RECENT DEVELOPMENTS IN CYPRUS DTT NETWORK
Cyprus- Bahrain (DTT signed in March 2015)
In pursuit of strengthening the ties with all Gulf countries, on 9 March, 2015 Cyprus and Bahrain signed a Double Tax Treaty agreement.
The agreement is expected to contribute to further development of trade and economic relations between Cyprus and Bahrain.
Besides the DTT, a series of other agreements were also signed on such issues as terrorism and crime, aviation services and health.
The agreement applies to taxes on income imposed by either country and in Cyprus they are (i) income tax, (ii) corporate income tax, (iii) SDC tax and (iv) capital gains tax.
DTT updates an existing protocol and expands the network of similar deals based on the OECD Model Tax Convention and it is hoped to boost foreign direct investments to Cyprus.
Cyprus –South Africa (DTT signed in April 2015)
A Protocol amending the Double Tax Treaty between Cyprus and South Africa was signed on 1 April 2015. The Double tax treaty is based on the OECD Model.
DTT introduced a 5% withholding tax on dividends has been in, which is paid if the beneficial owner of the dividends is a company holding at least 10% of the capital of the company, which is paying the dividend. In all other cases the rate is 10% and it works retroactively to 1 April 2012, when South Africa introduced the taxation of dividends in the hands of the shareholders.
The amending protocol aimed to provide favorable tax framework for investors, enhances the exchange of information between the two countries, thus furthering and enhancing the growth of business opportunities between two countries.
Cyprus – Georgia (DTT signed in April 2015, expected to come into force on 1st January 2016)
On 2 April 2015, a DTT has been signed between Cyprus and Georgia.
The agreement is expected to come into force on 1 January 2016 when both countries are expected to complete the ratifications procedures.
The DTT applies to taxes on income as well as on gains from alienations of immovable property. In the case of Georgia, income tax, property tax and profits tax are covered by the Treaty while in the case of Cyprus, personal income tax, defence tax, capital gains tax and immovable property are covered.
Double Tax Treaty between the countries provides for zero withholding tax on dividends, interest and royalty payments. The DTT is expected to strengthen the economic relations between Cyprus and Georgia and promote inbound and outbound investments
Cyprus-Iran (DTT signed in August, expected to come into force on 1st January 2016)
On 4 August, 2015 Cyprus and Iran signed a Double Tax Treaty agreement during an official visit of the Iranian Deputy Finance Minister in Cyprus that is believed to pave the way for the expansion of business and investment opportunities between Iran and Cyprus.
The DTT agreement came three weeks after world powers reached a deal on Iran`s nuclear activity to gradually lift international sanctions.
The new agreement opens up new opportunities for the expansion and upgrading of the Cyprus network of Double Taxation Agreements and is of high economic and political importance and aims to further strengthen and attract foreign investment and elevates the importance of Cyprus as an international business center.
Summarizing:
1) Dividends. 5% withholding tax on dividends paid, if the beneficial owner of the dividends is a company holding at least 25% of the capital of the company paying the dividend, in all other cases 10%;
2) Interest. 5% withholding tax;
3) Royalties. 6% withholding tax;
4) Capital Gains. Gains from the disposal of immovable property may be taxed in the country where the immovable property is situated. Gains from the disposal of shares, deriving more than 50% of their value directly or indirectly from immovable property may be taxed in the country in which the immovable property is situated.
The DTT is based on the OECD Model and is expected to enter into force on the 1st of January 2016, following the date of the ratification by both countries.
*For more detailed account of DTT treaties concluded with Cyprus, please see attached Annex.
Cyprus Tax Treaty Partners
Source – Ministry of Finance of the Republic of Cyprus
|
|
State |
Date of |
Date of entry |
Date of Publication in the Official Gazette |
|
1 |
Austria |
20 Mar 1990 |
10 Nov 1990 |
2500 - 27 Apr 1990 |
|
2 |
Bulgaria |
30 Oct 2000 |
3 Jan 2001 |
3461 - 30 Dec 2000 |
|
3 |
Belarus |
29 May 1998 |
12 Feb 1999 |
3273 - 9 Oct 1998 |
|
4 |
Belgium |
14 May 1996 |
8 Dec1999 |
3365 - 19 Nov 1999 |
|
5 |
Canada |
2 May 1984 |
3 Sep1985 |
2053 - 31 May 1985 |
|
6 |
China |
25 Oct1990 |
5 Oct 1991 |
2578 - 22 Feb 1991 |
|
7 |
Denmark |
26 May 1981 |
10 Aug 1981 |
1704 - 17 Jul 1981 |
|
8 |
Egypt |
18 Dec1993 |
14 Mar1995 |
2865 -11 Mar 1994 |
|
9 |
France |
18 Dec1981 |
1 April 1983 |
1468 - 9 Jul 1982 |
|
10 |
Germany |
9 May 1974 |
11 Oct 1977 |
1199 - 27 Jun 1975 |
|
11 |
Greece |
30 Mar1968 |
16 Jan 1969 |
651 - 10 May 1968 |
|
12 |
Hungary |
30 Nov1981 |
24 Nov 1982 |
862 - 7 May 1982 |
|
13 |
India |
13 Jun 1994 |
21 Dec 1994 |
2921 - 4 Nov 1994 |
|
14 |
Ireland |
24 Sep1968 |
12 Jul1970 |
726 - 19 May 1969 |
|
15 |
Italy |
24 April 1974 |
9 June 1983 |
1586 - 5 Sep 1980
4 Jun 1982 |
|
16 |
Kuwait |
15 Dec 1984 |
25 Sep 1986 |
2026 - 18 Jan 1985 |
|
17 |
Lebanon |
18 Feb 2003 |
14 Apr 2005 |
3976 - 8 Apr 2005 |
|
18 |
Malta |
22 Oct 1993 |
11 Aug 1994 |
2860 - 25 Feb 1994 |
|
19 |
Mauritius |
21 Jan 2000 |
12 Jun 2000 |
3410- 2 Jun 2000 |
|
20 |
Norway |
2 May 1991 |
1 Jan 1995 |
11 Jun 1996 |
|
21 |
Poland |
4 Jun 1992 |
9 Jul 1993 |
2735 - 4 Sep1992 |
|
22 |
Romania |
16 Nov 1981 |
8 Nov 1982 |
1757 - 26 Feb 1982 |
|
23 |
Russia |
5 Dec1998 |
17 Aug 1999 |
3306 - 26 Feb 1999 |
|
24 |
South Africa |
1 April 2015 |
8 Dec1998 |
4195 8 May 2015 |
|
25 |
Sweden |
22 Oct 1988 |
14 Nov1989 |
2377 - 20 Jan 1989 |
|
|
|
|
|
|
|
26 |
Syria |
15 Mar 1992 |
22 Feb 1995 |
2863 - 4 Mar 1994 |
|
27 |
Singapore |
24 Nov 2000 |
8 Feb 2001 |
3641 - 30 Dec 2000 |
|
28 |
Thailand |
27 Oct 1998 |
4 April 2000 |
3394 - 17 Mar 2000 |
|
29 |
United Kingdom |
20 Jun1974 |
1 Nov1974 |
1107 - 5 Jul 1974 |
|
30 |
USA |
19 Mar 1984 |
31 Dec 1985 |
1944 - 4 April 1984 |
|
31 |
Serbia* |
29 Jun1985 |
8 Sep1986 |
2073 - 23 Aug1985 |
|
32 |
Montenegro* |
29 Jun1985 |
8 Sep 1986 |
2073 - 23 Aug1985 |
|
33 |
Slovenia* |
29 Jun1985 |
8 Sep 1986 |
2073- 23 Aug1985 |
|
34 |
Slovakia** |
15 April 1980 |
30 Dec 1980 |
1599 - 3 May1980 |
|
35 |
Czech Republic |
15 April1980 |
30 Dec 1980 |
1599 - 3 May1980 |
|
36 |
Azerbaijan*** |
29 Oct 1982 |
|
26 Nov 1982 |
|
37 |
Armenia |
17 Jan 2011 |
|
4145- 5 Sept 2011 |
|
38 |
Kyrgyzstan*** |
29 Oct 1982 |
|
26 Nov 1982 |
|
39 |
Moldova |
28 Jan 2008 |
03 Sept 2008 |
4098 - 29 Aug 2008 |
|
40 |
Tajikistan*** |
29 Oct 1982 |
|
26 Nov 1982 |
|
41 |
Uzbekistan*** |
29 Oct 1982 |
|
26 Nov 1982 |
|
42 |
Ukraine*** |
29 Oct 1982 |
1 Jan 2014 |
26 Nov 1982 |
|
43 |
Seychelles |
28 Jun 2006 |
27 Oct 2006 |
25 Oct 2006 |
|
44 |
San Marino |
27 April 2007 |
18 July 2007 |
4088 - 13 July 2007 |
|
45 |
Quatar |
11 Nov 2008 |
20 Mar 2009 |
4099 - 14 Nov 2008 |
|
46 |
United Arab Emirates |
27 Febr 2011 |
1 Jan 2014 |
4145 - 5 Sept 2011 |
|
47 |
Estonia |
15 Oct 2012 |
8 Oct. 2013 |
4146 - 1 Febr 2013 |
|
48 |
Finland |
15 Nov 2012 |
27 Apr. 2013 |
4167 - 22 Mar. 2013 |
|
49 |
Portugal |
19 Nov 2012 |
1 Jan. 2014 |
4167 - 22 Mar. 2013 |
|
50 |
Bosnia* |
29 June 1985 |
8 Sept 1986 |
2073 - 23 Aug 1985 |
|
51 |
Lithuania |
21 June 2013 |
17 Απρ 2014 |
4173 - 4 Dec 2013 |
|
52 |
Spain |
14 Febr 2013 |
28 May 2014 |
4167 - 22 Mar 2013 |
|
53 |
The States of Guernsey |
15 Jul 2014 in Cyprus, 29 Jul 2014 in Guernsey |
4 Mar. 2015 |
4182 - 14 Aug 2014 |
|
54 |
Swiss Confederation |
25 July 2014 |
|
4181- 30 July 2014 |
|
55 |
Iceland |
13 Nov 2014 |
22 Dec 2014 |
4191 - 19 Dec 2014 |
|
56 |
Kingdom of Bahrain |
9 March 2015 |
|
4193 - Mar. 2015 |
|
57 |
Georgia |
13 May 2015 |
|
4196 - 29 May 2015 |
|
58 |
Iran |
4 August, 2015 |
1 Jan 2016 expected |
|
26 Aug 1983
*7 Denmark - The existing Convention shall cease to have effect as from 1.1.2012
* The treaty between Cyprus and the Socialist Federal Republic of Yugoslavia is
still in force.
** The treaty between Cyprus and the Czechoslovak Socialist Republic is still in
force
***The treaty between Cyprus and the Union of Soviet Socialist Republics
is still in force.
For further information on this topic please contact
Mrs. Liza Bokova (lbokova@pittaslegal.com) at SOTERIS PITTAS & CO LLC,
by telephone (+357 25 028460) or by fax (+357 25 028461)
The content of this article is intended to provide a general guide to the subject matter. Specialist advise should be sought about your specific circumstances.
