Withholding Tax and Double Tax Treaties
Withholding tax. dividends.royalties.tax treaties.
Withholding Tax on dividends, interest and royalties.
Cyprus does not levy a WHT on dividends, interest and royalties paid to non-residents of Cyprus except in the case of royalties earned on rights used within Cyprus, which are subject to a WHT of 10% (5% in the case of cinematographic films). Such Cyprus WHT on royalties for rights used within Cyprus may be reduced or eliminated by double tax treaties entered into by Cyprus or by the EU Interest and Royalty Directive as enacted in the Cyprus tax legislation.
Withholding Tax other types of income.
Cyprus levies a 10% WHT on technical services performed by nonresidents in Cyprus. However, no such WHT is levied if such services are performed via a permanent establishment in Cyprus of the non-resident or if performed between ‘associated’ companies as these are defined by the EU Interest and Royalty Directive as enacted in the Cyprus tax legislation.
Cyprus also levies a 10% WHT on the gross income/ receipts derived by a non- resident individual from the exercise in Cyprus of any profession or vocation and the remuneration of non-resident public entertainers (such as theatrical, musical including football clubs, other athletic missions etc).
Further, a 5% WHT is levied on gross income derived from within Cyprus by non-residents with no local permanent establishment for services in regards to the exploration, extraction or exploitation of the continental shelf as well as the establishment and use of pipelines and other installations on the ground, on the seabed and on the surface of the sea
Double tax treaty agreements.
A tax treaty is a bilateral—two-party—agreement made by two countries to resolve issues involving double taxation of passive and active income. Tax treaties generally determine the amount of tax that a country can apply to a taxpayer’s income, their capital, estate, or wealth. Cyprus has Double Tax Treaty agreement with more than 60 countries. Details of each agreement can be found on the Ministry of Finance website.