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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.
2026, In The Year — while an invoice can still fix it
| Transaction | So Far | Range (2025) | Contract | Before 31 December |
|---|---|---|---|---|
| Purchase of finished medicines Management accounts to 30 September 2026 (invented) | 0.40% | 1.59% to 2.64% | 2.00% | €182,400 up Suggestion Credit note from Pinewood Street Pharma AG, €182,400 to the contract, 2.00%, on a forecast base of €11,400,000. The defensive minimum: €135,560 to the low edge of the range, 1.59%. Beside the contract (2.00%: €182,400 up), for comparison: to the median, 2.52%: €241,854 up. Tax effect: at the Cyprus rate, to be confirmed by the practice. |
Against last year's range until this year's study is refreshed; the forecast base and the year-to-date result come from the client's management accounts. The written agreement is the starting point (OECD 1.42).
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.
2025, The Year Closed
Purchase of finished medicines
€305,200 up| Working | Value | Source |
|---|---|---|
| Tested party | Pinewood Street Pharma Cyprus Ltd | |
| Target in the agreement or policy | 2.00% | |
| Earned | -0.80% | |
| The range | 1.59% to 2.64% | The target is inside it |
| Base | €10,900,000 | Trial balance: sales of Pharma Cyprus Ltd (Trial balance, Pharma Cyprus Ltd) |
(contract − earned) × base: to the contract, never below it. The adjustment is €305,200 upwards for Pinewood Street Pharma Cyprus Ltd, to 2.00% (suggestion).
Beside the contract (2.00%: €305,200 up), for comparison: to the median, 2.52%: €362,046 up; to the nearest quartile, 1.59%: €260,415 up. Tax effect: at the Cyprus rate, to be confirmed by the practice.
Draft In the 2025 return of Pinewood Street Pharma Cyprus Ltd: a transfer pricing adjustment increasing its taxable profit by €305,200. How an adjustment for a closed year is made in Cyprus is to be confirmed by the practice.
VAT, customs value and withholding on an adjustment are for the team to check. For 2026, the same check before 31 December lets a credit note from Pinewood Street Pharma AG fix it in the books.
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.
Loans To A Director
Loan to a director (Pinewood Street Finance Ltd): interest-free. For the director, any loan or facility from the company is a deemed monthly benefit of 9.00% a year on the balance at each month end, taxed through payroll (ITL s.5(1)(ζ): 9%). For transfer pricing, a finance company lending interest-free is itself the pricing question: lending is its business, so the loan counts (Tax Dept FAQ Q11) and is priced like any other.