“Financing companies provide financial services intra-group and their profit is the remuneration for their financing activities,” Vestager said.

“This remuneration has to be in line with the arm’s length principle.”

In a June 30 circular, Cyprus’ Tax Department said the goal is to ensure market rates under the prevalent competitive conditions are applied to intra-group financing activities.

“This issue has been one of our key areas of focus since we started looking into the tax ruling practices of member states,” the commissioner said.

“My services have been in constructive contact with the Cypriot authorities on the issue. I welcome the changes to the Cypriot legislation, which aim to address concerns raised. They also follow similar changes introduced by Luxembourg in January 2017 to their national legislation.”

These, she added, are “very positive developments”.

“In order to achieve that all companies pay their fair share of tax, we also need Member States to be on board and review their national rules and practice,” Vestager said, before warning that passing laws alone isn’t enough.

“At the same time, the Commission cannot prejudge any case-by-case assessment of tax rulings under EU State aid rules and we will of course stay vigilant in monitoring the implementation of the amendments.”

Source: Cyprus Mail