Influencers in Cyprus face increased scrutiny as authorities step up checks on tax compliance and transparency in advertising.

This move, aimed at protecting consumers, follows new EU regulations requiring influencers to disclose commercial interests in their posts.

Content creators, who promote and sell products on various social media platforms like Instagram, Facebook, TikTok, and YouTube, have caught the attention of both the Tax Department and the Consumer Protection Service (CPS).

With social media becoming a dominant form of communication, “influencer marketing” has surged as a new and highly effective way for brands to reach their target audience.  

Influencers have proven adept at influencing purchasing decisions by showcasing products or services to their followers, often in partnership with companies.  

As a result, influencers are now considered traders under European legislation, as they conduct commercial activities similar to any business. 

In Cyprus, tax officials have already begun verifying whether influencers are declaring all of their income for tax purposes, and soon, it will be the turn of the CPS.  

In the coming weeks, authorities will begin auditing the social media posts of these influencers to ensure they comply with consumer protection laws.  

Their focus will be to identify whether influencers are misleading their followers with false or exaggerated claims about the products they promote.  

Additionally, they will scrutinise whether influencers are clearly disclosing when a post is part of a paid partnership or involves some form of benefit, such as free products, services, or coupons. 

Consumer Protection Service director Constantinos Karagiorgis this week said that influencers, like any other business in the European Union, must comply with consumer laws, which have grown stricter in recent years to provide greater protection to consumers.

“Influencers have a legal obligation to disclose whether the content they post on social media is of a commercial nature,” Karagiorgis told Philenews.

He also mentioned that “the promotion of a brand’s products or services in a post that generates either monetary revenue or other types of benefits (products, services, coupons, free subscriptions) for influencers must be disclosed as an advertising activity and presented in a way that is clear and conspicuous to the consumer”.

The push for transparency is not unique to Cyprus but reflects an EU-wide trend toward increased regulation of influencer marketing.  

Karagiorgis noted that transparency is key to protecting consumers from misleading practices.

To this end, the CPS, in collaboration with the Advertising Control Agency (ACA), has been working to educate both influencers and businesses about their responsibilities.

A series of actions have already been implemented to achieve this goal. The CPS has posted guidelines on its website and social media, offering influencers practical advice on how to comply with the law.  

“The aim of the campaign is for consumers to be able to recognise whether the posts of influencers, whom they follow on various social networks, are commercial in nature and they will be able to look for markings such as #ad, #Paidpartnership, ‘paid partnership with XX’, ‘involves paid promotion’ and be more aware of the content they ‘consume’,” Karagiorgis said.

Another initiative includes sending letters directly to businesses that collaborate with influencers, reminding them of their obligations when engaging in influencer marketing.

The focus is on ensuring that businesses and influencers alike disclose any paid partnerships or benefits received for promoting products.

In tandem with these efforts, a broader public awareness campaign is planned. The goal is to equip consumers with the tools they need to recognise commercial content and protect themselves from being misled.  

Meanwhile, the Tax Department continues its investigations into influencer income. This includes monitoring influencer accounts to identify potential cases of tax evasion.  

In some instances, influencers have been found to declare one income stream while pocketing undeclared earnings from their promotional activities.

In other cases, some influencers had not filed tax returns at all, citing their income as below the €19,500 tax-free threshold, when, in reality, their earnings were much higher.

For influencers, an essential resource is the Guide to Influencer Marketing, developed by the ACA with support from the CPS.

This guide provides detailed instructions on how influencers can comply with their legal obligations, drawing on international standards.

Finally, influencers can visit the European Commission website to stay informed about their responsibilities under the law.