Cyprus Cracks Down on Influencers for Tax Evasion and Misleading Ads

  • 3 months ago
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Influencers in Cyprus are facing heightened scrutiny as authorities intensify checks on tax compliance and transparency in advertising. This move is part of an effort to protect consumers, spurred by new EU regulations requiring influencers to clearly disclose any commercial interests in their social media posts. According to Cyprus Mail’s Souzana Psara, both the Tax Department and the Consumer Protection Service (CPS) are now focused on ensuring that content creators comply with these rules.

Influencers—those promoting and selling products on platforms like Instagram, Facebook, TikTok, and YouTube—have become key players in marketing. Brands increasingly rely on these individuals to reach their target audiences, making influencer marketing a powerful tool. With the rise of this trend, influencers have been categorized as traders under European legislation, meaning their activities are now viewed as commercial, similar to any business.

In response, Cypriot tax authorities have already started verifying whether influencers are reporting all their income. Soon, the CPS will begin auditing their posts to ensure compliance with consumer protection laws. Authorities will be looking closely at whether influencers are misleading their followers with exaggerated claims or failing to disclose when a post is part of a paid partnership or includes benefits such as free products or services.

Obligations for Influencers and Brands

Constantinos Karagiorgis, director of the CPS, recently emphasized that influencers, like any other business in the European Union, are required to follow strict consumer laws designed to protect the public. “Influencers have a legal obligation to disclose whether the content they post on social media is of a commercial nature,” Karagiorgis told Philenews.

Karagiorgis further explained that if influencers receive any form of compensation—whether monetary or in the form of products or services—for promoting a brand, they must clearly disclose this as advertising. Posts must be marked in a way that makes it obvious to consumers that they involve paid promotion, using labels such as #ad, #PaidPartnership, or similar clear indicators.

This push for transparency is part of a broader EU trend aimed at regulating influencer marketing. The CPS, in collaboration with the Advertising Control Agency (ACA), has been working to educate both influencers and businesses about their responsibilities. Guidelines have been made available on the CPS website and social media, offering practical advice to influencers on how to comply with these legal requirements.

Educational and Regulatory Initiatives

One of the CPS’s key initiatives is helping consumers understand how to recognize commercial content. According to Karagiorgis, the campaign is designed to ensure that people are aware when they’re viewing paid promotions and can easily identify markings such as #ad or #PaidPartnership in posts.

In addition to educating the public, the CPS is also reaching out to businesses that collaborate with influencers, reminding them of their legal obligations. Companies must ensure that any paid partnerships are properly disclosed to protect consumers from misleading advertising. A public awareness campaign is also planned to help consumers become more aware of how influencer marketing works and how to spot commercial content.

Tax Compliance Efforts

Alongside these consumer protection efforts, the Tax Department is actively investigating influencers’ income to catch cases of tax evasion. Authorities are monitoring influencer accounts to identify undeclared earnings from promotional activities. In some cases, influencers have declared only a portion of their income while hiding additional streams from their promotional work. Others have not filed tax returns at all, claiming their income falls below the €19,500 tax-free threshold, despite earning much more.

The ACA has also developed a Guide to Influencer Marketing with the support of the CPS. This guide offers influencers detailed instructions on how to meet their legal obligations and adhere to international standards. Additionally, influencers are encouraged to consult the European Commission website for up-to-date information on their responsibilities under EU law.

Source: Cyprus Mail (Souzana Psara)

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