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Cyprus: Changes anticipated on acceptable profit margins between related companies

26 April 2017

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Maria Nicolaou Zoe Kokoni

The Cyprus tax authorities, taking into consideration the international developments (OECD/G20 initiative – BEPS), have decided to amend the tax regime in relation to profit margins on loans between related parties.

Specifically, it is expected that as of July 1 2017, all loans between Cyprus tax resident companies and their related companies, will now have to be supported by transfer pricing studies. These will have to be prepared by independent experts and be based on the OECD principals. This new rule will affect all the financial transactions between related companies for both tax assessment purposes and for the issuance of tax rulings.

In addition, all tax rulings that have been issued up to June 30 2017 in relation to this subject will become void.

As a result of the above, we strongly advise clients and other interested parties to start reviewing their group structures.

Maria Nicolaou ( and Zoe Kokoni (, Nicosia
Eurofast Taxand Cyprus
Tel: +357 22699222

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