Transfer pricing circular:low value transactions

Transfer pricing circular

Overview Transfer pricing circular On 6 July 2023 a new circular was issued by the Tax Commissioner providing further guidance on the applicability of Transfer Pricing (TP) Legislation effective as of 1 January 2022. The clarifying circular specifies the ‘simplification measures’ on categories of controlled transactions that are exempted from the obligation to be documented […]

Amendment of 50% tax exemption on employment income

tax exemption

Overview On 30 June 2023, the amendment of the Cyprus Income Tax Law (‘’ITL’’) relating to Article 8(23A) was published in the Official Gazette of the Republic of Cyprus. Previous Article 23(A) before the amendment Based on the previous Article 23(A) of the ITL, which entered into force from 1st January 2022, a 50% exemption […]

Transfer Pricing update: Termination

Transfer Pricing

Overview of abandoned main circular On 30 June 2017, the Cyprus Tax Authorities (”CTA”) issued circular no.3 in respect of back-to-back financing arrangements. Based on the Circular, Cyprus companies would have the option to either adopt simplification rules (e.g. the recognition of the net profit margin of 2%) subject to justification through functional analysis or […]

Clarifications – Articles 8(21A)

Clarifications in respect of the application of Articles 8(21A) and 8(23A) of the Cyprus Income Tax Law On 1 November 2022, the Cyprus Tax Department of the Ministry of Finance issued the Circular no. 10/2022 in respect of the part exemption from income tax of the remuneration regarding the first employment exercised in Cyprus. The […]

Extension to the deadline tax return (TD1)

Extension to the deadline of the submission of tax return (TD1) and payment of tax in respect of the fiscal year 2021 On 28 July 2021, the Tax Department announced that, in accordance with a decision of the Council of Ministers, a decree will be issued stating that the deadline of submission of the personal […]

Amendments on employment income exemptions

Amendments on employment income exemptions Overview On 15 July 2022, the House of Representatives in Cyprus passed an amendment to the Income Tax Law (“ITL”) in respect of Articles 8(21) and 8(23) of the ITL, providing for a 20% or 50% exemption from income tax for individuals exercising employment in Cyprus. On 26 July 2022, […]

Introduction of New Transfer Pricing Rules as of 1 January 2022

transfer pricing cyprus laptop and coffee

Introduction of New Transfer Pricing Rules as of 1 January 2022 Overview On 30th June 2022, the Cyprus Parliament voted for a number of amendments in relation to the Cyprus Income Tax Law and Assessment and Collection of Taxes Law as well as the issuance of new Regulations in respect of the arm’s length principle […]

Special Defense Contribution – Amendment

Special Defence Contribution (”SDC”) – Amendment on application of reduced rate on interest income Overview On 26 May 2022, the House of Representatives passed amendment to SDC Law which is effective as of 8 June 2022, the date of its publication in the Official Gazette of the Republic of Cyprus. SDC Law amendment The amendment […]

Submission of tax return (TD1) 2021

Tax planning ​

Submission of tax return (TD1) in respect of the fiscal year 2021 Overview On 8 April 2022, the Cyprus Tax Department announced that the tax return for individuals (TD1) in respect of the fiscal year 2021 is now available electronically through taxisnet online system. Obligation for submission a tax return Based on the regulation Κ.Δ.Π. […]

UNSHELL Directive: How is your business affected?

ATAD3 or ‘‘UNSHELL Directive”: How is your business affected? Overview On 22 December 2021 the European Commission published a draft proposal setting out union rules to neutralise the misuse of shell entities for tax purposes, referred to as Anti-Tax Avoidance Directive 3 (“ATAD 3”). The draft proposal is in line with the reflections undertaken at […]