Search News and Articles
Guidance on Margins for Intermediary Financing Vehicles
Cyprus tax legislation does not contain specific provisions relating to the thin capitalization of companies, such as limits on debt-to-equity ratios. Therefore, a Cyprus holding company may be financed by loans without the risk of interest that is paid at arm's length to its parent company being disallowed for tax. However, in order to demonstrate that interest is charged on an arm's-length basis, it is important to have an adequate margin between the rate charged to the recipients of the funds on the one hand and the rate paid to the provider of the finance on the other.
This article was first published in International Law Office (ILO). www.iloinfo.com
For more information please visit www.neocleous.com