Engagements › Cobalt Bay Resorts › Year-End True-Ups
Year-End True-Ups
Each tested party against its contract and the range: whether an adjustment is suggested, how much, and how it is booked. The suggestion is always to the contract, never below it. The 2025 books are closed, so an adjustment for 2025 goes into the return; for 2026, the same check before 31 December lets an invoice or credit note fix it — to be confirmed by the practice.
Before the books close: each tested party against its target, with the invoice and journal.
2025, The Year Closed
Group management services
Credit note, if the group wants symmetry| Working | Value | Source |
|---|---|---|
| Tested party | Cobalt Bay Resorts Holdings Ltd | |
| Target in the agreement or policy | 5.00% | The policy's mark-up, not yet benchmarked |
| Earned | 5.00% | |
| The range | — | No study for this transaction |
| Base | €647,619 | the cost base implied by the amount and the margin earned |
| Of which shareholder activity | 35.00% | Functional analysis: not a chargeable service (OECD 7.9) |
Only the cost that is not shareholder activity can be charged (OECD 7.9), at the policy's mark-up, not yet benchmarked: €420,952 × 105.00% = €442,000, against €680,000 charged — €238,000 downwards on the fee.
Shareholder activity is the recipient's deductibility problem, not a Cyprus income one. The Cyprus steps: from 2026, stop charging the shareholder share; for 2025, a credit note if the group wants symmetry — what it does to the Cyprus return for a closed year is to be confirmed by the practice; a unilateral cut of the Cyprus tax base is not the route: No downward adjustment is drafted: the arm's length rule provides for profit to be added (ITL s.33(1), a reading), and for persons within Circular 6/2023's simplification measures the Tax Department says it will not adjust downwards (Circular 6/2023 ¶7δ); for a company over the Local File threshold that is to be confirmed by the practice — save the corresponding deduction for a Cyprus counterparty when the Commissioner raises the other side (ITL s.33(5)), or relief through a treaty's mutual agreement procedure after an increase abroad (OECD 4.32). An adjustment made only in the return is a compensating adjustment most countries do not recognise (OECD 4.38–4.39).
Draft Credit note from Cobalt Bay Resorts Holdings Ltd to Cobalt Bay Hotels Hellas S.A., only if the group wants symmetry: "Management services 2025: the shareholder activity share, not chargeable: €238,000."
Draft From 2026: Cobalt Bay Resorts Holdings Ltd invoices only the chargeable cost, at the policy's mark-up until a study supports it.
VAT and withholding on a credit note are for the team to check.
Amounts are computed on unrounded margins; the percentages shown are rounded to two decimals, so a figure may differ slightly from one worked out from them.
Priced By A Rate, No Study
- Brand licence to the hotels: €1,620,000, 4.00% — Group brand policy: 4% of room revenue. No study — rate to be evidenced Licence-agreement search not yet run.
No true-up is drafted without a study: a rate alone does not show what is arm's length.