Double Tax Treaties with Cyprus

Introduction

The Cyprus double tax treaties have been drafted very closely to the Organization in Economic Cooperation and Development (OECD) Model Treaty. The OECD model has been changed where necessary in order to conform with the tax systems of the countries concerned.

Cyprus provides substantial tax advantages to foreign investors, coupled with the provision of the double tax treaties; it makes good sense to make good use of such treaties.

It is certainly the policy of the Cyprus Government to encourage tax incentives for aliens, in order to develop Cyprus as a financial centre in its area, without, proclaiming or promoting itself as a tax haven.

The following form part of the main provisions included in the OECD model:-

Residence

In order for an individual, or a company to take advantage of a double tax treaty, he or it must be resident of one or two contracting states i.e. to be resident of Cyprus for tax purposes.

A resident of a contracting state is given by article 4.1 of the OECD model, namely "any person who, under the laws of that state, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature".

Permanent establishment

Permanent establishment is defined by article 5 of the OECD model meaning a fixed place of business through which the business of the enterprise is wholly or partly carried on. It includes especially a place of management, a branch, an office, a factory, a workshop, a mine, oil or gas well, a quarry or any other place of extraction of natural resources.

Business profits

Article 7 of the OECD model deals with business profits and states that these shall be taxable only in that state unless the enterprise carries on business in the other contracting state through a permanent establishment situated therein.

Dividends

The withholding taxes that are applicable to treaty countries are low, and this together with the low tax rates for offshore companies, makes investments in treaty countries through Cyprus very important.

Additionally investments can take place through Cyprus by a third country with the end result of great savings on tax planning.

Similar benefits can be accrued by the use of payments been affected by the use of interest or royalties.

Limitation of treaties

In some of the double tax treaties that have been established a number of anti avoidance provisions exist. These are to be found in the treaties with the France, Germany, UK, U.S.A. and Canada.

be found on the official website of the Ministry of Finance. The text of each Agreement is available below. Other than the Double Tax Agreements which are presently in force, the conlcusion of various other Agreements is pending. These Agreements are currently under negotiation. More over, certain Agreements have already been concluded appear below, however they are pending enforcement. The Double Tax Agreement in force between Cyprus and Norway, is that concluded between Norway and the United Kingdom, and is only available in the english language. Additionally the Agreement concluded between Cyprus and France is only available in the english language. The remaining Double Tax Agreements are available in both, the greek and the english language. Additionally this web page contains the Agreements in the form of exchange of letters, for the taxation of savings income that were signed on 25 May 2004 by the Republic of Cyprus and Guernsey, the Isle of Man, Jersey, the Netherlands Antilles, Aruba, Angualla, the British Virgin islands, the Cayman Islands, the United Kingdom Overseas Teritory of Montserrat and the Turks and Caicos Islands.

LIST OF DOUBLE TAX TREATIES FROM INLAND REVENUE DEPARTMENT   Εxchange of letters for the taxation of savings income between the Republic of Cyprus and Guernsey, Isle of Man, Jersey, Netherlands Antilles, Aruba, Angualla, The British Virgin islands, Cayman Islands, The United Kingdom Overseas Teritory of Montserrat and Turks and Caicos Islands. (File size 3287,45Kb)   Austria (File size 969,53Kb)   Belarus (File size 910,78Kb)   Belgium (File size 1026,87Kb)   Bulgaria (File size 2395,56Kb)   Canada (File size 2516,26Kb)   Chech Republic (File size 1520,69Kb)   China (File size 1250,45Kb)   Denmark (File size 2397.65Kb)   Egypt (File size 1156,98Kb)   France (File size 11576,95Kb)   Germany (File size 1942,71Kb)   Hungary (File size 2788.63Kb)   India (File size 1291Kb)   Ireland (File size 1528,88Kb)   Italy (File size 1918,51Kb)   Kuwait (File size 7953,76Kb)   Lebanon (File size 1734,94Kb)   Malta (File size 1203,91Kb)   Mauritius (File size 1093,36Kb)   Moldova (File size 1884.3Kb)   Norway (File size 1236,49Kb)   Poland (File size 1201Kb)   Qatar (File size 2128.77Kb)   Romania (File size 1837,41Kb)   Russia (File size 23267,85Kb)   San Marino (File size 1262.2Kb)   Seychelles (File size 428,41Kb)   Singapore (File size 875Kb)   Slovakia (File size 1520,69Kb)   South Africa (File size 999,35Kb)   Sweden (File size 1607,04Kb)   Swiss Confederation - Agreement and Memorandum of Understanding between the European Community and the Swiss Confederation providing for measures equivalent to those laid down in Council Directive 2003/48/EC on taxation of savings income in the form of interest payments, (File size 283.53Kb)   Syria (File size 1005,09Kb)   Thailand (File size 1050.33Kb)   Union of Soviet Socialist Republics (File size 4858,02Kb)   United Kingdom of Great Britain and Northern Ireland (File size 2116,68Kb)   United States of America (File size 8127,95Kb)   Yugoslavia (File size 1567,78Kb)