Cyprus adds financing table and revises transfer-pricing safe harbours

From tax year 2026, an affected taxpayer must submit the Financial Transactions Table electronically through Tax For All as an attachment to its Summary Information Table of Controlled Transactions. The requirement applies to persons within Article 33(7) of Income Tax Law N.118(I)/2002 where aggregate controlled transactions in the financial-transactions category exceed, or would exceed under the arm's-length principle, the threshold in Article 33(9).^[1][2]

The table forms part of the Local File

The guide treats the table as part of the Cyprus Local File. It captures the basic terms of each financing transaction, year-end balances and interest amounts, and the results of the supporting comparability analysis, including the arm's-length rate, spread or margin. The category-wide aggregate determines whether filing is triggered. Once the threshold is crossed, all reportable financial transactions for that tax year must be included, even where an individual transaction falls below the threshold.^[1][2]

The covered population includes receivable and payable loans, trade balances that have a financing character and other financing receivables or payables. Explicit guarantees and cash-pooling arrangements are excluded from this table. Before filing, the table is subject to the quality-assurance audit required by Regulation 3(3) of Regulatory Administrative Act 273/2022, and a separate table is prepared for each tax year.^[2][4]

Circular 5/2026 revises simplified financing returns

Circular 5/2026 separately updates the percentages available under Circular 6/2023 for eligible persons exempt from maintaining a Cyprus Local File. For debt-funded related-party lending, the minimum pre-tax return is 0.5% where the Cyprus entity does not control the financial risk and lacks capacity to bear it, and 2% otherwise. Equity-funded related-party lending uses the borrower country's ten-year government-bond yield plus 2.25%, while related-party borrowing used in the business is capped at the Cyprus ten-year government-bond yield plus 1.75%. The 5% mark-up for qualifying low-value-adding services is unchanged.^[3]

Groups should keep the two measures distinct

The new table is a Local File filing requirement for financial transactions above the statutory threshold; the revised percentages are simplification measures for eligible taxpayers below the Local File threshold. Treasury teams should map financing balances by Cyprus entity, reconcile them with the Summary Information Table and Local File, document risk control and financial capacity before adopting a simplified return, and build the prescribed quality-assurance review into the filing timetable.^[1][2][3][4]