Double Tax treaties

Cyprus has concluded 35 double tax treaties which apply to 45 countries. The main purpose of these treaties is the avoidance of double taxation on income earned in any of these countries. Under these agreements, a credit is usually allowed against the tax levied by the country in which the taxpayer resides for taxes levied in the other treaty country and as a result the tax payer pays no more than the higher of the two rates.

Further, some treaties provide for tax sparing credits whereby the tax credit allowed is not only with respect to tax actually paid in the other treaty country but also from tax which would have been otherwise payable had it not been for incentive measures in that other country which result in exemption or reduction of tax.

To give a simplified example:

  • A company is taxable in both treaty countries, say 40% at country A and 20% at country B. If the 20% tax at country B is paid, then a tax credit of 20% would be given in country A. The result is 20% tax in country A and 20% in country B.
  • If now, in country B the normal tax of 20% is reduced to 5% (for incentive purposes), if a tax sparing credit is provided in the respective treaty, the tax to be deducted in country A would still be 20%, as if full tax of 20% was actually paid in country B. The result would be 5% tax in country B and, in spite of that, a tax of only 20% in country A (the remaining 15% being the tax sparing credit).

All Cyprus resident companies qualify for Double Tax Treaty protection.

List of Double Tax Treaties with treaty rates for payments of dividends, interest and royalties.

For the full text of double tax treaties please go to the Ministry of Finance website by clicking here:

newsTitle

2014 Tax diary

Posted: November 24, 2014
End of each monthPayment of tax deducted from employees salary (PAYE) in the preceding…

2013 Tax diary

Posted: November 20, 2014
End of each month Payment of tax deducted from employees salary (PAYE) in the preceding…

Cyprus-Ukraine Tax Treaty

Posted: November 20, 2014
Cyprus Signed new Double Tax Treaty with Ukraine On 8th November 2012, Cyprus and Ukraine signed a…

© 2015 Alliott Partellas Kiliaris Ltd.
Designed by DelphiArt Ltd.