The two European Financial Centres, cautioned against the implementation of the proposed Common Consolidated Corporate Tax Base (CCTB) in the European Union and ended up signing the Double Taxation Treaty (DTT), primarily aiming to help the two nations strengthen bilateral ties.

During a joint press conference with his Luxembourg counterpart Pierre Gramegna, Cypriot Finance Minister Harris Georgiades highlighted how cautious they should be when it comes to corporate taxation and also said that: “on the one hand we are firm believers of being fully compliant with fiscal rules and maintaining a balanced budget, however on the other hand we do not believe that EU integration should deviate from the very sound and reasonable principle of subsidiarity, that is, decisions should be taken at the level closest to the citizen.” He further added that: “corporate taxation has been a national prerogative and should remain a national prerogative.”

Luxembourg’s Finance Minister Pierre Gramegna agreed with Mr. Georgiades` concerns and added that Luxembourg’s parliament has sent a letter to the European Union requesting clarifications as to the extent to which this directive meets the principles of proportionality and subsidiarity. “As Luxembourg, we are going to work together with the Commission and the EU members but having in mind that in terms of taxation the principle of unanimity is foreseen in the Treaty,” he said.

He also pointed out that: “corporate taxation is a broader initiative taken up byboth the G20 and the Organisation for the Economic Cooperation and Development (OECD) in the form of Base Erosion and Profit Shifting, providing a set of tools aiming at establishing a level-playing-field”, further adding that: “we must make sure that the CCTB inside the EU does not lead to a situation where we make Europe less competitive in terms of taxation than the rest of the world.”

“Signing the double tax treaty opens the way to further expanding the economic and commercial ties, building on the excellent political ties that we enjoy,” Georgiades said, and Gramegna added that this treaty was the “missing link”in a series of double taxation treaties signed between his country and the EU member-states, further saying that: “such agreements are important because they will boost bilateral relations for goods and services obviously because it makes trade more efficient.”

It is also worth mentioning that on the 3 May 2017 a double tax treaty between Cyprus and Barbados was signed which is based on the OECD model convention for the avoidance of double taxation on income and capital.

More information on the provisions of the said treaties will be provided following the publication of the treaties in the Official Gazette of the Republic of Cyprus.