Cyprus issued Decree No. 272/2026 to update its Pillar Two framework (Law 151(I)/2024) by recognising five OECD documents published after the law's December 2024 entry into force, and activating four safe harbours with staggered effective dates from 31 December 2025 onwards.
Cyprus released Decree No. 272/2026 on 26 June 2026 to incorporate OECD materials released after the country’s own Pillar Two legislation took effect.
The new decree recognises five key OECD documents: the January 2025 Administrative Guidance, the January 2025 GloBE Information Return, the 2025 Consolidated Commentary, the 2025 Examples, and the January 2026 Side-by-Side package.
This ensures Cyprus’s rules track the ongoing technical clarifications from the OECD/G20 Inclusive Framework.
How Cyprus implemented Pillar Two
Law 151(I)/2024, which came into force in December 2024, transposed the EU’s Pillar Two Directive (Council Directive 2022/2523) into Cypriot law. The law was built around the OECD guidance as it existed at enactment—specifically the 2022 Commentary, 2022 Examples, 2022 Safe Harbours and Penalty Relief document, the 2023 Administrative Guidance, the 2023 GloBE Information Return, the 2023 Consolidated Commentary, and June 2024 Administrative Guidance. These materials were formally listed in Article 2’s definition of “OECD Guidelines”.
Ministers can update the framework
Article 59 allows Cyprus to rely on the OECD Guidelines for interpretation where they don’t conflict with the EU Directive or domestic law. Article 60 grants the Finance Minister the power to issue decrees (published in the Official Gazette) that specify how the law operates in technical terms and identify which newer OECD materials apply. Decree No. 272/2026 is the first use of that authority since December 2024.
Cyprus advances Pillar Two implementation with early safe harbour rollout
Decree No. 272/2026 sets out Cyprus’s updated framework for the OECD’s global minimum tax rules, incorporating recent guidance published between January and May 2025, as well as the newly agreed safe harbour package from 5 January 2026. All EU Member States backed this package when it was formally endorsed.
The decree incorporates four separate OECD releases:
- Administrative guidance on transition-year rules and tax attributes (15 January 2025)
- Refined GIR filing requirements (15 January 2025)
- Consolidated commentary and worked examples (9 May 2025)
- Safe harbour framework implementation rules (5 January 2026)
Safe harbour availability and timelines
Four main safe harbours are now available to Cypriot taxpayers:
- Simplified ETR safe harbour: fiscal years beginning 31 December 2025
- Substance-based Tax incentive safe harbour: fiscal years beginning 1 January 2026
- Side-by-Side safe harbour: fiscal years beginning 1 January 2026
- Extended transitional CbCR safe harbour: fiscal years ending by 30 June 2029, provided they began no later than 31 December 2027
Cyprus moves faster than the standard timeline
One wrinkle stands out: Cyprus chose to activate the Simplified ETR Safe Harbour one full year ahead of the OECD’s standard implementation date of 31 December 2026. The decree permits this early adoption when coordination conditions are met, and Cyprus has satisfied those requirements, giving eligible groups earlier access to the simplified approach.
