Parliamentary Deliberations on Banking Secrecy and EU Tax Recovery
In a recent session, Cyprus parliamentarians engaged in a critical discussion on proposed legislative amendments that would empower authorities to request access to private banking information for the purpose of recovering taxes or duties levied by the European Union. This move comes as part of Cyprus’ commitment to align with its obligations as an EU member state.
The amendments, put forth by the finance ministry, are designed to rectify discrepancies between Cypriot domestic law and the EU’s Council Directive 2010/24. The directive facilitates mutual assistance for the recovery of claims related to taxes, duties, and other measures. The finance ministry’s submission is a direct response to notifications from Brussels pointing out the inadequacies in the current Cypriot legislation.
During the parliamentary discussions, it was highlighted that the existing law fails to clearly impose an obligation on Cypriot authorities to request the lifting of banking secrecy in efforts to recover taxes and duties. Representatives from the interior ministry, banking association, and Central Bank expressed their support for the proposed changes.
A Tax Department official shed light on the origin of the issue, noting that the initial law intended to harmonize with the EU directive contained ambiguities in its wording. This led to interpretations that could allow Cypriot authorities to avoid participating in mutual assistance by maintaining banking secrecy.
While the Personal Data Protection Commissioner’s office agreed with the essence of the amendments, they raised concerns about the lack of specificity regarding which ‘authorities’ would have the mandate to request banks to lift banking secrecy. The finance ministry clarified that such authorities would be identified on a case-by-case basis, which appeased the Commissioner’s office.
The scope of Council Directive 2010/24 is broad, covering claims related to all taxes and duties imposed by or on behalf of any EU Member State or its subdivisions. However, it explicitly excludes matters such as compulsory social security contributions and contractual dues like public utilities.
The proposed legislative changes signify Cyprus’ ongoing efforts to ensure compliance with EU regulations and reinforce the transparency of its financial systems.
