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 1^st 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 1^st 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 Signature Treaty/Protocol/ Note	Date of entry into force	Date of Publication in the Official Gazette of the Republic (Number and date)
1	Austria (new agreement)	20 Mar 1990 21 May 2012	10 Nov 1990 11 Jan 2013	2500 - 27 Apr 1990 4160 - 5 Oct 2012
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 Treaty Notes New Agreem.*	26 May 1981 11 Oct 2010	10 Aug 1981 10 Apr 1982 7 Sept 2011	1704 - 17 Jul 1981 2034 - 24 Sep 1982 4145 - 5 Sept 2011
8	Egypt	18 Dec1993	14 Mar1995	2865 -11 Mar 1994
9	France	18 Dec1981	1 April 1983	1468 - 9 Jul 1982
10	Germany new Agreement	9 May 1974 18 Febr 2011	11 Oct 1977 16 Dec 2011	1199 - 27 Jun 1975 4145- 5 Sept 2011
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 Treaty Protocol (Additional Protocol)	24 April 1974 7 Oct 1980 4 Jun 2009	9 June 1983	1586 - 5 Sep 1980 4 Jun 1982 4125 - 4 Jun 2010
16	Kuwait (New Agreement)	15 Dec 1984 5 Oct 2010	25 Sep 1986	2026 - 18 Jan 1985 4145 - 5 Sept 2011
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 (new agreement)	2 May 1991 24 Feb 2014	1 Jan 1995	11 Jun 1996 4180 - 20 Jun 2014
21	Poland (new agreement)	4 Jun 1992 22 Mar. 2012	9 Jul 1993 11 Jan 2013	2735 - 4 Sep1992 4156 - 30 Mar. 2012
22	Romania	16 Nov 1981	8 Nov 1982	1757 - 26 Feb 1982
23	Russia (Amendment Protocol)	5 Dec1998 7 Oct 2010	17 Aug 1999 2 April 2012	3306 - 26 Feb 1999 4145 - 5 Sept 2011
24	South Africa	1 April 2015 (26 Nov 1997)	8 Dec1998	4195 8 May 2015 3214 - 16 Jan 1998
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 Treaty Protocol	20 Jun1974 2 Apr 1980	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* (New Agreement)	29 Jun1985 12 Oct 2010	8 Sep 1986 14 Sept 2011	2073- 23 Aug1985 4145 - 5 Sept 2011
34	Slovakia**	15 April 1980	30 Dec 1980	1599 - 3 May1980
35	Czech Republic (new agreement)	15 April1980 28 April 2009	30 Dec 1980 26 Nov 2009	1599 - 3 May1980 4114 - 13 Nov 2009
36	Azerbaijan***	29 Oct 1982	26 Aug 1983	26 Nov 1982
37	Armenia	17 Jan 2011	19 Sept 2011	4145- 5 Sept 2011
38	Kyrgyzstan***	29 Oct 1982	26 Aug 1983	26 Nov 1982
39	Moldova	28 Jan 2008	03 Sept 2008	4098 - 29 Aug 2008
40	Tajikistan***	29 Oct 1982	26 Aug 1983	26 Nov 1982
41	Uzbekistan***	29 Oct 1982	26 Aug 1983	26 Nov 1982
42	Ukraine*** (new agreement)	29 Oct 1982 8 Nov 2012	26 Aug 1983 1 Jan 2014	26 Nov 1982 4167 - 22 March 2013
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	1 Jan 2016 expected	4196 - 29 May 2015
58	Iran	4 August, 2015	1 Jan 2016 expected

 

*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.