Cyprus New Double Tax Treaties Which Come Into Effect as from 1 January 2018
The following double tax treaties concluded by Cyprus come into effect as from 1 January 2018. All the new treaties are generally based on the OECD Model Tax Convention framework with some modifications.
Ethiopia
The treaty applies to taxes on income as well as on gains from alienation of movable or immovable property. In the case of Ethiopia, the treaty covers the income tax and the tax on mining, petroleum and agricultural activities, whereas, in the case of Cyprus, it covers corporate and personal income tax, defense tax and capital gains tax.
The treaty provides for a 5% withholding tax on:
- dividends
- interest
- royalties
as long as the recipient of the dividends, interest or royalties is the beneficial owner of the income.
Gains from the sale of shares of companies (including shares of property rich companies) are taxed in the country where the seller is located.
Iran
The treaty applies to taxes on income as well as on gains from alienation of movable or immovable property. In the case of Iran, the treaty covers the income tax, whereas, in the case of Cyprus, it covers corporate and personal income tax, defense tax and capital gains tax.
Dividends
The treaty provides for withholding taxes only on dividends at the following rates:
- 5% in case where there is at least 25% participation by a tax resident company,
- in all other cases the withholding tax is 10%.
Interest
There is a 5% withholding tax on interest, as long as the recipient of the interest or is the beneficial owner of the income.
Royalties
There is a 6% withholding tax on royalty payments, as long as the recipient of the royalties is the beneficial owner of the income.
Capital gains
Gains arising from the disposal of shares of immovable property-rich companies are taxed in the country where the immovable property is situated.
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