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Five Double Tax Treaties are coming into effect as of 01/01/2014

 
13/12/2013
Cyprus extends its Treaty network and offers new investment opportunities.


On 1st January 2014, new Double Tax Treaties with Estonia, Finland, Portugal, Spain and Ukraine will come into effect. The main provisions of these Treaties are summarized below.

Estonia - Cyprus Double Tax Treaty

• No withholding tax is imposed on dividend, interest and royalty payments.

• Capital gains from the sale of shares in "property rich" companies will be taxed in the country in which the property is situated.

• The Treaty contains no "Limitation of Benefits" clause.

Finland - Cyprus Double Tax Treaty

• Dividend payments will be subject to a withholding tax of 5% if recipient: (a) is the beneficial owner of the dividends, AND (b) is a company (other than a partnership), AND (c) has a direct control of at least 10% of voting power of the company paying the dividends. Otherwise dividend payments are subject to a 15% withholding tax.

• No withholding tax is imposed on Interest and royalty payments, provided that recipient is the beneficial owner of the interest or royalties.

• Capital gains from the sale of shares in "property rich" companies will be taxed in the country in which the property is situated.

• The Treaty contains no "Limitation of Benefits" clause.

Portugal - Cyprus Double Tax Treaty

• Dividend, interest and royalty payments are subject to a withholding tax of 10%, provided that the recipient is the beneficial owner of the dividends, interest or royalties.

• Capital gains from the sale of shares in directly or indirectly "property rich" companies will be taxed in the country in which the property is situated.

• The Treaty contains no "Limitation of Benefits" clause.

Spain - Cyprus Double Tax Treaty

• Dividend payments are exempt from withholding tax if the recipient: (a) is a company the capital of which is wholly or partly divided into shares, AND (b) directly holds at least 10% of capital of the company paying the dividends. Otherwise a 5% WHT applies (provided that the recipient is the beneficial owner of the dividends).

• No withholding tax is imposed on interest and royalty payments, provided that the recipient is the beneficial owner of the interest or royalties.

• Capital gains from the sale of shares in "property rich" companies will be taxed in the country in which the property is situated.

• The Treaty contains no "Limitation of Benefits" clause.

Ukraine - Cyprus Double Tax Treaty

• Dividend payments are subject to a withholding tax of 5% if recipient: (a) is the beneficial owner of the dividends, and (b) holds at least 20% of capital of the company paying the dividends, OR has invested at least 100 000 EUR in the acquisition of shares or other rights of the company paying the dividends. Otherwise dividend payments are subject to a 15% withholding tax if recipient is the beneficial owner of the dividends.

• Interest payments are subject to a withholding tax of 2%, provided that the recipient is the beneficial owner of the interest.

• Royalty payments are subject to a withholding tax of 10%, provided that the recipient is the beneficial owner of the royalties. A reduced withholding tax of 5% applies to royalties received in relation to: copyright of scientific work, any patent, trade mark, secret formula, process or information concerning industrial, commercial or scientific experience.

• Capital gains from the sale of any shares will be taxed in the country in which the alienator is resident.

• The Treaty contains no "Limitation of Benefits" clause.
 

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