Timely Report Transactions Between Your Related Companies to Avoid Fines and Additional Taxes

Dear Valued Client, Dear Associates,

We are writing to inform you of a critical requirement under Cyprus taxation laws regarding transactions between related companies.

Mandatory Declaration of Related Company Transactions and Associated Penalties

If your company is involved in transactions with related parties, whether between two Cypriot companies or between a Cypriot and a foreign company, you must prepare and submit a Summary Table of Information to the Cyprus Tax Department. This table must summarize such transactions and be submitted electronically along with your company’s annual tax return.

The declaration of transactions with related parties is mandatory for all transactions, including negligible ones.

Urgent Deadline: For the year 2022, the deadline for submission is November 30, 2024. Non-compliance will incur a penalty of five hundred euros (€500) from the Cyprus Tax Department.

Transactions to be Reported: Ensure your Summary Table includes:

  1. Financing transactions (balances, monetary facilities)
  2. Invoicing of goods
  3. Invoicing of services
  4. Invoicing of intellectual property rights

A company or individual is considered related if they directly or indirectly hold 25% or more of the voting rights or capital of another business, or if they hold 25% or more of the voting rights or capital of two businesses that transact with each other.

Ensure Compliance and Proper Documentation: The Cyprus Tax Department may impose additional taxes if it finds that transactions between related parties are not conducted on a commercial basis. It is crucial to ensure that all transactions are commercially justified and properly documented.

Make sure to have:

  1. A brief functional analysis (functions, assets, risks)
  2. A description of the business’s operational profile
  3. Justification for the chosen transaction pricing method
  4. Supporting documentation for transaction pricing

Act Now to Avoid Penalties! Contact us immediately if you have any questions or need assistance with Cyprus transfer pricing compliance. Our team is ready to help you navigate these requirements and ensure full compliance.

Contact Us:

Tel. +357 22 340000

Email: [email protected]

The authors expressly disclaim all and any liability and responsibility to any person, entity, or corporation who acts or fails to act as a consequence of any reliance upon the whole or any part of the contents of this publication.

Accordingly, no person, entity, or corporation should act or rely upon any matter or information as contained or implied within this publication without first obtaining advice from an appropriately qualified professional person or firm of advisors, and ensuring that such advice specifically relates to their particular circumstances.