Commission opens more infringements against Cyprus

The European Commission said on Thursday that it has opened infringement procedures against Cyprus for failing to ensure correct transposition of EU rules on combatting terrorism and failing to comply on VAT rules on dwellings.

It also said it had decided to send reasoned opinions to Cyprus and five other Member States urging them to comply with EU rules on the provision of data link services under its Single European Sky policy area.

The measures are part of the Commission’s infringement package for July in which the EU executive pursues legal action against Member States for failing to comply with their obligations under EU law.

Covering various sectors and EU policy areas, they aim to ensure the proper application of EU law for the benefit of citizens and businesses.

As regards the fight against terrorism, the Commission said it was sending letters of formal notice to Cyprus, Czechia, Greece, Spain and Lithuania for failing to correctly transpose certain elements of the EU rules on combating terrorism (Directive (EU) 2017/541) by the set date of September 8, 2018. Cyprus and the four other countries now have two months to respond to the arguments put forward by the Commission. Otherwise, the Commission may send a reasoned opinion.

Cyprus is also set to receive a letter of formal notice for its failure to properly apply EU VAT rules for dwellings purchased or constructed in Cyprus.

The Commission notes that Cyprus allows a reduced rate of VAT of 5 per cent on the first 200 square metres of dwellings used as the principal and permanent residence by the beneficiary, without any other limitations. The reduced rate is applied regardless of the income, assets and economic situation of the beneficiary, the members of the family that will reside in the dwelling, and the maximum total area of the dwellings concerned.

The VAT Directive does allow Member States to apply a reduced rate of VAT on housing as part of a social policy. However, the wide scope of the Cypriot legislation and the lack of limitations indicate that the measure goes beyond the objective of a social policy, it said.

Consequently, the Commission considers Cyprus has failed to fulfil its obligations under the VAT Directive. Cyprus now has two months to address the shortcomings identified and if does not take appropriate steps, the Commission may decide to send a reasoned opinion.

Moreover, Cyprus and five other states ­- France, Greece, Malta, Portugal and Slovakia —  will receive reasoned opinions for failing to provide and operate data link services for aircraft flying within the airspace under their responsibility. The decision follows letters of formal notice sent on May 15,2020, and additional letters of formal notice sent on February 18, 2021.

They now have two months to take the necessary measures. Otherwise, the Commission may decide to refer the case to the Court of Justice of the EU.

Finally, the Commission said it was opening infringement procedures to 24 Member States, including Cyprus, for failing to bring various national provisions in line with the Enforcement Directive on Posting of Workers. The Commission intends to ensure that the rules in place will allow for posting of workers to continue on the Single Market without unnecessary hindrances for employers, while ensuring the rights of the posted workers.