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CYPRUS TAX · TRANSFER PRICING · FINANCING

Cyprus financing transactions table illustrated by two office buildings connected by a glass bridge.

Cyprus Financing Transactions Table: Who Must File From 2026?

Cyprus financing transactions table rules apply from the 2026 tax year to taxpayers whose controlled financing transactions exceed, or would exceed on arm’s length terms, the applicable threshold.

By Grigoris Aivazidis · Lawyer, AVZ Law Office · Legal Briefing

A Cyprus company may have several loans with connected parties, none of which seems large on its own. The new filing obligation requires the company to consider the financing category as a whole and, where the conditions are met, disclose the relevant arrangements in a prescribed table.

The table is drawn from the Cyprus Local File and is submitted electronically with the Summary Information Table. It asks for more than a list of balances. The terms, interest and comparability analysis supporting the financing must also be considered.

Who must file the Cyprus financing transactions table?

The table applies to persons within the Cyprus transfer pricing framework whose controlled financing transactions exceed, or would exceed under the arm’s length principle, the threshold in Article 33(9) of the Income Tax Law. For tax year 2026, the relevant financing-category threshold is €10 million.

The test concerns the aggregate relevant financing category, not each loan in isolation. A Local File obligation in a different category does not by itself establish an obligation to file the financing table.

Does each loan have to exceed €10 million? No. Once the threshold is exceeded, an individual reportable financing transaction can be included even if that transaction is below the threshold on its own.

How is the €10 million threshold calculated?

For loans, the expert advice received explains that the maximum outstanding balance during the tax year is used, consisting of principal and interest charged but not paid. The closing balance alone may therefore understate a loan that was larger earlier in the year.

Controlled transactions are assessed using their absolute values for the financing category. Relevant loans granted and received are added rather than simply netted against one another. Trade and other balances of a financing nature also require attention. An ordinary trade balance that is not of a financing nature should be distinguished from an arrangement that, on its facts, provides financing.

There are specific exclusions and conditions. For example, the Tax Department’s guidance on certain advances to individual directors, shareholders and their close relatives should be checked against the facts and the company’s taxable activities before a balance is left out.

Which transactions appear in the table?

The guide identifies loans receivable and payable, trade receivables and payables of a financing nature, and other receivable and payable balances of a financing nature. They are recorded where, after accurate delineation, their arm’s length remuneration is determined through an interest rate.

The actual terms and conduct matter. A balance called a trade payable in the accounts may require closer examination if its real economic character is financing.

Are back-to-back financing arrangements included?

They can be. Loans received and loans granted are among the categories identified in the guide. When the filing threshold and other conditions apply, both legs of a back-to-back arrangement should be assessed against the reporting criteria.

The Tax Department’s Circular 7/2023 addresses arm’s length pricing for back-to-back financing. It is separate from the new table. For qualifying taxpayers outside the Local File obligation, Circular 6/2023 sets out simplification measures, and Circular 5/2026 revised certain financing rates from 2026.

What about interest-free shareholder loans?

The answer can differ depending on which side of the loan the Cyprus company occupies. The expert has advised that the relevant transitional FAQ treatment concerns the borrower, while a Cyprus lender providing an interest-free loan to a connected party remains subject to the arm’s length rules.

Published summaries of FAQ 25 report that qualifying interest-free related-party payables are excluded from the borrower’s financing-threshold calculation and Summary Information Table for tax year 2026. Eligibility and the precise terms of the current FAQ must be checked for the particular loan. This treatment should not be assumed to apply to a loan receivable.

A Cyprus lender should assess the loan against the arm’s length rules and, where the relevant requirements are met, its threshold, Summary Information Table and financing-table treatment. The absence of contractual interest does not itself settle the transfer pricing analysis.

Are guarantees and cash pooling included?

They are not entered in the Financing Transactions Table. The guide expressly excludes explicit guarantees and cash-pooling arrangements from that table.

The threshold question is separate. The guide gives an example in which an explicit financial guarantee that meets the benefit test contributes to the financing category exceeding the threshold, while the information entered in the new table concerns the loan receivable. Financial guarantees may also need to be reported in the Summary Information Table.

The expert could not verify from published material the amount used to value a guarantee for the threshold. The appropriate calculation should therefore be checked for the specific arrangement before the threshold is assessed.

What must be disclosed?

The guide identifies the basic financing terms, balances and interest for the tax year, and the results of the comparability analysis supporting the relevant arm’s length interest rate, spread or margin. Depending on the transaction and template fields, this can require the underlying credit assessment and benchmarking evidence.

Reconcile the table to the agreements, accounting balances, Summary Information Table and Local File. Differences between a signed agreement and actual conduct should be investigated before submission.

How is the table submitted and reviewed?

The prescribed Tax Department Excel template is used to prepare the table. It is submitted electronically through Tax For All as an attachment to the Summary Information Table. A separate table is required for each tax year in which the obligation arises.

The information forms part of the Local File and is subject to the applicable quality assurance review. The Tax Department’s general Local File guidance states that the reviewer must hold a practising certificate from ICPAC or another recognised body of auditors in Cyprus. The expert identified an ICPAC practising certificate for the table review. Confirm the reviewer’s eligibility and the current filing instructions before submission.

The Summary Information Table is due by the relevant income tax return filing deadline. Separate announcements may set or extend deadlines. The expert had not identified a separate table deadline for 2026.

A simple example

Assume a company has a reportable €6 million loan receivable and a reportable €5 million loan payable during the tax year. If those figures represent the relevant amounts under the threshold rules, their combined absolute value is €11 million. Neither loan has to exceed €10 million on its own for the category threshold to be crossed.

This example is illustrative. The actual calculation requires the relevant peak balances, applicable exclusions, connected-party status and arm’s length test to be checked. It does not establish how a guarantee is valued.

What if the threshold is not exceeded?

A company below the financing Local File threshold does not file the new table solely because it has a related-party loan. This does not remove the arm’s length principle or other obligations.

Subject to the applicable rules and exceptions, the Summary Information Table may still be required. The company should also consider the minimum documentation under Circular 6/2023 or the conditions and documentation for any applicable simplification measure. Safe harbours apply only where their conditions are satisfied.

Frequently asked questions

No. The financing-category threshold and other reporting conditions must be assessed.

The expert explains that relevant transactions are aggregated by absolute value, rather than simply netted.

It can, if the overall category exceeds the threshold and the loan meets the guide’s reporting criteria.

No. The applicable treatment can differ for a Cyprus borrower and a Cyprus lender. Check the current FAQ and the facts.

They can be, where the threshold and the guide’s criteria are met. Each relevant leg should be assessed.

No. The guide excludes them from that table, although they may remain relevant to the threshold and other reporting.

The guide excludes cash-pooling arrangements from the table. Other obligations may still require review.

It is a separate prescribed table submitted as an attachment to the Summary Information Table when required.

Yes, for each tax year in which the obligation applies.

Yes. The table’s information forms part of the Local File and is subject to the applicable quality assurance requirements before submission.

No. The arm’s length principle and other documentation or reporting duties may still apply.

Review related-party financing during the tax year, so that maximum balances, agreements, credit evidence and the review timetable can be identified before filing.

Sources and legal notice

This article refers to the Tax Department’s Financing Transactions Table guide, its Local File quality assurance guidance, simplification measures and Summary Information Table guidance.

Grigoris Aivazidis, Lawyer, AVZ Law Office. This article is general information and does not constitute legal or tax advice. The correct treatment depends on the facts and applicable law.

For assistance reviewing related-party financing and coordinating transfer pricing documentation, contact AVZ Law Office.