Cyprus has collected €50 million from multinational groups for the 2024 tax year under a minimum tax law that the European Commission says breaches EU rules and has asked the government to replace.
The money came from 30 business groups operating in Cyprus, Phileleftheros has learned. A source familiar with the matter told Phileleftheros the €50 million is additional revenue generated by the tax. A similar amount is expected for 2025, while the figure for 2026 will differ, because the legal framework is due to be amended.
The law, passed by parliament in December 2024 and applied to the 2024 and 2025 tax years, partly transposed the EU directive known as Pillar Two. The directive sets a minimum tax rate of 15% for multinational groups with annual revenue above €750 million. Instead of applying that rate in full, the Cypriot law introduced a less stringent arrangement known as the “domestic top-up tax”.
The Commission says the law favours the parent companies of US multinationals operating in Cyprus, in breach of EU law. It has sent Cyprus an ultimatum warning of sanctions if it does not comply, and the country risks referral to the EU Court of Justice and fines.
The Commission has also warned that if Cyprus does not fully comply with the directive, the OECD and other jurisdictions may not recognise the Cypriot regime. That would expose the affected groups to double taxation.
To avoid legal action, the government has decided to change the law before the end of the year and has tabled a bill in parliament. The House finance committee is expected to examine it in November.
Under the bill, Cyprus would fully apply the Qualified Domestic Minimum Top-up Tax (QDMTT) from 2026. This means a 15% minimum rate with no exemptions for any multinational. The finance ministry estimates the change will secure recognition of Cyprus’s tax regime and protect state revenue.
Separately, the Tax Department said on Tuesday that the Tax Commissioner had set 30 November 2026 as the deadline for top-up tax returns, notifications and filings, and for paying any top-up tax due. Where filings or payments fall due earlier, no administrative fines, interest or charges will be imposed, provided they are made by 30 November.
The planned amendment has drawn objections, with some US multinationals warning they will leave Cyprus. Finance Minister Makis Keravnos has dismissed that risk.
Last month, the Cyprus-American Chamber of Commerce warned that some US-based groups could reconsider expansion plans, choose other jurisdictions for new investment or decide against setting up in Cyprus. It said this could happen if they judged that the country’s competitive position was weakening against other international business centres. The chamber said US foreign direct investment in Cyprus stood at around $14.9 billion, and that US companies contribute €140 million in tax revenue each year.
The finance ministry’s impact assessment, which accompanies the bill, says there is not yet a precise picture of how many entities will be affected or how much revenue the change will raise.
When the original bill was debated in 2024, around 1,900 businesses were expected to be affected by the 15% minimum tax, with estimates of additional state revenue of €200 million to €250 million a year.
