Breaking news

Cyprus Faces Pressure To Revise Multinational Minimum Tax Rules

Cyprus is under pressure to revise its legislation on the minimum tax for multinational groups after the European Commission called for changes to align the framework with Pillar 2 rules.

Policymakers face a difficult balance. Failure to comply could expose the Republic to penalties and broader regulatory consequences, while stricter rules could encourage some US-linked multinationals to relocate to jurisdictions exempt from the 15% minimum tax until 2029.

Cyprus Adopted Its Framework In 2024

Cyprus approved its domestic top-up tax framework in December 2024, with the system scheduled to take effect in 2025. Under the law, multinational groups operating in Cyprus with an effective tax rate below 15% would pay the difference through a supplementary levy.

The framework was intended to give affected companies time to adapt while reducing incentives to relocate to more tax-favorable jurisdictions.

Brussels Calls For A QDMTT

The European Commission challenged the original framework, arguing that it disproportionately benefited parent companies of multinational groups with US interests. Brussels has called for a Qualified Domestic Minimum Top-up Tax (QDMTT) to ensure that minimum tax is collected domestically under the Pillar 2 framework.

A revised bill has been under public consultation since late July. It proposes introducing the QDMTT from Jan. 1, 2026, alongside amendments reflecting OECD guidance and recommendations.

Cyprus is scheduled for an assessment in autumn 2026, when its legal framework will be reviewed for compliance with internationally agreed Pillar 2 standards.

Businesses Warn Of Relocation Risk

The consultation deadline was extended from Sept. 5 to Sept. 7 because of the complexity of the issue. A recent meeting at the Finance Ministry brought together officials and professional bodies to discuss the proposed changes.

Some professional associations have warned that higher tax costs could prompt US multinationals to consider relocating to Malta, Estonia, Latvia or Lithuania. Those countries secured an exemption in 2023 that allows them to delay Pillar 2 implementation until 2029 because they had fewer than 12 subsidiaries of multinational groups above the €750 million threshold.

Professional groups reportedly told the ministry that US companies make a significant contribution to Cyprus’ public finances, paying about €140 million in taxes.

Ministry Sees Limited Room For Changes

Finance Ministry technocrats reportedly told stakeholders that there is little scope for further changes because of the European Commission’s firm position on the QDMTT.

Officials also warned that non-compliance could place Cyprus in a difficult position. The ministry aims to secure Cabinet approval as soon as possible and have Parliament pass the bill in October.

The issue is also being viewed against wider tensions between the US and European Union over international taxation, leaving Cyprus to balance regulatory compliance with its position as a destination for multinational groups.

Questions Remain Over The Original Rules

Private sources have raised concerns about the initial handling of the legislation, including the lack of clear data on the number of companies expected to be affected.

Parliament was initially told that 60 companies would be subject to the tax, but that figure later rose to 1,900. The ministry had estimated that the affected companies could generate between €200 million and €250 million in tax revenue for Cyprus. It is also understood that the draft legislation was amended in 2024 without notifying affected stakeholders, while EU authorities later informed Cyprus about the need for a qualified domestic tax.

Cyprus now faces a narrow path forward: comply with Brussels’ requirements while maintaining investor confidence and limiting the risk that mobile capital moves to jurisdictions offering more favorable tax treatment.

NERDs Replace FIRE As Young Workers Lose Confidence In Retirement

The FIRE movement promised younger workers a path to financial independence and early retirement. Now, a different group is emerging in the UK: NERDs, or the “Never Ever Retiring Demographic.”

Growing pessimism among Gen Z and millennials is driving the shift, with many questioning whether retirement will ever be financially achievable. Some are responding by reducing or abandoning pension contributions altogether.

Young Workers Are Losing Confidence In Retirement

Research from People’s Pension, a major UK workplace pension provider, found that 47% of Gen Z respondents aged 18 to 27 do not engage with their pension. Another 12%, equivalent to about 2.2 million young people, have stopped saving for retirement because they expect to work indefinitely.

Wider financial pressures are contributing to that outlook. High living costs have pushed milestones such as homeownership, marriage, having children and retirement further away for many younger workers, while inflation, layoffs and stagnant wages have added to uncertainty.

Pension Providers Face A Communication Gap

Financial pressure is only part of the problem. Young workers also say pension providers are failing to explain long-term saving in ways that feel relevant to them.

About 36% of respondents said providers do not explain retirement saving effectively. Among them, 27% said companies appear more focused on selling products than educating customers, while 16% cited complicated language and jargon.

A clear generational difference emerges in the responses. Some 29% of Gen Z respondents said providers fail to explain why pension saving matters, compared with 13% of Gen Xers and Baby Boomers. Similarly, 17% of Gen Z said providers do not use channels they engage with, versus 4% among older generations.

Clearer information could influence behavior. About 70% of Gen Z respondents said they would have started saving earlier if they had known that beginning in their 20s could potentially double their retirement pot compared with starting in their 30s. Another 63% said learning about tax relief and employer contributions motivated them to save.

“In a world where financial doom dominates pension conversations, young savers are tuning out,” said Kirsty Ross, proposition director at People’s Pension. “Our research shows they are not disengaged because they don’t care, they are disengaged because the messages aren’t working.”

Young Savers Want Simpler Tools

Progress bars and goal trackers were among the most popular tools respondents said could make pensions more relevant, cited by 31%. Another 26% wanted reassurance that they could start with small amounts, while 23% wanted examples of what people their age are doing.

Clear, bite-sized steps were cited by 22%, while 19% said light-hearted and relatable stories could make pensions more accessible.

People’s Pension has responded with Pension Drop, a campaign using social media influencers, live events and lifestyle personalities to encourage conversations about retirement saving.

“Looking back, I really wish I’d started earlier,” said Iain Stirling, comedian, TV presenter and Pension Drop ambassador. He said contributions made in someone’s 20s or 30s can make a significant difference later, while employer contributions and tax relief can increase the value of smaller payments.

Small Changes Can Improve Long-Term Saving

Stirling urged younger workers to check their pension provider, establish whether they have multiple pension pots and make sure they are contributing enough to receive the full employer match.

He also recommended increasing contributions after a pay rise or bonus, allowing workers to raise long-term savings without making a large immediate change to their spending.

For younger workers facing high living costs and uncertain career prospects, pension saving remains a difficult sell. Clearer information about employer contributions, tax relief and the long-term effect of starting early could help make retirement planning more tangible.

eCredo
Aretilaw firm
Uol
The Future Forbes Realty Global Properties

Become a Speaker

Become a Speaker

Become a Partner

Subscribe for our weekly newsletter