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Cyprus signs double tax treaty with Lithuania

 
08/01/2014
The first Double Tax Treaty between Cyprus and Lithuania was signed on the 21 June 2013. The provisions of the Double Tax Treaty will not be effective until the Treaty is ratified by both Cyprus and Lithuania.

As already commented and above, the Lithuanian Convention is the first Double Tax Treaty ever concluded between the Cyprus and Lithuania as following the demise of the Soviet Union, the former Double Tax Treaty between Cyprus-USSR was not applied by Lithuania.

The main provisions of the Treaty can be summarized as follows:

•    Dividend payments will be subject to a withholding tax of 0% if the recipient is a company and (a) is the beneficial owner of the dividends, and (b) has a minimum direct holding of 10% of the capital of the company paying the dividends. Otherwise dividend payments will be subject to a 5% withholding tax, provided that the recipient is the beneficial owner of the dividends.
•    No withholding tax will be applied on Interest payments.
•    Royalty payments will be subject to a 5% withholding tax, provided that the recipient is the beneficial owner of the royalties.
•    Capital Gains from the sale of shares will be taxed in the country in which the alienator is resident. However, gains from the sale of shares deriving their value or the greater part of their value directly or indirectly from (a) exploration or exploitation rights and/or (b) property situated in the other Contracting State and used in connection with the exploration or exploitation of the seabed or subsoil or their natural resources situated in that other State will be taxed in that other State.
•    The Treaty contains no "Limitation of Benefits" clause
 

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