Tax updates in Cyprus

As from 1st of January 2014, 4 new agreements for the avoidance of double taxation (DTA) between Cyprus and 1) Ukraine, 2) Finland, 3) Estonia, 4) Portugal have come into force.

All of the new agreements follow the OECD Model Convention.

The Agreement with Ukraine replaces the agreement between Cyprus and the ex USSR, which has been adopted by Cyprus and Ukraine following the dissolution of USSR. You can read more information about the changes of the DTT at http://yiangou.com.cy/news-read/81

The DTA between Cyprus and Finland

The main provisions of the DTA and the applicable withholding tax rates are:

  • Permanent establishment: any building site, a construction, assembly or installation project or a supervisory activity connected therewith constitutes a permanent establishment only if such site, project or activity lasts for a period of more than 12 months.
  • Dividends: 5% withholding tax if the beneficial owner is a company, holding at least 10% of the voting power of the capital of the company paying the dividend or 15% in all other cases.
  • Interest and Royalties: nil withholding tax
  • Capital gains: Gains from the disposal of immovable property, including shares or other corporate rights in a company whose assets are more than one-half consisting of immovable property situated in the other state are taxable in the other state. Gains from the disposal of any other type of shares are taxed in the country of which the seller is resident.  

The DTA between Cyprus and Estonia

The main provision of the DTA and the applicable withholding tax rated are as below:

  • Permanent establishment: any building site, a construction, assembly or installation project or a supervisory or consultancy activity connected therewith constitutes a permanent establishment only if such site, project or activity lasts for a period of more than 12 months.
  • Dividends, Interest, Royalties: Nil withholding tax
  • Capital Gains: Gains from the disposal of immovable property, including shares or comparable interests deriving more than 50 per cent of their value from immovable property situated in the other Contracting State, may be taxed in that other State. Gains from the disposal of any other type of shares are taxed in the country of which the seller is resident.  

The DTA between Cyprus and Portugal

The main provision of the DTA and the applicable withholding tax rated are as below:

  • Permanent establishment: any building site, or construction, or installation project or supervisory activities in connection therewith constitutes a permanent establishment only if such site, project or activities continue for a period or periods exceeding in the aggregate 12 months.
  • Dividends: 10% withholding tax
  • Interest: 10% withholding tax
  • Royalties: 10% withholding tax
  • Capital Gains: Gains from the disposal of immovable property, including shares or comparable interests deriving more than 50 per cent of their value from immovable property situated in the other Contracting State, may be taxed in that other State. Gains from the disposal of any other type of shares are taxed in the country of which the seller is resident.  

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