On 26 June 2026, the Cyprus Minister of Finance issued a Decree pursuant to Article 60(b) of the Cyprus Pillar Two legislation (Law 151(I)/2024). The Decree adopts a series of OECD administrative guidance documents for the purposes of interpreting and applying the Law, and confirms the entry-into-force dates for the safe harbours included in the OECD Side-by-Side (SbS) package. The Decree was published in the Official Gazette of the Republic of Cyprus on the same date.
Separately, on 29 May 2026, the European Commission published a Frequently Asked Question (FAQ) on the Pillar Two Directive confirming that all EU Member States should treat Cyprus as having a qualified Income Inclusion Rule (IIR) in effect for fiscal years commencing on or after 31 December 2023.
OECD documents adopted by the Decree
The Decree incorporates the following OECD documents into the interpretive framework for the Law:
- *Administrative Guidance on Article 9.1 of the GloBE Model Rules* (15 January 2025)
- *Administrative Guidance on Articles 8.1.4 and 8.1.5 of the GloBE Model Rules* (15 January 2025)
- *GloBE Information Return* (15 January 2025)
- *Consolidated Commentary to the GloBE Model Rules (2025)* (9 May 2025)
- *GloBE Model Rules (Pillar Two) Examples* (9 May 2025)
- *Global Anti-Base Erosion Model Rules (Pillar Two) Side-by-Side package* (5 January 2026)
Entry-into-force dates for the SbS safe harbours
Section 33 of the Law provides the legal basis for applying safe harbours in Cyprus. Because all EU Member States are members of the OECD/G20 Inclusive Framework on BEPS and have consented to the SbS agreement, the safe harbours in the SbS package are legally effective in Cyprus as of their respective entry-into-force dates without further legislative amendment. The Decree confirms those dates as follows.
The Simplified Effective Tax Rate (ETR) Safe Harbour applies for fiscal years beginning on or after 31 December 2025.
The extension of the Transitional Country-by-Country Reporting (CbCR) Safe Harbour applies for fiscal years beginning on or before 31 December 2027, excluding any fiscal year ending after 30 June 2029.
The Substance-based Tax Incentive Safe Harbour applies for fiscal years beginning on or after 1 January 2026.
The Side-by-Side Safe Harbour applies for fiscal years beginning on or after 1 January 2026, or the following year, as set out in the OECD Central Record listing jurisdictions that apply the safe harbour rules and their respective entry-into-force dates.
The Ultimate Parent Entity (UPE) Safe Harbour applies for fiscal years beginning on or after 1 January 2026.
Qualified status of the Cypriot IIR under EU law
The European Commission's 29 May 2026 FAQ addresses how the Cypriot IIR should be treated within the EU for fiscal years for which filing falls due before Cyprus appears on the OECD Central Record of legislation.
The Commission clarified that the qualified status of the Cypriot IIR is directly derived from Article 3(18) of the Pillar Two Directive for fiscal years commencing on or after 31 December 2023. All EU Member States must therefore treat Cyprus as having a qualified IIR in effect.
The FAQ further confirms that Cyprus can receive top-up tax information returns as of 31 May 2026 and is obliged under EU law to exchange information with other Member States under the EU Directive on Administrative Cooperation (DAC9) in time for the first exchange deadline. Where an MNE group 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.
Implications for MNE groups
Groups with a Cypriot ultimate parent entity or Cypriot constituent entities should assess how the Decree affects their Pillar Two position, including eligibility for each of the SbS safe harbours.
The European Commission's FAQ provides EU Member States with formal confirmation that the Cypriot IIR is qualified. However, MNE groups operating in non-EU jurisdictions should consider separately whether the treatment of the Cypriot IIR needs to be supported under the domestic qualification rules of those jurisdictions, as the Commission's position binds only EU Member States.