NEW CYPRUS DOUBLE TAX TREATIES HAVE ENTERED INTO FORCE RECENTLY

Cyprus has extended its double tax treaty (DTT) network after having introduced its new DTTs with Iran and Jersey.

Cyprus – Iran DTT

The Cyprus – Iran DTT has officially been introduced and will come into effect on the 1st of January 2018.  The DTT is in accordance to the OECD Model Tax Convention structure with minor alterations.

The DTT concerns taxation on income and capital gains due to the alienation of movable and immovable property(ies). The DTT covers personal income tax, capital gains, corporate tax and defence tax in regards to Cyprus. In Iran’s case, the DTT mainly deals with income tax.

Brief Outline of Cyprus-Iran DTT:

  • DIVIDENDS: Withholding tax is imposed on dividends. The withholding tax rate is set at 5% when a tax resident company holds 25% or more participation. In all other situations, the withholding tax rate is 10%.
  • INTEREST: In cases where the receiver of the interest is the beneficial owner, a 5% withholding tax is applicable.
  • ROYALTIES: In cases where the receiver of the royalties is the beneficial owner, a 6% withholding tax is imposed on the royalty payments.
  • Any gains derived from the sale of shares of companies holding immovable property are subject to tax in the country which the immovable property is situated.

 Cyprus-Jersey DTT

The Cyprus – Jersey DTT has officially been introduced and will come into effect on the 1st of January 2018.  The DTT is in accordance to the OECD Model Tax Convention structure with minor alterations.

The DTT concerns taxation on income and capital gains from the alienation of movable and immovable properties. The DTT covers personal income tax, capital gains, corporate tax and defence tax in regards to Cyprus. In regards to Jersey, the DTT mainly deals with income tax.

Brief Outline of Cyprus-Jersey DTT:

  • No withholding tax will be imposed on royalty payments, dividends and interest.
  • Any capital gains deriving from the sale of shares of a company are subject to tax in the country where the seller is tax resident. This also applies on the sale of shares of companies holding immovable property.