As Cyprus is in the early stages of adapting the Transfer Pricing specified compliance rules, it becomes imperative to refine and optimize them, ensuring comprehensive tax basis coverage while minimizing burdens on taxpayers.
In this context, on February 1, 2024, the tax authority of Cyprus has revised the thresholds for intra-group transactions, setting them at 5,000,000 Euros for financial transactions and 1,000,000 Euros per category for other transactions including goods, services, and intellectual property, etc. These adjustments are applicable for the tax year 2022 onwards.
It is essential to note that Circular 6/2023 is active and is mandating a form of documentation for intercompany transactions regardless of meeting the stipulated thresholds. Moreover the Circular includes specific safe harbour rates for financing transactions and low added intra-group services. Taxpayers who will opt to use simplification measures and safe harbour rates for selected transactions, should also meet DAC 6 reporting requirements.
Moreover, every Cypriot entity engaged in intra-group transactions is obligated to prepare and submit a Summary Information Table (SIT) alongside their tax return. The SIT should encompass company details, transaction types and amounts, as well as basic information about counterparties and their tax residency.
Drawing from our extensive experience in Transfer Pricing across various jurisdictions, we anticipate further amendments and enhancements to Transfer Pricing regulatory framework in Cyprus. For instance, in jurisdictions like Greece and Poland, the SIT extends to specifying the documentation method employed.
In conclusion, these updates underscore Cyprus’s commitment to align its Transfer Pricing regulations with international standards, promoting transparency and compliance within the realm of intercompany transactions.
Our team of experts stands ready to provide tailored solutions to meet your Transfer Pricing needs.
Do not hesitate to contact our Transfer Pricing team at tp@privelpartners.gr.
