Archive for Chris Damianou

Transfer Pricing And Intra-Group Financial Transactions

Transfer Pricing And Intra-Group Financial Transactions

Christodoulos Damianou, together with colleagues Christos Theophilou and Demis Ioannou of Taxand Cyprus present a case study of how the Cypriot tax authorities use safe harbour rules in determining arm’s-length interest rates.

Transfer pricing has always been a challenging exercise, in particular in regard to intra-group financial transactions. It was not until February 2020 that the OECD eventually published specific guidance on financial transactions, namely the “Transfer Pricing Guidance on Financial Transactions: Inclusive Framework on BEPS Actions 4, 8-10”.[1]

In the context of intra-group loans, to provide administrative simplicity for both the taxpayers and the tax authorities, safe harbour (or safe haven) rules are often used by tax authorities in determining arm’s-length interest rates. Such rules are usually optional (i.e. the taxpayer can elect to either apply the safe harbour rule or follow the country’s domestic transfer pricing guidelines).

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Written by | Posted in Intra-Group Financial Transactions • Transfer Pricing

Greek Government Legislative Initiative: Offers Self-Employed Reduction In Income Tax Rates For The Next 7 Years

Greek Government Legislative Initiative: Offers Self-Employed Reduction In Income Tax Rates For The Next 7 Years

It is widely known that brain drain is the worst threat to a country’s prosperity. The Greek government announced legislative initiative to reverse this phenomenon, to attract foreign investment and to invite foreign nationals to settle and work in Greece. The legislative initiatives also provide for a 50% reduction in income tax for the next 7 years, either if the job is transferred to Greece or if the interested individuals settle as self-employed or even as employees in another professional employment in Greece.

It is well known that financial motivation alone is never enough to decide upon one’s return to a country or even to move to another employer.  The excellent lifestyle, the mild climate along with the working conditions (since white collar personnel can work remotely) play a vital role in such decision making. Moreover, with the crisis now behind Greece and the long-term prospects in front of the country accompanied with political stability, will eventually result in an effective state and an economy that can offer more employment opportunities. Greece is one of the safest countries in the world for the expatriate and his family.

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Written by | Posted in Greek Government Legislation

Cyprus: The EU’s Newcomer For Introducing Transfer Pricing Legislation

Transfer Pricing In Cyprus

It is probable that, while you are reading this article, Cyprus is already the latest European country to introduce transfer pricing legislation in its income tax law with effect from the 1st of January 2021.

This introduction will mark a new era of how Cypriot corporations shall calculate their tax base: transfer pricing, in essence, is a mechanism that divides the overall business profit of a group amongst the various companies.

To date, Cyprus has had no detailed transfer pricing legislation included in its income tax law. The tax law was first introduced in 1941 by the British Colonial Governor in Cyprus (Sir William Denis Battershill) and made no reference to any transfer pricing provisions. It was not up until 2002, when the legislation was amended and a specific “arm’s length” provision was incorporated therein, despite there being no guidance on how to apply it. Further on, in 2017, a detailed transfer pricing circular (based on the OECD transfer pricing guidelines) was issued by the tax authorities governing (only) certain financing transactions.

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Written by | Posted in Transfer Pricing In Cyprus

Greece Offers 50% Reduction In Income Tax Rates

Greece Offers 50% Reduction In Income Taxes

It is widely known that brain drain is the worst threat to a country’s prosperity. The Greek government announced legislative initiative to reverse this phenomenon, to attract foreign investment and to invite foreign nationals to settle and work in Greece. The legislative initiatives also provide for a 50% reduction in income tax for the next 7 years, either if the job is transferred to Greece or if the interested individuals settle as self-employed or even as employees in another professional employment in Greece.

It is well known that financial motivation alone is never enough to decide upon one’s return to a country or even to move to another employer.  The excellent lifestyle, the mild climate along with the working conditions (since white collar personnel can work remotely) play a vital role in such decision making. Moreover, with the crisis now behind Greece and the long-term prospects in front of the country accompanied with political stability, will eventually result in an effective state and an economy that can offer more employment opportunities. Greece is one of the safest countries in the world for the expatriate and his family.

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Written by | Posted in Eurofast • Greece • Tax Rates

EU Tax News: Recent Tax Developments In Europe

Recent Tax Developments in Europe

Despite COVID-19, the international tax environment continues to transform.

Has your organization updated its method of operation to comply with the new requirements?

The EU Anti-Tax Avoidance Directive (“ATAD”) contains five legally binding anti-abuse measures implemented by most Member States against common forms of aggressive tax planning. Member States that have applied such measures shall provide a minimum level of protection against corporate tax avoidance throughout the EU, whilst at the same time ensuring a fairer and more stable environment for businesses.

1.Interest limitation

In order to discourage the artificial shifting of debt arrangements designed to minimize taxes. “ATAD” requires member states to implement measures limiting the tax deductibility of interest on debt, using a fixed percentage.

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Written by | Posted in EU Tax Avoidance Directive (ATAD)