU Pillar 2 Directive, confirming its recognition for global minimum tax purposes despite its absence from the OECD central record.
The European Commission published a new frequently asked question (‘FAQ’) on 28 May 2026, which affirms that all EU Member States must treat Cyprus as having a qualified income inclusion rule under the EU Pillar Two Directive.
The income inclusion rule ensures that EU Member States apply the minimum tax to the foreign subsidiaries of their companies. Qualified status for such rules ensures that other countries recognise each other’s rules, in order to avoid simultaneous applications of the rules to the same companies.
While qualified status of such rules can be consulted on the central record of the OECD/G20 Inclusive Framework, Cyprus is not a member of the Inclusive Framework and companies subject to Pillar Two must also consider its income inclusion rule as qualified with a view to the first Pillar Two global minimum tax returns which are due by 30 June of this year.
Frequently Asked Questions on Pillar Two Directive – Cyprus IIR treatment 2024
Question: The Income Inclusion Rules implemented by Cyprus do not currently appear on the OECD Central Record of legislation granted transitional qualified status or on the OECD document “Global Minimum Tax: Support for Central GloBE Information Return Filing and Exchange (2024 Reporting Fiscal Year)”. In light of this, how should those rules be treated within the EU for fiscal years for which filing is due before Cyprus appears on the OECD Central Record of legislation?
Answer: For the purposes of and in accordance with the Pillar Two Directive, the qualified status of the Cypriot IIR is directly derived from Article 3(18) of the Directive, for fiscal years commencing on or after 31 December 2023. Therefore, all EU Member States should treat Cyprus as having a qualified IIR in effect. Cyprus can receive top-up tax information returns as of 31 May 2026 and is committed and obliged under EU law to exchange information under DAC9 with other Member States in time for the first exchange deadline. If an MNE opts to file its top-up tax information return centrally in Cyprus, other Member States should not require domestic filing at that time in line with DAC9.
