Cyprus: Double Tax Treaty Round Up
The DTA between Cyprus and United Arab Emirates took effect on 1 January 2014
The double taxation agreement between Cyprus and the United Arab Emirates took effect on 1 January 2014. For a detailed analysis of the new agreement, the first between the two countries, please follow this link.
The DTA between Cyprus and Spain entered into force on 28 May 2014
The Spanish government has announced that the double tax agreement between Cyprus and Spain entered into force on 28 May 2014. Certain of its provisions will take effect from that date, and the remainder will take effect from 1 January 2015. The Cyprus tax authorities have indicated that they will allow the benefits included in the new agreement with effect from 1 January 2014.
For several years up to 2009 Cyprus-resident companies were ineligible for certain Spanish tax benefits and exemptions on account of Cyprus being included in the Spanish authorities’ so-called black list of tax havens, despite complying with all relevant information exchange requirements. In 2009 the Spanish authorities removed the restrictions and progress in the negotiations regarding the double taxation agreement resumed. The entry into force of the agreement normalises tax relations between the two countries and has already led to a significant expansion of economic ties and reciprocal investment between them.
The DTA between Cyprus and Lithuania will take effect from 1 January 2015
The double taxation agreement between Cyprus and Lithuania is now in force and will take effect on 1 January 2015. For a detailed analysis of the new agreement, the first between the two countries, please follow this link.
New DTA signed with Switzerland
On 25 July 2014 Switzerland and Cyprus signed a new double taxation agreement. It is the first DTA between the two countries and has to be ratified by both countries before it takes effect. The new agreement closely follows the 2010 OECD Model Convention, with only minor modifications, and the Protocol to the agreement clarifies certain detailed provisions. The 2004 agreement between the European Community and the Switzerland on taxation of savings income will continue in force, but the double taxation agreement will be much more beneficial to taxpayers once it takes effect.
As well as being one of the world’s most important financial centres Switzerland is the base for many ultra-high net worth individuals with business and personal interests in Cyprus. The new DTA will therefore be a valuable addition to Cyprus’s extensive treaty network and it is hoped that the remaining steps required to bring the new agreement into effect can be achieved quickly.
New DTA signed with Guernsey
Cyprus and Guernsey have signed a comprehensive double taxation agreement. The agreement was signed on behalf of the Republic of Cyprus on 15 July and on behalf of the States of Guernsey on 29 July. The agreement will enter into force once the necessary ratification procedures have been completed and will have effect from the following 1 January. The agreement provides for dividends, interest and royalties paid by a resident of Guernsey to a recipient in Cyprus to be taxable only in Cyprus, and vice-versa. The 2004 agreement on taxation of savings income between Cyprus and Guernsey will continue in force, but the double taxation agreement will be much more beneficial to taxpayers once it takes effect.