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Cyprus: Proposed increase to Local file thresholds

New thresholds would be raised to €5 million for financial transactions and €1 million for all other categories of controlled transactions

February 2, 2024

The Cyprus tax department on 1 February 2024 published a letter proposing updates to the thresholds for preparing a Local file for the 2022 tax year.

The new thresholds, which apply to Cypriot tax resident persons and permanent establishments (PEs) of non-tax resident entities engaged in controlled transactions, would be raised to €5 million for financial transactions and €1 million for all other categories of controlled transactions. The current threshold is €750,000 for all the categories of controlled transactions.

Therefore, the applicable thresholds for the 2022 tax year for preparing a Cyprus Local file would be:

  • Financial transactions: € 5 million
  • All other categories:  €1 million

The Cyprus tax department has emphasized that entities exempt from the obligation to prepare a Cyprus Local file must still comply with the provisions of Circular 6/2023 and maintain minimum transfer pricing documentation for their controlled transactions.

Read a February 2024 report prepared by the KPMG member firm in Cyprus

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