Transfer Pricing Rules in Cyprus – Guidance by Tax Authorities

Further to our previous newsfeed on this, the Cyprus Tax Department issued a notification (the Notification), providing guidance related to the Transfer Pricing (TP) documentation requirements.

The Notification provides guidance on the Master File, the Local File and the Summary Information Table. The content requirements are largely in line with the recommendations of the Organisation for Economic Co-operation and Development on Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (OECD TP Guidelines).

Master File

In accordance with OECD TP Guidelines, the Master File must contain standardized and high-level information relevant for all group members of a multinational enterprise (MNE), including an overview of the group’s business and its overall transfer pricing policies. It should also cover the global allocation of income and economic activity in order to assist tax administrations in evaluating the presence of significant TP risk.

The Notification provides that the Master File shall include the following information:

1.    Organizational structure including the group structure and jurisdiction of incorporation and tax residence of each group entity

2.    Description of the multinational enterprise (MNE) business including the following:

  • Important group business drivers
  • Description of the supply chain for the group’s largest products/services
  • List of important service agreements between MNE group companies
  • Description of main geographic markets for the group’s products and services
  • Brief functional analysis for the group (e.g., key functions performed, important risks assumed, and important assets used)
  • Important business restructurings

3.    Intangible Assets

  • Description of the group’s overall strategy on intangible property development, ownership and exploitation including research & development (R&D) functions
  • List of intangibles that are important for TP purposes and their legal owner
  • List of important intragroup agreements relating to intangibles,
  • A general description of the group’s TP policies related to R&D and intangibles
  • A general description of any important intragroup transfers of interests in intangibles

4.    Intercompany financial activities

  • A general description of how the group is financed
  • Identification of the entities of the group, which provide a central financing function for the group
  • A general description of the MNE’s general TP policies related to intragroup financing arrangements

5.    Financial and tax position

  • MNE’s annual consolidated financial statements (if prepared for any other purpose)
  • List and brief description of the group’s existing unilateral Advance Pricing Agreements or other tax rulings relating to the allocation of income among countries


Local File

Based on the same Guidelines mentioned above, the Local File should cover material transactions of the local taxpayer. It provides more detailed information (compared to the Master File) on intra-group transactions and documents how the taxpayer has complied with the Arm’s Length Principle on TP transactions.

The Notification provides that Local File shall include the following information:

Group information

A general description of the group’s activities/operation and group’s organizational structure including the group structure and jurisdiction of incorporation and tax residence of each group entity

Local entity

  • A detailed description of the management structure of the local entity, a local organization chart, and a description of the individuals to whom local management is accountable to and the jurisdiction(s) in which such individuals maintain their principal offices
  • Detailed description of the business and business strategy pursued by the local entity, indicating any changes compared to the prior year
  • A detailed description of any group business restructurings or intangible transfers in relation to or affecting the local entity, in the present or previous year
  • List of key competitors

Controlled transactions

  • Detailed description of the controlled transactions including:
    • A description of the nature of the controlled transactions (i.e., sale of goods, provision of services, financial transactions, licences of intangibles, etc.) and the context in which such transactions take place
    • The amount of intragroup transactions for each category of controlled transactions involving the local entity (i.e., payments and receipts for products, services, royalties, interest, etc.) broken down by affiliated counterparty

  • Identification of associated enterprises involved in each category of controlled transaction and the relationship between them
  • Copies of intercompany agreements relating to the controlled transactions
  • Analysis and documentation for each category of controlled transactions, which shall include:
    • A detailed comparability and functional analysis of the local entity and relevant associated enterprises indicating any changes compared to prior years
    • An indication of the most appropriate transfer pricing method and the reasons for selecting that method
    • An indication of which associated enterprise is selected as the tested party, if applicable, and an explanation of the reasons for this selection
    • A summary of the important assumptions made in applying the transfer pricing methodology
    • If relevant, an explanation of the reasons for performing a multi-year analysis
    • A list and description of selected comparable uncontrolled transactions, if any, and information on relevant financial indicators for independent enterprises relied on in the transfer pricing analysis
    • A description of any comparability adjustments performed
    • A description of the reasons for concluding that relevant transactions were priced on an arm’s length basis based on the application of the selected transfer pricing method
    • A summary of financial information used in applying the transfer pricing methodology
    • A copy of existing unilateral and bilateral/multilateral advance pricing agreements (APAs) and other tax rulings in which the Cyprus Tax Department is not involved and which are related to controlled transactions of the local entity

Financial information

  • Annual audited financial statements of the local entity for the fiscal year concerned
  • Information and allocation schedules showing how financial data from the financial statements is used for the determination or the transfer pricing documentation of the controlled transactions
  • Information and allocation schedules showing how the financial data of the comparables are used in applying the transfer pricing method and how it may be tied to the annual financial statements
  • Explanation of how the TP results are used for the purposes of determining the tax base of the local entity


Summary Information Table (SIT)

The SIT is an additional TP form that must contain high-level information on related party transactions, including details of the counterparties, their jurisdiction of tax residency, the category of intercompany transactions entered into, as well as their value. It is noted in the Notification that the SIT should not be considered as a complete and extensive documentation.


Other Matters


Both the Master File and the Local File must be prepared by the Income Tax Return submission deadline for the respective tax year, which is 15 months from the end of the tax (and calendar) year. They must be made available by the taxpayer at any time after the preparation deadline and they must be submitted to the Tax Department within 60 days of a relevant request.

The SIT must be prepared on an annual basis and should be submitted to the Tax Department together with the Income Tax Return, as per the deadline mentioned above.


The TP Documentation Files must be retained for a period equal to that as per the relevant provisions regarding maintaining books and records, which is six years.


The Master File and the Local File shall be available in either hardcopy or electronic format in an internationally accepted language, preferably in English. Upon request a taxpayer is obliged to translate in Greek the TP Documentation Files within 60 days.

Frequency of documentation updates

The TP Documentation Files can be used for subsequent years as long as they are updated in order to reflect any significant changes of the market conditions that may impact the information and data included therein.

Effective Date

The new provisions are effective from tax year 2022 onwards.

View all news