Cyprus has further expanded its exhaustive Double Tax Treaty network with the signing of a Treaty with Iran which is due to come into effect on 1 January 2018. The Treaty is also expected to strengthen Cyprus’ economic and commercial ties with Iran.
On 4 August 2015 Cyprus and Iran signed an Income Tax Treaty which entered into force on 5 March 2017 relating to the avoidance of double taxation and fiscal evasion. The Treaty will now come into effect on 1 January 2018.
Key Points of the Treaty:
According to the Treaty, Capital Gains derived from the alienation of shares in a company deriving more than 50% of the value directly from immovable property by a resident of a Contracting State will be taxed in the country where the immovable asset is located.
Provided that the recipient of the interest is the beneficial owner of the interest, then withholding tax on interest payments shall not surpass 5% of the gross amount of the interest.
Provided that the recipient is the beneficial owner of the royalties, then withholding tax on royalties shall not surpass 6% of the gross amount of the royalties.
Provided that the recipient is the beneficial owners of the dividends, withholding tax shall not surpass 5% of the gross amount of the dividend if the beneficial owner is a company which holds directly not less than 25% of the capital of the company paying the dividends.
Further, withholding tax shall not surpass 10% of the gross amount of the dividends in all cases.
It is worth noting that at present, neither Cyprus nor Iran impose withholding tax on dividend payments as per domestic legislation.
For further information on how you can benefit from the Cyprus – Iran Double Tax Treaty, or to explore the benefits a Double Tax Treaty between Cyprus and any other country, please contact us and a member of our staff will be happy to discuss your individual case with you.