In response to recent developments by the Cyprus Tax Department, Transfer Pricing regulations are undergoing significant changes, as per the circular issued on February 1, 2024. The Transfer Pricing (TP) law, effective since January 1, 2022, encompasses Related Parties Transactions (RPT) exceeding €750,000 per category, imposing adherence to the ‘arms-length’ principle.
There is currently a proposal from the Ministry of Economics and stakeholders to raise the threshold for ‘financing’ RPT to €5,000,000 and for other RPT categories to €1,000,000, pending parliamentary approval, causing a delay in official implementation.
As an interim measure, the Cyprus Tax Department has set the following thresholds for the financial year 2022: €5,000,000 for transactions falling under the ‘financing’ category, and €1,000,000 for all other Related Parties Transactions categories. In other terms, for the fiscal year 2022, Local File (LF) submission is mandatory only if RPT surpasses the specified thresholds.
These changes underscore the importance for businesses to stay informed and seek expert guidance for compliance in this evolving regulatory landscape.
Eurofast professionals in Cyprus offer comprehensive tax compliance services designed to optimize your financial operations, including the proficient management of Related Parties Transactions. For further guidance and nuanced expertise, reach out to us at nicosia@eurofast.eu.
Nicholas Marcou
Corporate Accountant
Eurofast Nicosia
nicosia@eurofast.eu