Transfer Pricing in Cyprus: Key Updates

Updates to Transfer Pricing Rules in Cyprus

Important amendments have been introduced to Cyprus tax legislation regarding Transfer Pricing (TP). The changes were made to the Income Tax Law No. 118(I)/2002, Article 33, and affect documentation and reporting obligations for controlled transactions.

New thresholds for Local File preparation

The obligation to prepare detailed transfer pricing documentation (Local File) applies when the volume of controlled transactions with related parties during a calendar year exceeds the following thresholds:

• €10,000,000 — financial transactions (loans and borrowings)

• €5,000,000 — sale or purchase of goods

• €2,500,000 — services, intellectual property, and other transactions

While the thresholds for documentation have been revised, the requirement to disclose all controlled transactions remains unchanged.

Mandatory reporting: Summary Information Table (SIT)

Regardless of whether the above thresholds are exceeded, taxpayers are required to submit the Summary Information Table (SIT) on an annual basis.

Important:
The SIT must be filed for all controlled transactions without exception, even where the transaction amount is as low as €1.
Transactions that do not meet the Local File threshold must still be disclosed in the SIT.

Deadline for submission of the SIT for the 2024 tax year

According to the current regulations, the deadline for submitting the SIT for the 2024 reporting year is 30 November 2026.

Liability and penalties

Cyprus tax legislation предусматривает significant penalties for non-compliance with Transfer Pricing requirements:

• Failure to submit or late submission of the SIT — €500 (fixed penalty)

• Failure to provide the Local File upon request by the tax authorities (within 60 days) — penalties ranging from €5,000 to €20,000, depending on the length of the delay

Timely compliance with TP requirements helps reduce tax risks and avoid penalties.

Note: The content of this article is relevant at the time of its first publication. It is intended to provide general information on the topic and does not constitute legal advice. We recommend seeking professional advice regarding your specific matter before taking action based on the information presented. For more information or consultation, please contact our tax experts by email at contact@mainpartnertrust.com

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