CYPRUS Law and Practice Contributed by: Marios Palesis and Theodora Charalambous, Kinanis LLC
15. Foreign Payment Restrictions 15.1 Restrictions on Outbound Payments Relating to Uncontrolled Transactions Cyprus does not restrict outbound payments relat - ing to uncontrolled transactions provided they are incurred wholly and exclusively for the production of taxable income. 15.2 Restrictions on Outbound Payments Relating to Controlled Transactions Cyprus does not restrict outbound payments relating to controlled transactions, provided such payments are incurred wholly and exclusively for the production of taxable income and are at arm’s length. 15.3 Effects of Other Countries’ Legal Restrictions Cyprus does not have rules regarding the effects of other countries’ legal restrictions. 16. Transparency and Confidentiality 16.1 Publication of Information on APAs or Transfer Pricing Audit Outcomes Cyprus does not publish information on APAs or TP audit outcomes. As the concept is relatively new, little information is available to publish. 16.2 Use of “Secret Comparables” There is no guidance on prohibiting the use of “secret comparables”. Also, since the relevant legislation is relatively new, at this point the tax authorities do not refer to “secret comparables”.
nies that do not exceed the EUR5 million threshold in aggregate for financing transactions. The safe harbour rates cover the following: • the provision of loans out of own capital; • the provision of loans funded out of financial means; and • the receiving of loans. Furthermore, the Cyprus tax authorities have issued a Circular specifying that the only accepted method for financing transactions is the CUP method. Use of any other method requires explicit prior approval. 12. Co-Ordination With Customs Valuation 12.1 Co-Ordination Requirements Between Transfer Pricing and Customs Valuation Cyprus does not require co-ordination between TP and customs valuation. 13. Controversy Process 13.1 Options and Requirements in Transfer Pricing Controversies The relevant legislation in Cyprus was introduced in 2022; therefore, there is no (or, at most, a limited) TP con - troversy process. A taxpayer can challenge the results of a TP audit through the tax tribunal. The taxpayer is not obliged to pay the tax before applying to court. 14. Judicial Precedent 14.1 Judicial Precedent on Transfer Pricing Cyprus TP legislation was introduced in 2022; there - fore, judicial precedent on TP in Cyprus does not yet exist. As such, UK, EU or other common law jurisdic - tion judicial precedent may be used. 14.2 Significant Court Rulings As TP legislation was only introduced in 2022, there are currently no court rulings.
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