Cyprus introduces Transfer Pricing Legislation

Cyprus introduces Transfer Pricing Legislation

On 30 June 2022 the House of Representatives (Parliament) of the Republic of Cyprus has voted into law the transfer pricing (TP) requirements, through amendments to the Income Tax Law (L.118(I)/2002) and the Assessment and Collection of Taxes Law (L.4/1978), as amended.

The new TP legislation has been published in the Official Gazette of the Republic of Cyprus on 8 July 2022 and will have a retroactive effect from 1 January 2022.

These legislative developments are based on recommendations of the Organisation for Economic Co-operation and Development (OECD) on Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations.


Scope of application

The requirements revolving around TP documentation apply to Cypriot tax resident persons and permanent establishments of non-tax resident entities for certain types of transactions with their related parties (legal and physical persons).


Steps to ensure compliance

Businesses are encouraged to assess the impact of the above legislative amendments on their transactions and business activities and prepare their respective TP policy and internal procedures, where appropriate.

In addition, businesses must prepare the necessary TP documentation files, including the Summary Information Table, as well as the Local File and Master File in cases where:


  • Local File: The taxpayer’s transactions with their respective related parties exceed or would exceed (based on the arm’s length principle) the amount of €750,000 in aggregate per transaction category per tax year.


  • Master File: The taxpayer is either the Ultimate Parent Entity (UPE) or the Surrogate Parent Entity (SPE) and forms part of a Multinational Enterprise (MNE) group with a country-by-country reporting obligation, i.e., with a consolidated revenue of over €750 million.


Non-compliance penalties

The following table summarises the fines that may be imposed in case of non-compliance with TP legislation:

Non-Compliance Description

Penalty (in €)

Late (or absence of) submission of the Summary Information Table


Failure to provide TP documentation (i.e., Local File, or Master File) within the mandatory 60-day timeframe:


–       if submitted between 61st – 90th day


–       if submitted between 91st – 120th day


–       if not submitted or submitted after 121st day



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