Further to our previous newsfeeds on this, on 1 February 2024, the Cyprus Tax Department published revised thresholds for what concerns the obligation to prepare a Local File for transactions with related parties (known as “Controlled Transactions”).
As per section 33 of the Income Tax Law, a Local File must be prepared by taxpayers if their Controlled Transactions exceed (or should have exceeded based on the Arm’s Length Principle) the amount of €750,000 per annum in aggregate per category of transactions (sale/purchase of goods, provision/receipt of services, financing transactions, receipt/payment of IP licencing/royalties, etc.).
Further to extensive consultations with various stakeholders, it was agreed to increase the above-mentioned threshold as follows:
The increase of the threshold is effective for the tax year 2022.
The provisions of the tax circular regarding the application of simplification measures for taxpayers exempt from the requirement to prepare Cyprus Local File, as covered in our related newsfeed, continue to apply.
