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DOUBLE TAX TREATIES

One of the main reasons why Cyprus has become a very popular jurisdiction for establishing a base for international business is the availability of a large number of double tax treaties, which number 50 in total.
 
Many of the well-known offshore tax jurisdictions impose a low or nil income tax on the company profits.  However the problem with those jurisdictions is that they do not have double tax treaties.  Cyprus offers a full basket of incentives including the low tax on the net profits and the double tax treaties.
 
Other than the Double Tax Treaties which are presently in force, the conclusion of various other Treaties is pending. These Treaties are currently under negotiation. Moreover, certain Treaties have already been concluded, however they are pending enforcement.
 
All Cyprus’ double tax treaties have been drafted so as to accord very closely to the Organisation in Economic Cooperation and Development (OECD) model Tax treaty. The treaties aim to avoid double taxation of income earned in these countries.  This is achieved usually by either exempting the income from tax, by providing a tax credit for the amount of tax paid in other contracting country or by a reduced withholding tax.

Summary of withholding tax rates

Note that under Cyprus domestic legislation there is no withholding tax on dividends and interest paid to non-residents of Cyprus at all times thus the treaty rates shown below are NOT applicable.

 

 

Countries

 

Paid from the following countries to residents of Cyprus

 

Paid from Cyprus to residents of the following countries

 

Dividends
%

 

Interest
%

 

Royalties
%

 

Dividends
%

 

Interest
%

 

Royalties
%

 

Armenia

 

Nil (30)

 

5

 

5

 

Nil (30)

 

5

 

5

Austria

10

Nil

Nil

10

Nil

Nil

Belarus

5 (17)

5

5

5 (17)

5

5

Belgium

10 (8)

10(6,18)

Nil

10 (8)

10(6,18)

Nil

Bulgaria

5(22)

7(6,23)

10(23)

5(22)

7(6)

10

Canada

15

15(4)

10(5)

15

15(4)

10(5)

China, P.R.

10

10

10

10

10

10

Czech Republic

Nil(28)

Nil

Nil(29)

Nil(28)

Nil

Nil(29)

Denmark

Nil(6,32)

Nil

Nil

Nil(6,32)

Nil

Nil

Egypt

15

15

10

15

15

10

Estonia

Nil

Nil

Nil

Nil

Nil

Nil

Finland

5(35)

Nil

Nil

5(35)

Nil

Nil

France

10(36)

10(10)

Nil(3)

Nil

10(10)

Nil(3)

Germany

5(36)

Nil

Nil

5(36)

Nil

Nil

Greece

25

10

Nil(11)

25

10

Nil(11)

Hungary

5(8)

10(6)

Nil

Nil

10(6)

Nil

India

10(37)

10(10)

15(14)

10(37)

10(10)

10(15)

Ireland

Nil

Nil

Nil(11)

Nil

Nil

Nil(11)

Italy

15

10

Nil

Nil

10

Nil

Kuwait

10

10(6)

5(7)

10

10(6)

5(7)

Lebanon

5

5

Nil

5

5

Nil

Malta

Nil

10

10

15

10

10

Mauritius

Nil

Nil

Nil

Nil

Nil

Nil

Moldova

5(26)

5

5

5(26)

5

5

Montenegro (25)

10

10

10

10

10

10

Norway

Nil(12)

Nil

Nil

Nil

Nil

Nil

Poland

Nil(34)

5(6)

5

Nil(34)

5(6)

5

Portugal

10

10

10

10

10

10

Qatar

Nil

Nil

5(27)

Nil

Nil

5(27)

Romania

10

10(6)

5(7)

10

10(6)

5(7)

Russia

5(16)

Nil

Nil

5(16)

Nil

Nil

San Marino

Nil

Nil

Nil

Nil

Nil

Nil

Serbia (25)

10

10

10

10

10

10

Seychelles

Nil

Nil

5

Nil

Nil

5

Singapore

Nil

10(6,24)

10

Nil

10(6,24)

10

Slovak Republic

10

10(6)

5(7)

10

10(6)

5(7)

Slovenia

5(31)

5

5

5(31)

5

5

South Africa

Nil

Nil

Nil

Nil

Nil

Nil

Sweden

5(8)

10(6)

Nil

5(8)

10(6)

Nil

Syria

Nil(8)

10(4)

10

Nil(8)

10(4)

10

Thailand

10

15(20)

5(21)

10

15(20)

5(21)

Ukraine

5(19)

2

5(33)

5(19)

2

5(33)

United Kingdom

15(13)

10

Nil(3)

Nil

10

Nil (3)

United States

5(9)

10(10)

Nil

Nil

10(10)

Nil

Notes

1. Under Cyprus legislation there is never any WHT on dividends and interest paid to non-residents of Cyprus.

2. Royalties earned on rights used within Cyprus are subject to WHT of 10%.

3. A rate of 5% on film and TV royalties.

4. Nil if paid to a government/Central Bank/ Public Authority or for export guarantee.

5. Nil on literary, dramatic, musical, or artistic work.

6. Nil if paid to the government/Central Bank/ Public Authority of the other state.

7. This rate applies for patents, trademarks, designs or models, plans, secret formulas, or processes, or any industrial, commercial, or scientific equipment, or for information concerning industrial, commercial, or scientific experience.

8. A rate of 15% if received by a company holding less than 25% of the share capital of the paying company and in all cases if received by an individual.

9. A rate of 15% if received by a company controlling less than 10% of the voting power of the paying company and in all cases if received by an individual. If a company controls at least 10% of the voting power of the paying company in order to benefit from the WHT rate of 5% other conditions relating to the income of the paying company need to be satisfied, otherwise a WHT rate of 15%.

10. Nil if paid to a government, bank, or financial institution.

11. A rate of 5% on film royalties.

12. A rate of 5% if received by a company controlling less than 50% of the voting power and in all cases if received by an individual.

13. This rate applies to individual shareholders regardless of their percentage of shareholding. Companies controlling less than 10% of the voting shares are also entitled to this rate. Companies controlling at least 10% of the voting shares are entitled to nil WHT.

14. A rate of 10% for payments of a technical, managerial, or consulting nature.

15. Treaty rate is 15%. However, the maximum WHT per Cyprus tax legislation is 10% (refer to note 2).

16. A rate of 10% on dividend if paid by a company in which the beneficial owner has invested less than EUR100.000 in the share capital of the company paying the dividend.

17. If investment is less than EUR 200,000, dividends are subject to 15% WHT which is reduced to 10% if the recipient company controls 25% or more of the paying company.

18. No WHT for interest on deposits with banking institutions.

19. A rate of 15% if a dividend is paid by a company in which the beneficial owner holds less than 20% of the share capital of the paying company and the beneficial owner has invested less than Eur 100.000.

20. A rate of 10% on interest received by a financial institution or when it relates to sale on credit of any industrial, commercial, or scientific equipment or of merchandise.

21. This rate applies for any copyright of literary, dramatic, musical, artistic, or scientific work. A 10% rate applies for industrial, commercial, or scientific equipment. A 15% rate applies for patents, trademarks, designs or models, plans, secret formulas, or processes.

22. This rate applies to companies holding directly at least 25% of the share capital of the company paying the dividend. In all other cases the WHT is 10%.

23. This rate does not apply if the payment is made to a Cyprus international business entity by a resident of Bulgaria owning directly or indirectly at least 25% of the share capital of the Cyprus entity.

24. A rate of 7% if paid to a bank or financial institution.

25. Serbia, and Montenegro apply the Yugoslavia/Cyprus treaty.

26. This rate applies if received by a company (excluding partnerships) that holds directly 25% of the shares. A rate of 10% applies in all other cases.

27. Applies to any consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work (including cinematograph films and films, tapes or discs for radio or television broadcasting), computer software, any patent, trademark, design or model, plan, secret formula or process, or for information concerning industrial, commercial, or scientific experience.

28. This rate applies if received by a company (excluding partnership) which holds directly at least 10% of the share capital of the paying company for an uninterrupted period of no less than one year. 5% applies in all other cases.

29. 10% for patent, trademark, design or model, plan, secret formula or process, computer software or industrial, commercial, or scientific equipment, or for information concerning industrial, commercial, or scientific experience.

30. A rate of 5% if a dividend is paid by a company in which the beneficial owner has invested less than EUR 150.000.

31. The provisions of the Parent-Subsidiary EU directive are applicable.

32. A rate of 15% if received by a company controlling less than 10% of the share capital of the paying company or the duration of any holding is less than one uninterrupted year. A rate of 15% also applies if received by an individual.

33. A 5% WHT will be levied on payment of royalties in respect of any copyright of scientific work, any patent, trade mark, secret formula, process or information concerning industrial, commercial or scientific experience. 10% WHT will be levied in all other cases.

34. This rate applies if the recipient company (partnership is excluded) holds directly 10% of the share capital of the paying company for an uninterrupted period of atleast 2 years. 5% in all other cases.

35. A rate of 15% applies if received by a company controlling less than 10% of the voting power in the paying company and in all cases if received by an individual.

36. A rate of 15% if received by a company holding less than 10% of the share capital of the paying company and in all cases if received by an individual.

37. A rate of 15% if received by a company holding less than 10% of the shares of the paying company and in all cases if received by an individual.