Cyprus Double Taxation Treaties: Tax Benefits for Foreign Investors

Cyprus Double Taxation Treaties: Tax Benefits for Foreign Investors Which are the main benefits of the Cyprus Double Tax Treaty to the owner of a Cyprus company? For an international businessman planning his tax correctly is a key element to his success in increasing his profits and to overcome the competition. Cyprus has for years now in fact since before 1956 realized that . It has since signed over 42 Double Taxation Treaties with third countries. Some of those DTTs are indeed very favorable. Cyprus in an intensive race of incessant efforts has managed to sign over 42 Double Tax Treaties with many third countries all over the world. This makes the Cyprus Company very attractive for tax planning for the serious and dedicated international businessman.

More than 200.000 companies are registered till now and the number is growing steadily. Combined with the a low corporate tax of 12.5% and the equally very important 0% tax on dividends paid out and coupled with a liberal Cyprus Tax legislation, Cyprus is a jurisdiction which offers many and rich tax incentives to the international tax Entrepreneur. The main target of the DTTs is the avoidance of taxing twice income earned in any of these countries. Because of the provisions of these agreements, a credit is allowed against the tax which would otherwise be levied by the country in which the taxpayer resides.

A Double Taxation Treaty also clarifies the scope of the taxing rights of each contracting country, allowing thus international trade to be transacted with a degree of certainty and stability. This is why Tax Treaties for the avoidance of double taxation are important tools for international tax planning. They are also a substantive attraction to international investors, for any jurisdiction which has entered into such agreements. Further Double Taxation Treaties are of key importance for international business, as they encourage investments from one country to another.
Let be noted that Double Taxation Treaties are useful tools for both Income Tax (personal tax) and Corporate Tax,thus in their own particular way providing relief in two principal and very important sectors of international business. The first facet of this tool allows the tax levied in one country to be credited against tax payable in the other contracting country with respect to the same income. the second facet is that the Treaties exempt certain classes of revenue from being taxed either in one or the other contracting country.

Generally treaties create exemptions which provide that the legal entity operating in one territory will not be liable to tax on profits made in the other territory unless it has a permanent establishment in that other territory. Most of the treaties determine that the country where the taxpayer resides is the appropriate territory where his total revenue will be assessed. Then relief is given for certain types of revenues which are more appropriately taxed in the territory where they arise.

See Below the Double Tax Treaties of Cyprus

If you have problem accessing the texts of any Double Taxation Treaty, please get in touch with us and our personnel will be only too glad to send it to you in English.

Notes

* 7 Denmark – The existing Convention shall cease to have effect as from 1.1.2012.

* The treaty between Cyprus and the Socialist Federal Republic of Yugoslavia is still in force.

** The treaty between Cyprus and the Czechoslovak Socialist Republic is still in force.