Newsroom
Cyprus has been included on a 42-country list that will bring certain transactions with Greek businesses under closer tax scrutiny. But the decision does not mean Greece has accused Cyprus, or every company based here, of tax evasion.
The list, drawn up by Greece’s Independent Authority for Public Revenue, known as AADE, covers jurisdictions where corporate tax rates are at least 40% lower than the equivalent rate in Greece. The official term is “states with preferential tax regimes,” although such countries are often loosely described as tax havens.
Cyprus appears alongside three other EU member states, Ireland, Bulgaria and Hungary, as well as Albania, the United Arab Emirates, Qatar, Monaco and a number of offshore financial centers.
In practical terms, the decision means that a Greek company making payments to a business registered in Cyprus may have to provide considerably more evidence before those payments can be treated as legitimate expenses and deducted from its taxable income.
An invoice, on its own, may not be enough.
Greek tax inspectors will be looking at whether goods were actually delivered, whether services were genuinely provided, and whether the amount charged makes commercial sense. They may also examine whether the Cyprus-based supplier has a real business presence, rather than existing mainly on paper.
For example, if a Greek company pays a large consulting fee to a Cyprus firm, it could be asked to show who performed the work, what was delivered, why the service was needed, and how the price was calculated.
Contracts, invoices, bank records, proof of delivery, and other supporting documents may all be required.
The burden of proof will fall on the Greek company claiming the expense. If it cannot demonstrate that the transaction was real, routine, and commercially justified, Greek authorities may refuse to recognize the payment as a deductible business cost.
That could leave the company facing a higher tax bill and potentially substantial penalties.
AADE is particularly interested in arrangements through which profits may be shifted out of Greece by presenting them as payments to businesses in countries with lower tax rates. Its auditors will therefore look beyond the paperwork to establish whether there was genuine economic activity behind each transaction.
New digital cross-checking systems are also expected to make it easier for the authorities to identify suspicious, inflated, or potentially fictitious invoices.
For legitimate Cyprus businesses trading with Greece, the decision does not prohibit transactions or automatically suggest wrongdoing. It does, however, make proper records and a genuine operating presence even more important.
Cyprus-based companies may find that their Greek clients ask for more documents, clearer contracts, and additional proof that goods or services were actually supplied.
The classification applies to the 2024 tax year and is based on a tax-rate calculation established under Greek law. Cyprus is listed because its corporate tax regime falls within that mathematical threshold, not because every transaction involving the island is considered suspicious.
