Transfer Pricing

Overview

Transfer Pricing Cyprus: More than risk management

Commercially, a business can adapt its pricing policies to meet both the legal and economic requirements in its country of operation. Operationally, a restructure can improve efficiencies and drive business performance. Taxand’s global team of dedicated experts helps you to approach transfer pricing and business restructuring not merely as a matter of risk management but also as a highly effective international tax planning tool, supporting documentation requirements, effecting business restructuring arrangements, and supply chain value creation.

Increasing efficiency, reducing your tax rates

Good transfer pricing policies and restructuring arrangements can help increase efficiency and reduce effective tax rates. At Taxand we remain continually apprised of the latest transfer pricing regulations, business restructuring arrangements, supply chain value creation, intangible asset valuation techniques, and routinely carry out robust economic analyses to support pricing policies and maintain strong, productive relationships with local tax authorities. Moreover, we maintain deep knowledge of advanced transfer pricing optimisation and business restructuring approaches—and adapt those approaches to meet real-world business constraints.

We recognise that for international business restructurings, transfer pricing is a core component to ensure that a robust and substantive business model is implemented. In addition to offering core transfer pricing and business restructuring services, Taxand offers specialist traditional transfer pricing expertise as well.

Whether you are establishing centralised functions, reshaping operational flows; require support to satisfy documentation requirements in multiple jurisdictions or assistance with advance pricing agreements; tax advice associated with intangible asset valuations, business restructuring or dispute resolution, Taxand has the capacity, experience and knowledge to meet your needs. View Taxand’s Transfer Pricing Advisors in Cyprus

Transfer Pricing Cyprus Services

Global design and value chain optimisation services
• Risk management
• Intellectual property tax management
• Global Restructuring
• Tax leakage minimisation

Tax optimised valuation services
• Intangible assets valuation
• Assessment of arm’s length royalty rates

Dispute resolution services
• Audit support
• Negotiation of mutual agreements and arbitration procedures
• Expert testimony

Advance pricing agreement services
• Unilateral bilateral and multilateral Advance Pricing Agreements
• Negotiation with relevant tax authorities

Documentation services
• Global, regional and local documentation
• Transfer pricing documentation related to goods, services and intangibles
• Economic analyses including benchmarking studies
• Reconciling actual transfer pricing position and defensive policies

FAQ

1. When are the new Transfer Pricing documentation compliance obligations effective?

Effective as of o1 January 2022 and arm’s length principle may be applied and interpreted in accordance with the OECD Transfer Pricing Guidelines as amended from time to time.

2. Who is in-scope?

(1) Cyprus tax resident persons; and (2) permanent establishments of non-resident persons situated in Cyprus, engaged in “Controlled Transactions” (main rule of the law is when one legal entity participates in the share capital of another legal entity through the direct or indirect holding of share of at least 25%, the two parties are considered related parties).

3. What is-scope?

Filing obligations of the controlled transactions on an annual basis:
I. Cyprus Local File (submitted within 60 days upon request);
II. Master File (if relevant); and
III. Summary Information Table (submitted together with the tax return).
* Small size exemption applies when the controlled transactions cumulatively, per category (e.g. services, goods, financial transactions, do not exceed €750,000 per tax year.

4. Transfer pricing documentation compliance obligation deadlines?

The Transfer Pricing Study and the summary information table for a particular year should be prepared no later than the due date for submitting the taxpayer’s Income Tax Return for that year.

5. Transfer pricing documentation compliance obligation penalties?

• In the event of late submission of the summary information table, a five hundred euros (€500) fine is imposed.
• In case the documentation is not made available to the Tax Commissioner within 60 days from the notification of a request, a fine of five thousand euros (€5,000) is imposed,
• If it is not made available from the sixty-first (61st) day until the ninetieth (90th) day, a fine of ten thousand euros (€10,000) is imposed.
• If it is not made available at all or made available after the ninetieth (90th) day, a fine equal to twenty thousand euros (€20,000) is imposed.

6. Who is eligible to prepare a transfer pricing study?

A person who holds a Practicing Certificate from the Institute of Certified Public Accountants of Cyprus needs to perform a quality review of the Cyprus Local File noted above.

7. Does the new legislation provide for an Advance Pricing Agreement procedure?

Yes, and the Advance Pricing Agreement decision may be applicable for a maximum term of four years.