Cyprus - UK- Double Taxation Convention- Update of the Treaty of 1974
The Cyprus UK Double Taxation Convention has bene signed in Nicosia on March 22, 2018.
The New Treaty is pending certain legal proceedings by both contracting states following which it shall take full effect on 1 January 2019 in Cyprus.
The existing taxes to which the Convention shall apply are and in particular in the United Kingdom: (i) the income tax; (ii) the corporation tax; and (iii) the capital gains tax and in the Republic of Cyprus: (i) the income tax; (ii) the corporate income tax; (iii) the Special Contribution for the Defense of the Republic; and (iv) the capital gains tax.
Withholding taxes on dividends, income and royalties (with minor exception) are exempt from taxation.
In relation to capital gains, Cyprus retains exclusive position in relation to disposal of the shares by the Cyprus tax resident but in following cases:
1. Where the shares derive more than 50 per cent of their value (directly or indirectly) from immovable property situated in the UK. This does not apply to shares in which there is substantial and regular trading on a Stock Exchange.
2. Where the shares derive their value or the greater part of their value (directly or indirectly) from certain offshore rights/property relating to exploration or exploitation of the seabed or subsoil or their natural resources located in the UK.
Cyprus also retains the exclusive taxing rights on pension income of Cyprus tax resident individuals, with the exception of certain cases of UK Government service pensions.
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.
