Cyprus Signing Tax Treaty with Iran

Cyprus Signing Tax Treaty with Iran :The Republic of Cyprus continuously extends its Tax Treaty engagements and has done so with Iran on 4^th August 2015. The said Tax Treaty has entered into force in March 2017 and it is based on the Organisation for Economic Co-operation and Development (O.E.C.D.) Model Convention.

Cyprus Signing Tax Treaty with Iran  – Main Provisions of the Treaty

Below is an outline of the main provisions of the said Tax Treaty:

Permanent Establishment:

Permanent establishment in this treaty is defined in accordance with the definition provided by the OECD Model Tax Convention. More specifically it is defined as a building site, a construction, assembly or installation project or supervisory activities in connection therewith.The aforementioned may constitute a ‘permanent establishment’ provided it is maintained for more than 1 year.

Dividends:

Where the recipient of the dividends is also the beneficial owner of those dividends then the withholding tax shall not exceed:

 a) 5% of the gross dividend amount in case where the beneficial owner is a legal entity holding directly a minimum of 25% of the company’s capital paying the dividends;

 b) 10% of the gross dividend amount in any other instance.

Interest:

Where the recipient of the interest is also the beneficial owner of the said interest then the withholding tax shall not exceed 5% of the gross interest amount.

Royalties:

Where the recipient of the royalty is also the beneficial owner of the said royalty then the withholding tax shall not exceed 6% of the gross royalty amount.

Capital gains:

The Gains that are derived by a person residing in the Contracting State from the disposal of immovable property situated in the other Contracting State may be taxed in that other State.

The Gains that are derived by a person residing in the Contracting State from the disposal of shares in a company, deriving more than 50% of their value directly from immovable property situated in the other Contracting State may be taxed in that other State.

Effective Date:

The said Treaty as mentioned above has entered into force on 5 March 2017 and shall the provisions of the said treaty shall be coming into effect as from 1 January 2018.

Benefits

The said Tax Treaty shall be creating new opportunities for investments between the two Countries.