During the month of May 2017, Cyprus has concluded 3 new Double Tax Agreements in an effort to further strengthen its ties with other countries and establish Cyprus as a forceful international financial centre.
Cyprus – Barbados Double Taxation Treaty
On 3 May 2017 Cyprus and Barbados signed an agreement for the avoidance of double taxation in London based on the Organisation of Economic Cooperation and Development (OECD) model. The agreement was reached following several years of negotiations.
The double taxation agreement signed between Cyprus and the Caribbean island lays the groundwork for cooperation between the two countries.
Paradoxically, Cyprus and Barbados have a lot in common; both countries are former British colonies that gained independence in the 1960s; both countries have a strong service-based economy with tourism and financial services playing an important role.
Cyprus – Luxembourg Double Tax Treaty
On 8 May 2017 Cyprus and Luxembourg signed a bilateral treaty on the avoidance of double taxation based on the OECD model.. The Agreement is now awaiting ratification and if it is ratified before the end of 2017 then it is expected to enter into force as of 1 January 2018.
The Grand Duchy of Luxembourg was one of the few European countries with which Cyprus did not have a Double Tax Treaty in force.
This new agreement is expected to pave the way for the enhancement of the financial and trade ties between the two countries.
The main characteristics of the treaty are as follows:
- Withholding taxes will be imposed only on dividends at the following rates:
- 0% where there is at least 10% participation by a tax resident company
- 5% in all other cases
- No withholding taxes will be imposed on interest.
- No withholding taxes will be imposed on royalties (as long as the recipient of the royalties is the beneficial owner of the income).
- Gains from the sale of shares of immovable property will be taxed in the country where the asset is located.
Cyprus – San Marino Double Tax Treaty
The Minister of Foreign Affairs of Cyprus, Mr Ioannis Kassoulides and the Minister of Foreign Affairs of San Marino, Mr Nicola Renzi, signed a double tax treaty in Nicosia on 19 May 2017.
The agreement is expected to strengthen the ties between the two countries.
The conclusion of new Double Tax Treaties between Cyprus and other countries is aimed at establishing Cyprus as an international financial centre and attracting additional foreign investment and further solidifying Cyprus’s international diplomatic ties.