On 1 February 2024, the Cyprus Tax Department ("CTD")
published a letter updating the thresholds for preparing a Local
File for the tax year 2022.
Currently, in accordance with the provisions of the Income Tax
Law of 2002, as amended, the requirements for preparing a Local
File apply to Cypriot tax resident persons and Permanent
Establishments (PEs) of non-tax resident entities that are engaged
in controlled transactions, i.e., with related parties, during a
tax year, provided that the cumulative amount per category, exceeds
or should have exceeded based on the arm's length principle the
amount of EUR 750,000 (for all the categories of controlled
transactions).
The stakeholders, including the Ministry of Finance, are in
favor of increasing the threshold for the category of financial
transactions for preparing a Local file to EUR 5 million. It should
be noted that for loans the principal amount and accrued interest
should be considered when examining whether the
