Update on the New Transfer Pricing Framework
In relation to our previous newsletters on the New Transfer Pricing Documentation requirements (dated August 2022, which can be found here) and the Termination of Intra-Group Financing Transactions Circular (dated February 2022, which can be found here), we would like to provide you with an update on the following matters:
Frequently Asked Questions:
The Cyprus Tax Department has issued FAQs and clarifications related to the newly introduced framework. The FAQs cover the application of Articles 33 and 33C of the Income Tax Law, as well as Regulation 314/2022 and Regulation 273/2022, effective from 1st January 2022.
The FAQs and clarifications cover the following matters:
Controlled transactions to be included in the Local File
Threshold concerning rental income
Aggregation of purchases and sales
Year of reference concerning the Summary Information Table
The relevant category for guarantees
Updating of benchmarking studies concerning intra-group loans
Responsibility for completion and submission of the Summary Information Table
Abolition of the June 2017 back-to-back circular
Threshold concerning financing activities
Balance for the purposes of determination of the threshold for financing activities
Loans and monetary facilities granted to a company’s physical persons directors or shareholders and their close relatives.
Summary Information Table
The taxpayer is responsible for completing the Summary Information Table, which should be submitted by the taxpayer’s statutory auditor or tax consultant. The table should be completed by all taxpayers with reference to each tax year and submitted electronically by the submission deadline of the underlying tax year’s Corporate Income Tax Return (TD4).
The table includes summarized information about related party transactions separated into 5 categories. The table should be completed where the underlying controlled transactions of each category exceed €750,000 or shall exceed €750,000 on the basis of the arm’s length principle. The categories are:
Goods (sales and purchases)
Services (provision and receipt)
IP and intangibles (Sales/provision and purchases/receipt)
Financial transactions (provision and receipt)
Other Transactions (Sales/provision and purchases/receipt)
How can we help?
We are available to provide assistance with the preparation of files and relevant filings, and to clarify any queries you may have.