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Cyprus Double Tax Treaties

Constructive use of the Cyprus Treaties’ Network has rendered considerable advantages to businesses and individuals who have chosen to establish legal entities in Cyprus. Tax treaties, in Cyprus and most countries, legally supersede local tax legislation and for this reason they are a useful tax-planning tool to protect businesses and individuals against double taxation of income earned in other countries.

  • The main purpose of these treaties is the avoidance of double taxation of income earned in any of these countries. Under these agreements, a credit is usually allowed against the tax levied by the country in which the tax payer resides for taxes levied in the other treaty country, and as a result the tax payer pays no more than the higher of the two rates (a number of the treaties also contain very beneficial “tax-sparing credits”).

  • The EU Parent Subsidiary and the Interest & Royalties Directives can be used to eliminate withholding taxes on payments of dividends, interest and royalties from or to EU Group Companies and the EU Merger Directive to eliminate the tax effects of EU Group reorganizations.

The following table shows the rates of withholding tax deducted from income, with countries that have signed a double taxation treaty with Cyprus.

 

  Received in Cyprus Paid From Cyprus *

Dividends

%

Interest

%

Royalties

%

Dividends

%

Interest

%

Royalties

%

Non Treaty Countries 0 0 0 0 0 0**
Armenia 0(32) 5(33) 5 0 (32) 5 (33) 5
Austria             (31) 10 0 0 10 0 0
Belarus 5 (4) 5 5 5 (4) 5 5
Belgium 10 (1) 10(16) 0 10 (1) 10 0
Bulgaria 5 (19) 7 (25) 10 (20) 5 (19) 7 (25) 10
Canada 15 15 (7) 10 (11) 15 15 (7) 10 (11)
China 10 10 10 10 10 10
Chech Republic 0 (30) 0 10 0 (30) 0 0
Denmark 0(34) 0 0 0 (34) 0 0
Egypt 15 15 10 15 15 10
Estonia 0 0 0 0 0 0
Finland 5(37) 0 0 5 (37) 0 0
France 10 (2) 10 (9) 0 (26)  10 (2) 10 (9) 0 (26)
Germany 5(2) 0 0 5 (2) 0 0
Greece 25 10 0 (12) 25 10 0 (12)
Hungary 5 (1) 10 (8) 0 0 10 (8) 0
India 10 (2) 10 (8) 15 (15) 10 (2) 10 (8) 15 (15)
Ireland 0 0 0 (12) 0 0 0 (12)
Italy 15 10 0 0 10 0
Kuwait 10 10 (8) 5 (14) 10 10 (8) 5 (14)
Kyrgyzstan       (27) 0 0 0 0 0 0
Lebanon 5 5 (16) 0 5 5 (16) 0
Malta 0 (22) 10 (8) 10 15 10 (8) 10
Mauritius 0 0 0 0 0 0
Moldova 5(19) 5 5 5 (19) 5 5
Montenegro      (28) 10 10 10 10 10 10
Norway 5 (3) 0 0 0 0 0
Poland 0 (36) 5 (8) 5 0 (36) 5 (8) 5
Portugal 10 10 10 10 10 10
Qatar 0 0 5 0 0 5
Romania 10 10 (8) 5 (14) 10 10 (8) 5 (14)
Russia 5 (6) 0 0 5 (6) 0 0
San Marino 0 0 0 0 0 0
Serbia               (28) 10 10 10 10 10 10
Seychelles 0 0 5 0 0 5
Singapore 0 10 (23) 10 0 10 (23) 10
Slovakia           (29) 10 10 (8) 5 (14) 10 10 (8) 5 (14)
Slovenia 5 5 (33) 5 5 5 (33) 5
South Africa 0 0 0 0 0 0
Spain 0 (35) 0 0 0 (35) 0 0
Sweden 5 (1) 10 (8) 0 5 (1) 10 (8) 0
Syria 0 (1) 10 (8) 15 (13) 0 (1) 10 (8) 15 (13)
Tajikistan        (27) 0 0 0 0 0 0
Thailand 10 15 (17) 5 (18) 10 15 (17) 5 (18)
Ukraine 5 (21) 2 5 5 (21) 2 5
United Arab Emirates  (35) 0 0 0 0 0 0
United Kingdom 0 (24) 10 0 (26) 0 10 0 (26)
U S A 5 (5) 10 (10) 0 0 10 (10) 0
Uzbekistan     (27) 0 0 0 0 0 0

Notes

 

* Payments of dividends and interest to non residents are exempt from withholding tax in Cyprus according to the Cyprus Legislation. Royalties granted for use outside of Cyprus are also free of withholding tax in Cyprus

** 10% in the case of royalties granted for use within the Republic. 5% on film and TV rights

  1. 15% if received by a company controlling less than 25% of the voting power
  2. 15% if received by a company controlling less than 10% of the voting power
  3. NIL if paid to a company controlling at least 50% of the voting power
  4. This rate applies if the amount invested by the beneficial owner is over € 200.000 irrespective of the % of voting power acquired. 10% is imposed if received by a holder of at least 25% of the share capital of the paying company. Otherwise the rate is 15%
  5. 5% if received by a company controlling at least 10% of the voting power
  6. 10% if received by company, which has invested less than $ 100.000
  7. NIL if paid to the Government of for export guarantee
  8. NIL if paid to the Government of the other State of to financial institution
  9. NIL if paid to the Government of the other State or in connection with the sale on credit of any industrial, commercial or scientific equipment or any merchandise by one enterprise to another or in relation to any form of loan granted by a bank or is guaranteed from government or other governmental organisation.
  10. NIL if paid to the Government of the other State to a bank or a financial institution or in respect to debt obligations arising in connection with sale of property or the provision of services
  11. NIL on literally, dramatic, musical or artistic work with the exception of films used for television programs
  12. 5% on film royalties (except films shown on TV)
  13. 10% on literary, dramatic, musical, artistic work, films and TV royalties
  14. NIL on literary, artistic or scientific work including films
  1. 10% on payment of technical fees, management fees and consultancy fees
  2. NIL if paid to the Government of the other State, a political subdivision or local authority, the National Bank or any institution the capital of which is wholly owned by the State or political subdivision or local authority or in the form of interest income from bank deposits
  3. 10% on interest received from financial institutions, on interest paid in connection with industrial, commercial, scientific equipment or the sale or merchandise between two companies
  4. 10% on right to use industrial, commercial or scientific equipment or for information concerning industrial, commercial or scientific experience and 15% for patents, trademarks, designs, models, plans, secret formulas or processes
  5. 10% if received by a company, which owns less than 25% of the capital
  6. This rate does not apply, where 25% or more of the capital of the Cypriot resident is owned directly or indirectly by the Bulgarian resident paying the royalties and the Cyprus company pays less than the normal rate of tax
  7. The treaty provides for 25%, but domestic rate of NIL applies since it is lower than the treaty rate
  8. The treaty provides that the tax on the gross amount of the dividends shall not exceed that chargeable on the profits out of which the dividends are paid
  9. 7% if paid to a bank or similar financial institution. NIL if paid to the government
  10. The treaty provides for 15% withholding tax but the local taxation provides for 0% withholding tax
  11. NIL if paid to or is guaranteed by the government, statutory body, the Central Bank
  12. 5% on film royalties, including films used for television programs
  13. The treaty between the Republic of Cyprus and the United Soviet Socialist Republic applies
  14. The treaty between the Republic of Cyprus and the Socialist Federal Republic of Yugoslavia still applies
  15. The treaty between the Republic of Cyprus and the Czechoslovak Socialist Republic still applies
  16. NIL if the beneficial owner is a company (other than a partnership) which holds directly at least 10% of the capital of the company paying the dividends where such holdings is being possessed for an uninterrupted period of not less than one year. 5% in all other cases
  17. The treaty has been ratified and will enter into force during 2014
  18. 5% if the beneficial owner has invested in the capital of the company less than the equivalent of € 150.000 at the time of the investment
  19. NIL if paid to the Government or to local authority, or to the Central Bank
  20. NIL if the beneficial owner is a company (other than a partnership) which holds directly at least 10% of the capital of the company paying the dividends, where such holding is being possessed for an uninterrupted period of no less than 12 months

NIL if the beneficial owner is the other Contracting State or the Central Bank of that other State, or any national agency or any other agency (including a financial institution) owned or controlled by the Government of that other State

NIL if the beneficial owner is a pension fund or other similar institution providing pension schemes in which individuals may participate in order to secure retirement benefits, where such pension fund or other similar institution is established, recognized for tax purposes and controlled in accordance with the laws of that other State. 15% in all other cases

  1. NIL if dividend is received by a company (other than a partnership) holding at least 10% of the capital of the dividend paying company. 5% in all other cases
  2. NIL if the beneficial owner is a company (other than a partnership) which holds directly at least 10% of the capital of the company paying the dividends, where such holding is being possessed for an uninterrupted period of no less than 24 months. 5% in all other cases
  3. 5% if the dividend is received by a company (other than a partnership) which holds directly at least 10% of the voting power in the company paying the dividends. 15% in all other cases

The information contained in this Site has been written in general terms and therefore cannot be relied on to cover specific situations; application of the principles set out will depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any of the contents of this newsletter. PanAudit Konnaris Limited would be pleased to advise readers on how to apply the principles set out in this newsletter to their specific circumstances. PanAudit Konnaris Limited accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of any material in this newsletter.

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Double Taxation

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Address: P.O. Box 25621, 1311 Nicosia – Cyprus
Telephone: +357 22 777802
Fax: +357 22 771469

Pavlos Demetriou

Audit & Assurance Manager
Mr. Pavlos Demetriou holds a bachelor of Science (BSc) in Accounting and Finance and he is a member of the Association of Chartered Certified Accountants (ACCA) and a member of ICPAC. He has extensive knowledge and experience of more than 10 years in Audit and Assurance.

pavlos.demetriou@panaudit.eu

Aristi Xenofontos

Human Resource Supervisor
Mrs Aristi Xenophontos has a Diploma in Office Administration and in LCCI Accounting and has extensive knowledge and experience of more than6years in Human Resource and Office Administration.

aristi.xenofontos@panaudit.eu

Demetra Kyprianou

Account Manager
Mrs. Demetra Kyprianou has a Bachelor Degree in Business Administration and Diploma in LCCI Accounting Third Level and has more than 10 years of experience in the areas of the firm’s activities.
demetra.kyprianou@panaudit.eu

Andri Andreou

Accounting and Tax Manager
Mrs Andri Andreou has a Diploma in Business Administration and in LCCI Accounting and has extensive knowledge and experience of more than 10 years in Accounting and Tax.

andri.andreou@panaudit.eu