Cyprus: local rules

The arm's length rule is section 33 of the Income Tax Law 118(I)/2002 (ITL). Section 33(1) lets the Commissioner add to the profit of a business any profit it lost because of non-arm's length terms with a related business. Companies are related at 25% of votes, capital or income (s.33(3)), and since 1 January 2026 a director who holds 50% of board votes also counts (Law 244(I)/2025). Section 33(5) gives the Cyprus counterparty a matching deduction, and section 33(6) says the OECD Transfer Pricing Guidelines, as amended, may be used to apply and read the rule. The full documentation rules came in with Law 101(I)/2022 from 1 January 2022. The Cyprus tax year is the calendar year (ITL s.2).

Every Cyprus resident company, and every Cyprus permanent establishment, with controlled transactions must file a Summary Information Table (SIT) electronically with its tax return each year (s.33(10)). It must also keep a transfer pricing documentation file, updated each year and ready by the return deadline (Notification KDP 314/2022, para 3). The file has a Master File, only for a Cyprus ultimate or surrogate parent entity of a group, and a Cyprus Local File. The Local File is not needed for a category of controlled transactions that does not exceed EUR 2.5m in the tax year, EUR 5m for goods, or EUR 10m for financing (s.33(9)(a), raised from EUR 750,000 per category from 1 January 2026 by Law 244(I)/2025; the Council of Ministers can change these amounts by decree under s.33(14)). For tax years 2022 to 2025 the law said EUR 750,000 per category, but the Tax Commissioner wrote to professional bodies on 1 February 2024 that EUR 1m (EUR 5m for financing) would be applied. Below the thresholds the Tax Department's Circular 6/2023 requires minimum documentation (a short functional analysis, the method and the arm's length price) and offers optional safe harbours for low value adding services (5% mark-up on cost) and for loans. Files go to the Commissioner within 60 days of a request (s.33(11)), in English or another international language, with a Greek translation on request.

The OECD methods apply through s.33(6) and the Notification (KDP 314/2022 para 7), which ties the arm's length principle to Article 9 of the OECD Model. The Local File must name the most appropriate method and explain why it was chosen. The Commissioner can publish accepted methods and acceptable ranges by notice in the Official Gazette (s.33(13)). Unilateral, bilateral and multilateral advance pricing applications can be made to the Commissioner under s.33C ITL.

Failing to file the SIT is a fixed fine of EUR 500. If the documentation file is not given within 60 days of a request, the fine is EUR 5,000 for days 61 to 90, EUR 10,000 for days 91 to 120, and EUR 20,000 after that or if never provided (Assessment and Collection of Taxes Law 4/1978, s.50Z). A late tax return carries a fixed charge, now EUR 500 for a company with turnover or assets above EUR 1m and EUR 250 for other companies (s.50A), and the Commissioner usually waives it if the return arrives by a published penalty-free date. Late tax is charged 5%, and another 5% after two months. A CbC report that is not filed can be fined up to EUR 10,000 (s.50D).

The Law for Ensuring a Global Minimum Level of Taxation 151(I)/2024 (passed December 2024) applies the IIR to fiscal years starting on or after 31 December 2023, and the Cyprus domestic top-up tax and the UTPR to fiscal years starting on or after 31 December 2024 (art. 61). Groups with revenue of EUR 750m or more, and large domestic groups, are covered. The Top-Up Tax Information Return (TTIR, Form T.D.336) and the notifications (Forms T.D.331 to T.D.334) are due 15 months after the fiscal year end (art. 45(7), art. 47). For the transition year the period is 18 months or 30 June 2026, whichever is later (art. 57). The top-up tax return and payment are due 30 days later (art. 48), and Form T.D.335 is the return for the IIR. For the first fiscal year that starts from 31 December 2023 to 30 December 2024, the Tax Commissioner set 30 November 2026 as the last date for the returns (T.D.335, T.D.336), the notifications (T.D.331 to T.D.334) and the payment, and no fines, interest or charges apply if they are made by then (notice of 27 October 2026, which replaced the 30 September 2026 date in the notice of 15 June 2026).

The company tax return (Form T.D.4) is due by 31 March of the second year after the tax year (15 months) up to tax year 2025, and by 31 January of the second year after from tax year 2026 (Law 243(I)/2025). The Council of Ministers often moves the date by decree. Tax year 2023 was moved to 31 March 2026 (KDP 358/2025) and tax year 2024 to 30 November 2026 (KDP 359/2025). Companies with audited accounts pay the balance of tax by 1 August after the tax year for tax years up to 2025, and by 31 January of the second year after from tax year 2026, the same day as the return (Law 4/1978 s.38(1)(a), as amended by Law 243(I)/2025). CbC reports are due 12 months after the group's year end under the Administrative Cooperation Law 205(I)/2012, art. 7C. The corporate tax rate is 15% from 2026. All filings go through the Tax For All (TFA) portal. Deadlines that fall on a Sunday or public holiday move to the next working day under the Interpretation Law s.31, but a Saturday does not move.