Transfer Pricing (TP)

On 30 June 2022, Cyprus enacted an in-depth TP legislation and incorporated the OECD TP Guidelines for Multinational Enterprises and Tax Administrations (OECD TP Guidelines) into the Cypriot Income Tax Law of 2002 (Law 118(I)/2002), as amended. TP is the way tax law permits for the allocation of income to related companies and permanent establishments.

Transfer Pricing (TP) Requirements

There are two requirements for tax residents in the Republic of Cyprus:

  • To submit a summary information table which includes intercompany transactions, general information about the group, the profile of the business and TP method used.
  • To prepare a TP study to justify compliance with the arm’s length principle subject to a small size exemption (do not exceed €750,000 per tax year).
A Guide to Transfer Pricing (TP)

Arm’s length Principle

The arm’s length principle means that: ‘entities that are related via management, control or capital in their controlled transactions should agree the same terms and conditions which would have been agreed between non-related entities for comparable uncontrolled transactions’. This is codified in Section 33 of the Income Tax Law. The TP rules provide for the content of the TP Documentation Files (Local and Master Files) and the Summary Information Table (SIT) as well as introduce the concept of Advance Pricing Agreements (APAs).

A Guide to Transfer Pricing (TP)


There are documentation requirements in relation to TP that apply to all Cypriot tax resident companies, as well as permanent establishments of non-resident companies as from 1 January 2022:

  • Local File: The Local File is applicable for Taxpayers if their dealings with connected persons either exceed (or should have exceeded based on the arm’s-length principle) the amount of €750,000 in aggregate per category of transaction per tax year (e.g., sale/purchase of goods, provision/receipt of services, financing transactions, receipt/payment of IP licensing/royalties, others).
  • Master File:  The Master File shall be prepared by Multinational groups that meet both below requirements:

    • Consolidated revenue exceeding € 750 million.
    • The Ultimate Parent Entity (UPE) or Surrogate Parent Entity of the group is a Cypriot tax resident company.

Upon request by the Tax Department of the Republic of Cyprus, the Local File (and Master File, if applicable) should be made available within 60 days from receiving the relevant request by the taxpayer or by a person approved to act as a representative of the taxpayer.

A Guide to Transfer Pricing (TP)

Summary Information Table (SIT)

The Summary Information Table (SIT) is an additional form that is applicable to all taxpayers engaged in related party transactions, with zero reporting materiality threshold. It must reflect high-level information about the taxpayer’s annual intercompany transactions, including details of the counterparties, category of intercompany transactions entered, and amount per transaction category. The SIT is submitted to the tax authorities on an annual basis alongside their respective Income Tax Return.

A Guide to Transfer Pricing (TP)

Penalties for non-compliance with Transfer Pricing (TP) legislation

Penalties for non-compliance with the submission deadlines for TP Documentation Files and the SIT:

  • Master and Local files:

    • €5,000 (if submitted between 61 and 90 days from the request of the Tax Department)
    • €10,000 (if submitted between 91 and 120 days from the request of the Tax Department)
    • €20,000 (if not submitted or submitted after the 120 days from the request of the Tax Department)

A Guide to Transfer Pricing (TP)

Advance Pricing Agreements (APA)

An Advance Pricing Agreement (APA) is a chosen agreement linking a taxpayer and one or more tax authorities that permits the parties to approve in advance the transfer pricing approach for any given intercompany transaction(s) for a specific time. An APA includes certain criteria and assumptions used in determining the arm’s length pricing of the related transactions for a particular period. Taxpayers may submit APA to the Cypriot Tax Authorities for evaluation and approval. APAs may have unilateral, bilateral, or multilateral applications and in these situations, they will be valid for four (4) years.

Transfer Pricing (TP):  Frequently Asked Questions (FAQ)

The Tax Department of the Republic of Cyprus has released answers to Frequently Asked Questions (FAQ) with reference to Sections 33 and 33C of the Income Tax Law, Regulatory Administrative Act (RAA) 314/2022 and RAA 273/2022, with effect as from 1 January 2022 available here.

Our Tax Practice Portfolio

Our Tax Department has been thriving for over a decade, with our clients seeking our professionals’ advice and assistance in all aspects relating to taxation for corporates as well as individuals, in line with the latest local and international tax developments.

Our clients entrust us with the structuring of their operations in a way that incorporates the applicable tax incentives and ensures their compliance with any and all of their tax obligations and filing of their tax returns. The exceptional quality of our tax professionals is the reason why our clients select us to be their entrusted tax partners.

Contact us today for an initial, complimentary consultation.



Image icon
T: +357 22 021100
F: +357 22 757566
Image icon
Image icon
1 Kinyras Street, Kinyras Tower,
3rd Floor, 1102 Nicosia, Cyprus
Image icon
© ServPRO 2011-2023. All Rights Reserved. Policies