The Commissioner of Taxation with Circular 1/2023, informs that the provisions of Interpretive Circulars No.3 and No.5 relating to “back-to-back” financing arrangements are retroactively terminated as of 31 December 2021.
In that respect as from 1/1/2022, Companies can not apply the simplification measures on the intra-group “back-to-back” financing transactions (taxable profit margin of 2%).
This is in line with the new Law that is applicable as from 1/1/2022 where all intra-group transactions of any nature must be executed at an arm’s length basis. Further than that if the transaction per activity exceeds EUR750k per annum, the Company has an obligation to prepare a transfer pricing study and a local file.
We remain at your disposal for any clarifications and assistance on the matter and or the preparation of Transfer Pricing Study.
For more details, please contact:
George Yiallourides
Managing Director
T: +357 25 443132
E: yiallourides@ayca.com.cy
Ioannis Charalampous
Tax Manager
T: +357 25 443132
E: ioannis@ayca.com.cy