Transfer Pricing In Cyprus: What You Need To Know

  • Jeffrey Brown

Transfer Pricing In Cyprus: What You Need To Know

Transfer pricing is a term that often confuses business owners. In reality, it’t not difficult. It’s just another way of saying how you price transfers of goods or services between your company and related parties. When it comes to transfer pricing in Cyprus, there are certain rules that you need to follow. Failure to do so can lead to hefty penalties by the tax authorities and a risk of being audited for tax fraud. Let’s take a closer look at what this means and why it is so important when operating as a business in Cyprus.


Why Is Transfer Pricing Cyprus Important For Businesses?

In Cyprus, transfer pricing policies are important because they help businesses value transfers of goods and services correctly. This impacts the profitability of the companies involved and how much tax they pay. The guidelines for implementing these policies are different across the world.



What Are The Basics Of Transfer Pricing In Cyprus?

When pricing transfers of goods and services, you need to take into account all related costs, including the costs of production, storage, logistics, and any additional profit. These costs need to be realistic. If you overvalue the price, you run the risk of higher taxes, an audit, and a more vigilant audit by the tax authorities if you have a high risk of committing tax fraud.


Limitations Of Transfer Pricing Rules In Cyprus

Companies that are part of a group of companies are subject to the rules for transfer pricing in Cyprus, which means that they can choose the method of valuing the goods or services transferred between companies, as long as the method chosen is consistent, industry-accepted, and adheres to the arm's-length principle. This means that the seller must charge a price that is comparable to what other companies in the same industry charge for similar services.


Conclusion

In Cyprus, companies that are part of a group of companies are subject to transfer pricing rules, which means that the selling company needs to consider all costs, including profit, when selling to another entity within the group. Failure to do so can lead to hefty penalties by the tax authorities and a risk of being audited for tax fraud.

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