As of 1st of January 2022, TP requirements have been enacted in the Cyprus legislation and a TP analysis is now mandatory under the Cyprus Law of transactions between related parties. Section 33(9)(a) of the income Tax Law provides that the aggregate threshold is at arm’s length with a value more than EUR 750,000 p.a. in aggregate per transaction category (i.e. financial transactions, services, goods, PI-related transactions and other)
The law provides for penalties and interest for non-compliance.
As we are in the process of preparation of Financial Statements for 2022, it is recommended that you check about the related parties transactions of your company and consider whether they fall in the scope of the TP requirements so as to perform a TP study.
Should you require any assistance by our team, do not hesitate to contact us. In order to be able to assist you though we will need detailed information of your company’s related parties transactions for the year 2022. In this case, we will need to provide us a fully completed table that will include all transactions with related parties (including both transactions over EUR 750,000 value).
It is clarified that for the purposes of the TP legislation, two companies are considered as related parties if the same person (and its related persons) or a group of persons directly or indirectly:
- Hold 25% of the share capital or voting rights of both companies, or
- Have the right to at least 25% of both companies’ income.
Consequently, a company is also considered as related to a physical person (and its related persons), if that person(s):
- Hold 25% of its share capital or voting rights, or
- Have the right to at least 25% of the company’s income