Cyprus extends its Double Tax Treaty relations

 Cyprus signs two more double Tax treaty agreements :The Republic of Cyprus continues to extend its Double Tax Treaty Network and has done so recently by signing additional agreements with Luxembourg and Barbados.  Both treaties are based on the OECD model treaty.

Cyprus signs two more double Tax treaty agreements: Treaty with Luxembourg  

As mentioned above, a treaty was signed this month between Cyprus and Luxemburg which is expected to enhance economic relations between the two countries both members of the EU. As the treaty is based on the OECD model treaty it provides the following in relation dividends, interest and loyalty:For Dividends there is no withholding tax paid to a company that holds directly 10% of the capital at least of the dividend paying company.  In any other case the rate will be 5%. For Interest and royalties there is no withholding tax paid to a resident of the other contracting state.

Furthermore, the two countries have reached an agreement for the purposes of the treaty with regards to a collective investment vehicle which shall be shall be considered a resident of a contracting state if the domestic law of such state provides that it is liable to tax due to its residence, domicile, management location and other similar factors. Cyprus is steadily developing its investment fund industry which has already been established in Luxembourg. The Treaty in addition to the aforementioned includes also provisions in relation to the exchange of informationin accordance with the OECD model treaty. The treaty shall enter into force once notifications are exchanged from both countries that their formal ratification procedures have been completed.

Treaty with Barbados

As mentioned above in our introduction, a treaty was also signed this month between Cyprus and Barbados which is expected to strengthen the economic ties between the two countries, both having a service-based economy. Again, the tax treaty is based on the OECD Model Convention and provides for zero withholding tax on interest, dividend and royalty payments. The treaty shall enter into force once notifications are exchanged from both countries that their formal ratification procedures have been completed.